The UK’s largest farmer-controlled arable marketing business, the Openfield Group, has posted a profit from its latest full year of trading, following two difficult years. The turnaround follows an acquisition and the return to more ‘normal’ national grain production levels.
The company has reported a pre-tax profit of £2.4 million on sales of £749m in the year to June 30th 2015, compared to a loss of £4.25m on sales of £743.6m in the previous year when reduced winter plantings led to a smaller national crop in 2013. The 2012/13 year saw a surplus of £31,000 on revenues of £709.8m, when the wettest year on record impacted both grain quality and yields for harvest 2012.
Borrowings for the year-end were £7.75 million, about £2m higher than the previous year, but “falling entirely within the working requirements of business and reflecting the point in the cash-flow cycle,” says the company, which says it is in a sound financial position and continues to operate without any core debt.
Grain volumes handled in the latest year rose by 19% to 4.3 million tonnes. This was helped by the above average yields from harvest 2014 and a return to UK grain exporting, plus Openfield’s acquisition of the Countrywide Farmers grain marketing business in December of that year. At the same time, the business re-integrated the transport and logistics function previously outsourced to DHL Supply Chain five years earlier.
“The headline numbers illustrate the scale of the turnaround,” states Openfield chairman Richard Beldam, who also farms in Worcestershire. “Clearly, the much improved harvest was helpful, but the executive management, led by chief executive James Dallas, are to be congratulated in achieving not only this result, but on refocusing activity for the long-term success of the business on behalf of members.”
Since the year end, Openfield has ceased to act as marketing partner for two members of the central store Openfield Network, Camgrain and Aberdeen Grain. Openfield says the grain business acquired from Countrywide Farmers more than makes up for the loss in volume from the two co-operatives.
“It is disappointing that other farmer-owned businesses chose not to share our vision for returning value to members,” notes Mr Beldam. “However, we are financially better for it and the reaction from consumers has been entirely positive. We remain committed to our co-operative principles of building long-term alliances with consumers for the benefit of UK farmers and are willing to welcome those farmers who share this philosophy with us.”
Mr Beldam adds that Openfield’s relationship with its other stores and groups “goes from strength to strength as the developments around the Southern hub of stores, the closer linkage with West Country Grain and the further investment in Angus Cereals clearly demonstrate”.
Openfield says its pool results were well received by members, while “shrewd capital management and good consumer relations” enabled it to pay its farmers an average nine days earlier than the previous year. “Farm businesses are under intense financial pressure and we have responded by doing what we can to ensure the timely transfer of funds,” concludes Mr Beldam.