The UK’s largest arable marketing business Frontier Agriculture, a joint venture between AB Agri and Cargill, saw profits and sales rise in the 2018/19 financial year.
The company made an operating profit of £34.3 million on revenues of £1.65 billion in the year ended June 30th 2019, compared to £30.3m and £1.49bn in the previous twelve months. Net assets were £258.23m at the year-end (£256.46m in 2018).
The twelve months started with the small national harvest in 2018, which supported farmgate crop prices above £150/tonne throughout the marketing year. In turn, this gave farmer customers confidence to invest in crop inputs for the following harvest, aided by the benign 2019 spring weather.
Frontier continues its strategic direction to increase the contribution from agronomy services and non-grain related activities – these now account for 58% of group earnings, with grain trading and related business 42% of the total. The company now has 160 agronomists across the country.
Frontier made two acquisitions during the period. In November 2018 it acquired the Shropshire-based agronomy services, inputs distributor and animal health business BCW Agriculture and its eleven agronomists. January 2019 saw the company agree to purchase storage co-operative Fengrain’s grain trading and marketing business Fengrain Services for £2.99m. This subsidiary, with offices in north Cambridgeshire and Kent, handled around 800,000 tonnes of crops annually.
There was capital investment of £9m across Frontier’s grain storage, seed and crop processing, inputs distribution, crop trials and digital services activities during the year. This included the installation of a bean dehulling plant in Nottinghamshire capable of processing up to 50,000 tonnes of field beans each year into a fish feed ingredient.
Looking ahead, directors do not believe the EU exit at the end of this year will be a major threat to the business, as 93% of its trading is within the UK. The biggest risk is added volatility to currency movements.
On Covid-19, the business is relatively well placed, with seed deliveries completed ahead of the lockdown; 70% of fertiliser deliveries made to farm customers and the remainder with manufacturers; and 80% of crop protection products needed for the growing period already in store.
“We anticipate that the UK arable supply chain will continue to operate without interruption, despite the control measures implemented by the UK government,” directors note.