Farm co-op profits fall 50% as markets endure tough year

Published on 27/03/2009 21:26

THE Inverurie-based ANM Group, which is Scotland's largest farmer-owned co-operative, has announced a trading profit of £909,000 for the year to 31 December 2008. This is some way below the £1.7 million achieved in the previous year, but is still "highly satisfactory" given current trading conditions and especially with the reserves rising by £411,000 to £5.4m.

Group throughput rose from 192.3m to 206m while turnover rose by 7.7m to 99m. Brian Pack, who has been chief executive since 1990 and who steps down at the end of April, contends that the co-op is well placed for the future.

He said: "The hard-earned reserves we have assiduously built up over the years ensure that the group is fit to face the bruising financial conditions of the moment and also that we have funds to look to future opportunities which can only increase.

"The group is impacted in various different ways, including customers with credit issue, consumers changing their buying habits to cheaper cuts of meat, the property development market stalled for the moment and many of the population saving rather than spending."

The parent society, which basically revolves around auctioneering of livestock, posted a trading profit of 810,000 – down by 20,000. However, much of this reduction is attributed to the fact that there was a significantly lower level of trading in entitlements. Livestock values increased considerably during last year and this resulted in a higher commission income.

However, Pack is concerned at the steady decline in numbers of both cattle and sheep throughout Scotland. This was confirmed by last December's census which revealed that Scotland has lost in the region of one million breeding ewes and 70,000 beef cows in the past decade.

The past year has been a difficult period for meat traders with the ex-farm price of cattle at point of slaughter rising by around 70p per kilo. Abattoirs have found it difficult to pass on this increase to their customers, notably major supermarkets.

This resulted in the profits of Scotch Premier Meat plunging from 379,000 in 2007 to a loss of 198,000 last year. However, Yorkshire Premier Meat, which operates from Sheffield, fared much better with a profit of 301,000 compared to 450,000 in the previous year.

Aberdeen and & Northern Estates recorded a profit of just 7,000, but this is almost entirely due to the fact that less farmland has been offered for sale while the housing market has stalled.

But there must be some concern at the performance of the Group's two catering subsidiaries – Highland Country Foods and Chacuterie Continental which collectively posted a loss of 167,000. This deficit is attributed to the rising cost of raw materials, but Pack claims the outlook is "more promising".

The overall balance sheet is strong, but it is proposed that the dividend to members be cut from 7 per cent to 5.5 per cent.

John McIntosh, the chairman, said: "Some of our managers have had a particularly challenging time in what turned out to be a particularly hostile market. I am greatly encouraged by the way they have maintained their enthusiasm and drive to look for new opportunities."