Another farmer co-op goes under

[Brisel]

Ah, I wasn't aware of their name. Used to have storage in Wilts Grain but sold it to build more storage here years ago.

It's always a pity when another co-op goes down. We're going to need to co-operate more in future to capture value in the food chain & we need decent management in place in these stores. Never easy to be caught in the middle of farmers who want max value and very few big players who use the grain who have the market power.

 

[An Gof]

How many employees did those 70 members have to fund? Presumably they weren't getting much added value from them?

Would they have a good grant for the storage too?

The whole central storage thing is a bit of a dark art It’s been discussed many times on here. I don’t know but I would be very surprised if Angus Cereals hadn’t received significant grant funding.
And therein lies the problem. The majority of central storage has been built with significant grant funding. It is most unlikely it would have developed in the same way without it.
Trouble is if a buisness is dependant on the grant funding to make it happen it might not be the best solution in the first place.
I am the proud owner of some very expensive storage in a central store. There is little if any value added opportunities in my area and the directors have to keep pushing handling charges up to prevent an Angus cereals scenario.
Space that cost members around £100 per tonne AFTER grant that now trades (if you can find a buyer) at £30-40 per tonne.

 

[Baling Hay]

Yet another blow for Openfield then...........yikes!

 

[Chae1]

Marketing. Trying to get a group of farmers to make a decision. Joys of a co operative.

 

[yellow belly]

without coops in the grain market the farmers will end up much poorer when we get a harvest with exports needed
some of the biggest domestic consumers are owned by some the biggest traders cargil especially

the coops came about after farmers at the time realised the days of the small local merchants in every town disappeared
50 years of consolidation and now we only have a very few buyers of grain any less and the cereal farmers is in the same boat as the sugar beet farmer of the milk producer

short term gain will not be of benefit to farmers as a whole I will trade with those that can get credit insurance
last year well grain went under the trade could not get insurance for them

storage companies will suffer this year as they will not fill their stores to capacity because of the short harvest this will be worse in areas more affected with the drought and those whole cropping to conserve feed

a true coop does not trade the grain in principle so members are well protected against insolvency it is also possible to take an advance
the grain is owned by the farmer not he coop

 

[Baling Hay]

without coops in the grain market the farmers will end up much poorer when we get a harvest with exports needed
some of the biggest domestic consumers are owned by some the biggest traders cargil especially

the coops came about after farmers at the time realised the days of the small local merchants in every town disappeared
50 years of consolidation and now we only have a very few buyers of grain any less and the cereal farmers is in the same boat as the sugar beet farmer of the milk producer

short term gain will not be of benefit to farmers as a whole I will trade with those that can get credit insurance
last year well grain went under the trade could not get insurance for them

storage companies will suffer this year as they will not fill their stores to capacity because of the short harvest this will be worse in areas more affected with the drought and those whole cropping to conserve feed

a true coop does not trade the grain in principle so members are well protected against insolvency it is also possible to take an advance
the grain is owned by the farmer not he coop

Ahhh but I bet quite a few co-ops do actively trade positions! They don't just sell pool grain.

 

[Widgetone]

Openfield had a torrid time with another store in Scotland a few years ago. The manager went to Frontier quickly followed by the store’s marketing. Which one was that?

Bit of a pattern, not sure of the finer details, but Openfield lost Camgrain marketing to Frontier did they not? Anyone know how that's going?

 

[An Gof]

Bit of a pattern, not sure of the finer details, but Openfield lost Camgrain marketing to Frontier did they not? Anyone know how that's going?

@Banana Bar ?

 

[Clive]

Be careful who you extend credit to ! I have a feeling there is a lot more like this to come unfortunately

 

[glasshouse]

It seems funny they’ve managed to invest £7m over 7 years to end up in administration . Surely grain prices haven’t fluctuated that much that they couldn’t stick to a business plan?

Or is this another case of the directors screwing the company for as much as possible before jumping ship at the last minute?

grain prices have been swinging about massively since 2011 when they started.

 

[Phil P]

grain prices have been swinging about massively since 2011 when they started.

Admittedly 11/12 prices where good, but you can’t base a long term business on those prices, nearly every arable Farm in Britain would go bust if they worked on getting £200/t for wheat every year! Since then yes prices have fallen, probably averaged out around the the £120-£130/t if you lucky and that’s what you’ve got to look at long term. You can’t throw millions into a company working on one or two years grain prices knowing you may only get £100/t next year or the next 5 years!
Just my opinion, I know I couldn’t justify that sort of investment with such poor planning as the money has to come from somewhere!
7 million between 40 farms £175,000 each, think I’d put my own grain store up.

 

[glasshouse]

Admittedly 11/12 prices where good, but you can’t base a long term business on those prices, nearly every arable Farm in Britain would go bust if they worked on getting £200/t for wheat every year! Since then yes prices have fallen, probably averaged out around the the £120-£130/t if you lucky and that’s what you’ve got to look at long term. You can’t throw millions into a company working on one or two years grain prices knowing you may only get £100/t next year or the next 5 years!
Just my opinion, I know I couldn’t justify that sort of investment with such poor planning as the money has to come from somewhere!
7 million between 40 farms £175,000 each, think I’d put my own grain store up.

They started when prices were low. The point is we have had massive fluctuations which can unseat even the best rider. plus their first year of operation was a weather induced disaster

 

[Phil P]

They started when prices were low. The point is we have had massive fluctuations which can unseat even the best rider. plus their first year of operation was a weather induced disaster

They started 2011 which was a very good year if I recall with prices hitting over £205/t but since 2013 they have steadily fallen.

Not been part of a co-op I’m probably not in the best place to pass judgment, but as a 4th generation farmer though I know you have to look very long term at prices against borrowings if you want to survive in this industry.

 

[Clive]

Why would markets affect a true storage co-op unless they started speculating ?

How on earth these things can go bust given how much they cost farmers to use vs building their own storage or using merchant stores I have no idea

 

[glasshouse]

They started 2011 which was a very good year if I recall with prices hitting over £205/t but since 2013 they have steadily fallen.

View attachment 696848
Not been part of a co-op I’m probably not in the best place to pass judgment, but as a 4th generation farmer though I know you have to look very long term at prices against borrowings if you want to survive in this industry.

If you look at the graph, prices were very poor in early 2011 when decisions were made.

 

[glasshouse]

Why would markets affect a true storage co-op unless they started speculating ?

How on earth these things can go bust given how much they cost farmers to use vs building their own storage or using merchant stores I have no idea

because when prices go high, members sell elsewhere.
traders got caught in 2012 because the crop simply wasnt there to trade. wheat in eastern scotland yielded under 2t /ac

 

[Phil P]

If you look at the graph, prices were very poor in early 2011 when decisions were made.

Prices where on the rise from August 2010.

 

[Clive]

because when prices go high, members sell elsewhere.
traders got caught in 2012 because the crop simply wasnt there to trade. wheat in eastern scotland yielded under 2t /ac

But coop stores charge regardless of if you use it - or is this a different model ?

Trending and stirsge business are very different beasts as well - trading is s high risk game

 

[SilliamWhale]

Why would markets affect a true storage co-op unless they started speculating ?

How on earth these things can go bust given how much they cost farmers to use vs building their own storage or using merchant stores I have no idea

And did all those staff add value to a bit of corn?

 

[Phil P]

Why would markets affect a true storage co-op unless they started speculating ?

How on earth these things can go bust given how much they cost farmers to use vs building their own storage or using merchant stores I have no idea

I would say they’ve been trying to recoup their investment to quickly and gambling on the futures.