Loss for Scottish co-op
SCOTLANDS biggest farm requisites co-op made a pre-tax loss of £1.1m in the year to June 30, compared with a profit of more than £500,000 the year before.
The annual report and accounts, issued to the 9000 members of Aberdeen-based North Eastern Farmers, records a 6% rise in turnover to almost £60m, but shows operating profit down from nearly £1m to just £22,000.
In his chairmans statement, John Mackie reports that interest and finance charges of £590,000 and "exceptional items" of £564,000 turned the small operating profit into a loss of £1.1m, reduced to £683,000 by tax credits.
A main area of difficulty had been oat trading and processing. The late harvest in 1993 led the company to buy high-priced supplies through the trade – only to end up with a splendid harvest for local contract growers.
"Finance and storage costs resulted in an escalation of raw material prices, business was lost, and sales growth curtailed," says Mr Mackie. "To add to the stock problem, the 1994 harvest produced a record crop from our contract grown acreage. Grampian Oat Products has suffered from very high raw material prices and an inevitable and substantial trading loss was incurred."
Mr Mackie is bullish about the future and claims substantial new orders, with stock supply and prices now at competitive levels. He also reports that in the core business of supplying farm requisites, pressure on margins intensified and there was an urgent need to reduce overhead costs.
Staff numbers reduced
That had been done by reducing staff numbers and closing centres at Wick, Turriff and Aberdeen, saving about £500,000 a year.
The mild winter and hot summer had not helped the society, reducing sales of porridge oats, farm feeds, and domestic fuel.
The co-op had also written off its worst ever bad debt of £100,000 incurred by a local turkey operation which went into liquidation last January.
Despite the loss-making year, directors have recommended a dividend of 7% (6% last year) but there will be no bonus on trading (1% last time).