Mole Valley Farmers (MVF) has reported its second consecutive full year operating loss, after what it calls one of the most challenging years in its trading history, but one which proved to be a period of transition and change.
The co-operative has recorded an operating loss of £4.2 million on a turnover of £559m in the year to 30th September 2024, compared with an operating loss of £7.60m from revenues of £609.78m in the previous twelve months. The business returned £300,000 to its farmer shareholders during the period through its loyalty bonus scheme.
MVF chief executive Jack Cordery highlights an improvement in earnings before interest, taxes, depreciation and amortisation (EBITDA) from the £2.7m loss in 2022/23 to a £2.7m profit in the latest full year. “Market conditions remained challenging during the trading year, with continued global conflicts impacting supply chains; whilst cost of living pressures and political change lead to uncertainty in the domestic market,” explains Mr Cordery. “All these factors weighed heavily, leading to increased cost of operations at a time when consumer confidence to spend or invest on-farm was limited.”
The period saw MVF sell its fertiliser importing and blending facility at Newport in South Wales to Thomas Bell & Sons. It says this move allowed a reduction in working capital requirements, risk and exposure in a global market, whilst maintaining price competitiveness in a product area that its customers rely on. Following the divestment, over 75,000 tonnes of fertiliser have been traded into the domestic market.
The co-operative also invested in its Mole Valley Feed Solutions business through the lease of the Uffculme Mill in west Devon from ABN. This has grown direct-to-farm feed volumes to 841,000 tonnes. At the same time, the operational teams have worked to reduce feed manufacturing costs, whilst maintaining product quality.
“Last year’s Uffculme Mill acquisition has also proved successful, with volumes already exceeding our initial predictions,” Mr Cordery adds. “Having a dedicated organic facility has allowed us to create capacity at our Huntworth mill, reduce our distribution costs and open up new markets. Our move into the organic poultry sector has been a success.”
The company’s rural retail business, with 55 stores trading under the MVF, Mole country Stores and associated brands, faced the same pressures affecting the wider UK retail market. Divisional sales, at £237m, were down 4.5% year-on-year – although 9% up on the five-year average. The downturn is attributed to a subdued agricultural market, which was affected by adverse weather at key times, plus a lack of confidence in the sector to invest as output prices remained depressed.
The business says the IT cyberhacking incident in August 2023 resulted in prolonged disruption to its retail division, with a slower than expected return to profitability. “Whilst we were back operationally very quickly after the incident, there was prolonged disruption for customers in the retail sector and, for some, it has taken them time to re-engage with us,” notes Mr Cordery. The IT team has focused on rebuilding the infrastructure while improving security and reducing costs.
“In summary, there has been a year-on-year improvement in the underlying performance of the business – however, the level of recovery has not been sufficient to return the business to profit in the year ending September 2024,” says Mr Cordery.
“I remain confident that the changes made, and the ongoing actions in place, will have an incremental benefit in this financial year. We have already seen further improvement and are tracking ahead of last year with increased volumes through our feed business, improved agri retail sales driven by greater focus on our farming customers and an improved profitability across our forage division.
“The Mole Valley Farmers business will need to change to adapt to the market dynamics; however, our core principles of a strong agricultural base, industry leading advice and knowledge transfer, competitive products and commitment to UK agriculture remains consistent. We will continue to find ways to innovate and compete harder,” Mr Cordery concludes.