It has, by any standards, been a rough 18 months for UK farmers.[QQ] First there was the BSE crisis, then one of the wettest winters on record and now an epidemic that threatens to change the face of the countryside for years. Of course, farmers have always faced the vagaries of the weather and the threat of catastrophic diseases among their animals, but seldom have the hammer blows fallen so close together, or with quite such devastating effect.
The agricultural industry that relies on farming is also being affected. Abattoirs, grain mills, animal feed producers, specialist hauliers, dairies, butchers, suppliers of lime and fertiliser; the list goes on and on. In the midst of all this is Culverwells, an East Sussex-based, limited company that describes its business as “agricultural and horticultural engineers, calor gas dealers and sundriesmen”.
The company’s finance director, Jack Beal, 57, is normally a happy man. He and his two fellow directors own the controlling interest in the business and have done so since 1978. When he is not doing the job he enjoys, he will generally be found on one of the golf courses that abound in the East Sussex countryside (11 handicap) or willing England to victory at Twickenham or wherever else they happen to be playing. These, however, are not happy days.
“Although the BSE crisis affected the beef farmers very badly it has been difficult to come to any conclusion about its direct effect upon Culverwells,” says Beal. “The same is likely to be true of foot and mouth, since we have not been directly affected by it here. What has affected us far more has been the appalling weather over the winter that has stopped farmers getting onto the land. In the year ending September 2001, we expect our normal annual turnover of #9.5m to reduce by #2m.”
Worse still, the bad weather has impacted directly on Culverwells’ Lewes headquarters. At 3.30pm on 12 October last year, water began to bubble up through the drain covers and into the ground floor retail area. By 4.30pm, all the stock had been loaded onto docks four feet high and the staff sent home. By around 8pm, the water had reached the ten-and-a-half foot mark and had destroyed almost the entire #680,000-worth of stock.
“The flood level remained at this high level for several hours, before gradually dropping to the seven-foot mark, where it stayed for the following two days,” says Beal.
Luckily, the flood was not a complete disaster. Culverwells has three other sites, two in Sussex and one in nearby Kent, where repair and maintenance work could continue. But the directors’ decision about whether to move the company to another location away from the risk of flooding was almost made for them. “Following the floods, the value of the Lewes site plummeted,” says Beal. “As a result, we made the decision to refurbish the customer-facing aspects of the business and continue trading from here. We didn’t really have any option.” The site was due to open again in mid-April.
Other tests of the company’s profitability are ahead. Foot and mouth means that the confidence of farmers remains on a knife-edge. Everywhere there are signs warning strangers to stay off the land and access is restricted to those with a real need.
“For us,” said Beal, “it means that routine maintenance of farmyard equipment is not being asked for and, even on those occasions when it is, the process of disinfecting our vehicles on the way in and on the way out adds time and money to each job. We have to meet these additional costs ourselves. We would not dare ask the farmer to help pay for the extra time.”
Beal admits that farmers do moan a lot, but, at the moment, they have good reason to. “For the past 18 months most of them have been trading at a loss and in consequence have not been able to invest in their businesses,” he says.
Yet, despite the uncertainties of being an agricultural supplier, Beal has no plans to give up – “unless it is to play golf”. With the livelihood of around 73 staff to look after, he is conscious of the need to stay ahead of the game. “The flood meant that we lost several customers to other suppliers and we are unlikely ever to get them back,” he says. “On the other hand, our workshop was able to continue working almost without a break. Meeting and beating these sorts of challenges gives me a terrific buzz.”
View our archived webinar, including Oracle and a host of ‘Fast Data’ experts, to discover how financial professionals can help create a Fast Data business
Reinmoeller, professor of strategic management at Cranfield School of Management, has proposed an Eight Actions Model to help organisations increase margin and perform ahead of market expectations
When thinking about Iran as a potential market it’s important to go in with open eyes. This means being aware of some of the myths as well as being clear on the challenges
Third of UK companies with defined benefit pensions schemes are paying out more from their scheme in pensions than is being received in contributions