Norfolk farm buying group identifes growth potential
Michael Pollitt, agricultural editorMembers of one of the country's biggest buying groups, Anglia Farmers, could make even more savings for their individual businesses.After seven years of rapid growth, the latest annual report of Norfolk-based Anglia Farmers discloses a 2.Michael Pollitt, agricultural editor
Members of one of the country's biggest buying groups, Anglia Farmers, could make even more savings for their individual businesses.
After seven years of rapid growth, the latest annual report of Norfolk-based Anglia Farmers discloses a 2.5pc dip in turnover to �142.1m.
But chief executive Clarke Willis said total turnover would be about �250m if members bought all their inputs through the group. And he identified three opportunities to generate greater value for the group's 1,942 shareholder members.
Mr Willis said that electricity purchases accounted for �14m or a tenth of the group's annual turnover. "But only about a third of our members are buying electricity through us.
Three members of his team verified electricity bills, which were notoriously inaccurate. "We've got 3,500 electricity bills coming into the office, some monthly, some quarterly. What members get is the back office verification as we take the hassle out as well."
"We went into the market at the end of February and we have actually fixed our farmers' electricity prices from October 1. We're probably one of the biggest buyers of electricity in Norfolk. Interestingly, we're taking on about 70 new meters a month and it is a growth area.
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"Our new contract comes with automatic meters, so we're rolling those out to members as well. We can actually monitor usage far more accurately."
Anglia Farmers eases back-office administration for members. "It is like having a team of people who are working on their behalf. We're very open: 'The price we buy it is the price we sell it' and that the way it operates."
"Our level of commitment is a KPI (key performance indicator) as far as we're concerned. Our commitment on fuel is 88pc, on chemicals 83pc, fertiliser 85pc and seed 66pc. Our under-lying commitment is about 85pc.
"We have a challenge. Only 33pc of our members buy electricity, 10pc buy insurance and only 42pc their communications. If we didn't take on another member and did all the business with existing members, our turnover would be double," said Mr Willis.
"The average full member does nearly �100,000 of business and pays on average about 1.1pc on average in levy," he added.
Efficiencies were being driven in the back office. "Our average invoice value is about �450. The reality for the majority of our members is the ability to book it to Anglia Farmers is crucial to their business."
Suppliers get cleared funds on the last working day of the month - on the nail. "For the smaller business, it is their lifeline. I've got suppliers who tell me they can write cheques knowing funds will be there because we pay."
And another back-office improvement, AF OnLine was growing strongly. "All our scanned invoices are available online - through a portal - which members can download straight into their FarmPlan system. We now have 15pc of our invoices that go from our system into members' accounts system electronically. What we're developing is a paperless backend."
George Bell, chairman, said in his annual report: "We've never been busier. In moat areas, volumes have increased substantially and we currently processing around 40,000 invoices a month."
On the broader front, membership increased by six per cent or 109 on the previous year. And since January 31, 2006, when turnover was �58.6m, it has risen almost year to peak at �145.7m last year while in the same period the number of employees staff at the Honingham Thorpe business park, Colton, near Norwich, has grown from the original 30 to 65.
Mr Willis said that turnover per employee had risen from �1,955 at the launch of AF to �2,187. "Our turnover per employee has remained relatively stable over the past five years," he added.
Another measure of performance - operating costs - had risen slightly from 1.6pc of turnover to 1.8pc last year.
"At the merger of the two former buying groups, Loddon Farmers was about 1.9pc and Mid-Norfolk was about 2.3pc," said Mr Willis.
Reserves were boosted by �141,000 last year and members funds now stand at �1.51m.