April 26, 2012

 

UK grain trader Tynegrain's revenues nearly double

 

 

Tynegrain, grain trading and storage specialist, seen record revenues almost doubled and are now on course to launch a GBP4 million (US$6.5 million) storage facility in time for this year's harvest.

 

The South Shields-based farmer owned co-operative saw 2011's turnover jump to GBP174 million (US$281 million) from GBP96 million (US$155 million) the previous year and pre-tax profits increased to GBP2.3 million (US$3.7 million) from GBP1.9 million (US$3.1 million) in the year to the end of June.

 

The group, the sixth biggest in its field working with farmers across the UK, benefited from a rise in the volume of purchased grain and high trading prices. Managing director Mark Bright said: "We are a farmer-owned business and we are here to work on behalf of farmers. If we make money, we can continue to lend to farmers to help their cash flow and reinvest in new activities."

 

The business employs 36 staff after recently taking on four graduates, and is ultimately owned by its 106 shareholder farmers.

 

"It has the ethos of a co-operative. Last year, we lent GBP30 million (US$48.5 million) in advance payments to farmers - it is key to us to remain profitable to lend to farmers to ease their cash flow," said Bright.

 

"The market movement has raised profit but, in percentage terms, we don't make any more than we used to, but the turnover is so much bigger."

 

He said the business is currently on course for another "historically high" profit but he expected it to be "slightly less" than last year, due to the volatility of the market.

 

"The opportunities have been less. The year before, the market went in a straight direction but, this year, it's been choppy," added Bright.

 

"Outside influences on the grain markets mean that speculators are now 'risk off' and 'risk on'.

 

"Last week, for example, the bonds in Spain went up, so all of a sudden, Goldman Sachs became risk adverse.

 

"They are trading a wide range of commodities. Outside speculation in grain is phenomenal. Historically, it would move GBP30-40 (US$48.5-65) per tonne of wheat, but now you would expect movement of GBP100 (US$162) or more.

 

"Market movement creates opportunity but they also create risk. All commodities just move than much more. Farmers grow grain exactly as they used to, but the running of farms is more expensive and the possible returns have become more attractive."

 

One of Tynegrain's key investments has been its new 40,000-tonne grain store on Teesside, which is due to open in time for the 2012 harvest.

 

"It's a GBP4 million (US$6.5 million) investment and we received a GBP880,000 (US$1.4 million) grant from the RDPE (Rural Development Programme for England)," said Bright.

 

"It's on the Wilton site directly next to Ensus, so if that comes back on stream ... and it's just six to seven minutes away from the deep water berth."

 

In addition to its Port of Tyne headquarters, the business also has a Scottish office at Turriff, near Aberdeen, and uses a network of port facilities down the East coast.