Farmers urged to do due diligence when trading grain

Farmers are being encouraged to take great care and show due diligence when trading their grain, as analysis of company accounts shows a recent deterioration in the financial performance of many key players.

In his annual look at accounts lodged with Companies House for the 2024-25 trading period, consultant Richard Whitlock notes that grain merchants’ profits have dropped sharply over the past year.

This, he says, is a reflection of the difficult trading environment that the whole arable sector has been facing – for farmers and grain merchants alike.

Combined pre-tax profits for all 23 firms in the report that purchase free-market farm grain in the UK, came to just £39.28m, down from £107.61m the year before – a drop of 65%.

See also: Grain merchants show mixed fortunes in company accounts

“The order of balance sheet values of the top 13 companies has not changed, but there has been some real pain in many camps, with losses for a second year or a large fall-off in profits,” said Mr Whitlock.

“Some companies are restructuring their businesses to survive in this new economic environment, and there are some voluntary redundancy programmes going on, which is no surprise,” he added.

Financials

In terms of net assets, Frontier, Wynnstay and Simpsons Malt remained top of the table in 2024-25, while in turnover terms it was Frontier (again), ADM Agriculture and Cefetra that led the way.

However, while Simpsons and Frontier both made good profits in 2024-25 – of £9.48m and £9.36m respectively – ADM and Cefetra both posted trading losses – of £7.9m and £1.8m respectively.

“As things stand, I don’t see more government support or protection coming farming’s way, so it will be down to free-market forces, survival of the fittest, talent and sheer grit,” said Mr Whitlock. “For farmers, it’s time to be very careful who you sell to.”

He suggested not just choosing companies to trade with based on turnover or grain prices offered, but their risk profile and ability to pay.

Those that are making a decent profit – both in itself and as a percentage of net assets – should be less risky, as are those that have a diversified portfolio.

Strategic approach

Graham Redman, consultant with Andersons and editor of the Nix Farm Management Pocketbook, suggested speaking with the end users (for example the miller or compounder ) to identify if there had been any financial – or staffing – difficulties among their merchant suppliers.

Checking their balance sheets on Companies House is also useful. “Make a table of capital and debt positions,” he said. “The ratio unveils the company’s ability to pay you.”

And keep on top of payment terms, he added. “Be ready to make that phone call if the money does not appear. They do the same with farmers when you buy fertiliser.”

For more information, contact richard@richardwhitlockltd.co.uk