Cornwall Farmers, the farmer-owned agricultural supply co-operative, is expecting to return to profit in 2011 after one-off costs pushed it into the red.
The business, which is owned by its 4,200 members, said its unaudited results showed an expected loss of £2.6 million for the year to September 30 2010, but stressed that £2.5 million of this was from exceptional items.
This included a loss of £1.5 million from the trading and subsequent disposal of its machinery division which was sold earlier this month, and £1 million of adjustments to reflect overvalued assets on the balance sheet, plus some restructuring costs.
“We are investing in a larger direct sales force to grow our agricultural business, while introducing new retail products”
Excluding these exceptional items, Cornwall Farmers expects to post a loss of £100k on sales of £68 million when its accounts are published in the New Year, which was similar to the previous year’s performance.
Chairman Peter Thomas said: “These were one-off exceptional items and the underlying business remains strong, so we expect to return to profit in 2011 despite the tough economic climate.
“During the year we have recruited a new executive team tasked with putting the co-operative on a more commercial footing and we are already seeing the benefits of that. We have disposed of our loss-making machinery division, significantly reduced our bank borrowings, and our new three-year business plan will see us greatly improve how we buy and transport goods, with benefits to members and customers.
“Next year we anticipate one-off profits from the disposal of surplus sites, including our former machinery site at Roche, and we are investing in a larger direct sales force to grow our agricultural business, while introducing new retail products.”
Thomas said the co-operative would not be paying a bonus to members this year, although it was working hard to reinstate one next year. And he confirmed that in line with co-operative rules members would not be able to redeem their investment in the co-operative in the short-term, although this position would be reviewed regularly.
He said: “While our new management team works to return the co-operative to profitability it is important for members, customers and staff that we retain capital in the business.”
Thomas added that he had asked Evelyn Boscawen, President of Cornwall Farmers, to review the corporate governance of the co-operative, including whether an all-farmer board of directors was the most appropriate structure for the business going forward.
The outcome of that review, and any recommendations, will be known by the time of the co-operative’s Annual General Meeting in the New Year.
Cornwall Farmers has been supplying goods and services to rural communities in Cornwall and Devon for 90 years. It sells around £45 million of seeds, fertilisers, feeds and forage to local farmers and around £25 million of goods through its network of 14 country stores every year.
The co-operative employs 270 staff and injects more than £30 million a year into the local economy through wages and what it spends with local suppliers.