Understanding merchants’ financial strengths more important than ever – NEWS

Uncertainty means farmers must carefully weigh dealers' financial strengths before making sales decisions this year.


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Understanding the financial strengths of traders is more important than ever

Agribusiness consultant Richard Whitlock warned that understanding traders' finances is more important than ever. Trader margins are likely to come under pressure this year amid trade uncertainties, the impact of Brexit and currency volatility.

Mr Whitlock highlighted the problems farmers faced after managing Wellgrain in 2017, saying the letter had been on the wall 18 months earlier.

"It's a high risk environment and it's not easy for traders to make decent money," he said.

Mr Whitlock said with uncertainty about trade, Brexit and agricultural policy and Covid-19 that there could be some "upset" in this sector.

The safety in the factories and fears of virus transmission also presented challenges this year. Farmers had to take fair and representative samples to avoid rejections and penalties.

He added, “Many will crawl around to buy their share. In a highly competitive market, the first thing to do is to eliminate margins. "

financial assets

Frontier, which recently signed a deal with Warburtons, is the largest player in the market with net assets of £ 258.2 million, ahead of Wynnstay Group which, according to Companies House, has Simpsons Malt's net worth of £ 94.4 million . GBP owns.

Mr Whitlock said it is important to check that they are financially sound, part of a larger group, and have different profits. But it was also important to check whether they were providing a good service to the farmers.

He said there are advantages and disadvantages to serving larger and smaller suppliers, with smaller suppliers often being able to offer a more personalized service.

"Bigger usually means you are more in control of your processes," he said.

"They usually have a process that follows a certain line, but that doesn't mean it's not a good line."

But he said larger dealers could still be flexible and the best time to negotiate was before a price was agreed.

"It may mean you are not getting the best price, but it may work better for your company," he added.

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