Streamlining strategy helps AF Group deliver a record £1.1m rebate for members
- Credit: Angela Sharpe Photography
Profits have leapt by 76pc at a Norfolk-based agricultural buying group – allowing it to deliver a record £1.1m rebate to its members.
The AF Group, formerly known as Anglia Farmers, has reported profits of £2.1m in the financial year to January 31, 2019, with turnover rising by a more modest 8pc to £274m.
Chief executive Jon Duffy said the "stunning" figures resulted from a programme of efficiency improvements, including a focus on staff and building strong relationships with suppliers, which has cut costs and encouraged existing customers to do more business with the firm.
The AF Group, based at Honingham Thorpe outside Norwich, is the largest agricultural buying co-operative in the UK, sourcing products for around 3,500 members across the country.
As a result of the group's financial performance, the growing membership will benefit from a combination of discretionary and product rebates totalling £1.1m - up by almost 80pc on the previous year, and the largest total rebate in AF's history.
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Mr Duffy said, 18 months into his five-year plan for the business, the streamlining strategy was now starting to take effect.
"Our strong growth this financial year reflects the robust partnerships we've built over the last 18 months," he said. "It's rewarding that we continue to earn trust and grow partnerships in the agricultural community.
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"We have continually advised our members to get "business fit" by ensuring they get their costs under control and our results show that we have practised what we've preached.
"Our focus in this area has enabled us to pay £300,000 to members via our first ever discretionary general rebate which, combined with the £700,000 members gained via product rebates, has delivered the largest rebate total in AF's history of over £1m. In addition, our price adjustments of over £500,000 means we have returned over £1.6m worth of value back to our members.
"We have the great honour of running a business that is owned by its members, but we look at the members through two distinct lenses. They are our customers, so we have to delight them with our service levels and products. If we do that, they come back and do more business with us. The second lens is that actually those customers own the business as members, so they also need to be rewarded for that. We can share our success. It is a business model that works.
"I also think Norfolk should be bloody proud of this business. It is a Norfolk business that is doing exceptionally well on a national scale."
Mr Duffy said a motivated workforce and strong supplier relationships were also key to the organisation's success.
"Our strategy was to concentrate on staff and make sure we had the right people with the right skills and the right attitude," he said. "We have made sure this is a great place to work in terms of the environment and the culture and the values this business is built upon. Then productivity goes up if people enjoy what they are doing.
"In terms of growing turnover, we made sure we had good strong relationships across the supply chain, and we also recognised there were areas where we could take costs out.
"One example is distribution of crop protection products. If you go back a couple of years, a farmer would order a whole range of crop protection products for his farm and we might go and source them from five different places. That might sound like good procurement, but in actual fact it is adding costs - you have got five distribution centres and five lorries and five drivers. But if you plan further ahead and know what is going to be needed, you can send out one lorry, and that straight away cuts down your cost.
"There is a real value gain by working smarter. If you can do business more smartly then people will want to do more business with you."
The uncertainties facing the agricultural industry makes cost efficiency a vital consideration for farmers, said Mr Duffy.
"I have been saying for quite a while that no-one quite knows what is going to happen with Brexit and the Agriculture Bill, but what businesses can be doing in our sector is getting themselves as fit as they possibly can," he said.
"We are on a journey now to getting absolutely fit. We don't spend money where we don't need to. We plan ahead to be proactive, and we are capable of reacting very quickly to whatever might be around the corner."