Fram Farmers, an innovative leader in the farmer-owned cooperative sector, achieved a group operating surplus of £141,000 (£174,117: 2014/15) during the financial year to 30 June 2016.
Established in Framlingham, Suffolk during 1960, Fram Farmers now purchases farm inputs and markets combinable crops on behalf of over 1400 farming businesses who collectively farm over 400,000 hectares throughout the UK, enabling them to obtain best value from the supply chain.
Announcing the results at the cooperative’s Annual General Meeting, Chairman Rodney Baker-Bates highlighted that while significant reductions in the cost of key agricultural inputs such as fertiliser and fuel had benefitted members, they were the primary reason for a 7.5% fall in Fram Farmers’ turnover to £169 million (£183 million). However, Members placed more orders with Fram Farmers and the volume of invoices processed increased to 204,280 (203,674).
Another year of strong performance by Framtrade Ltd, Fram Farmers’ wholly-owned retail subsidiary which supplies oil and gas products to over 4000 members of the public, combined with the completion of the sale of the Group’s previous office site in New Road, Framlingham, increased the level of capital and reserves to a record £3,302,857 (£2,848,129).
Mr Baker-Bates, a leading City businessman who joined the Fram Farmers Board in 2010 and succeeded Serena Greenwell as Chairman in 2016, added:
“This has been a challenging year, both for our members as cash flow became constrained by falling output prices and for the group as many Members only placed for immediate delivery. Although annual turnover fell, we achieved positive cash flow from our operations and our balance sheet remains strong.
“The need for a strong capital position has become increasingly important, because in a volatile and challenging farming market our financial strength gives suppliers confidence that they will be paid and allows us to negotiate competitive terms on behalf of our Members. The group rewards loyalty by returning the rebates which we negotiate with suppliers in full to the Members who earned them. These totaled £679,426 (£849,463), which represents 41.2% of the fees charged and significantly reduces the cost of Society membership.
“The referendum decision to leave Europe and probability of exiting the Single Market will have long-term consequences for the UK economy, specifically for the food and farming industry which will need to become even more efficient and diverse in output to remain competitive in an increasingly global market place. This trend is already becoming clear, but will accelerate.
“The farming industry faces an extended period of change, which will present both risks and opportunities. The group will face similar challenges to ensure that our Members continue to receive an excellent service. However, the Board is confident that the group is in a strong position to respond to opportunities and mitigate risks as they arise, based on the four key pillars of financial strength; management leadership; organizational expertise and experience, together with the energy, commitment and intent to meet Member’s needs.”
Richard Anscombe, Chief Executive, added:
“Fram Farmers Group turnover and profitability has held up well in light of significant falls in value of the key commodities which we purchase on behalf of our Members. At £867, the average annual cost, net of rebate, represents extremely good value given the access this provides to our team of professionals who source products and provide market information and commentary solely in our Members’ best interests.
“The purchase of arable inputs by Members has become increasingly ‘hand-to-mouth’ in response to depressed commodity prices and pressure on farming margins. This was reflected in a lower level of turnover for arable inputs during the financial year. The value of crop protection products was £30,370,686 (£33,157,282), fertiliser purchases amounted to £22,799,906 (£27,519,097) and the value of seed orders was £4,695,087 (£5,115,880), reflecting lower product costs, manageable levels of crop diseases during the growing season and the use of lower-cost products. Our focus on improving regional coverage by fuel distributers helped drive prices down, benefiting Members across all three key fuel groups.
“The unique collaboration with ADM Direct, our marketing partner, continued to deliver improved Member benefits and strong operational performance, while allowing us to conserve our fundamental values of trust and transparency. Our grain marketing pools continue to help Members overcome market instability by proving a uniquely transparent and well-balanced marketing approach which has delivered consistently good results over the last six years. Pool commitment hit a record high in 2015/16 and the volume of grain traded through the Society was the second largest in our history, being 27% above the 10-year average.
“Turnover in livestock feed and products experienced solid growth, reaching a record £26 million, with a robust increase in commitment from both existing Fram Farmer Members and an influx of new producers to the Society. The volume of purchased feed climbed to a record 132,000 tonnes, up 14% year-on-year and 59% over the last five years.
“Electricity was another successful area, delivering like-for-like volume growth of over 8%. Since 1 January 2016 we have added 106 new sites to the group contract and currently provide electricity to 4192 Member sites.
“Orders for building materials placed through Fram Farmers also increased, taking the year-on-year growth from 9.1% to 9.5%.
“During the year we introduced a range of new services to Members in response to the challenges of falling market prices and continued volatility in commodity markets. We secured extended supplier terms for key products and continue to offer cash advances to Members against grain committed to the Fram Farmers marketing pools. Both have added significant value to our Members’ businesses in a year where cash flow has remained an industry-wide challenge.
“Fram Farmers Insurance, a new service launched during the year, has exceeded our expectations, with over 80 Members choosing to source farm insurance cover through the group and many saving a double-digit percentage on their previous premiums.
“We remain committed to being an innovative leader in farmer cooperatives, operating ethically and transparently solely in the interests of our farmer Members. That ethos is reflected in the fact that during the year we opened 306 new trading accounts.”
The picture shows CEO Richard Anscombe