Coupar Angus based grain co-op East of Scotland Farmers (EOSF) has posted a record profit in the year to May 31, 2014.
Chairman George McLaren, Bankhead of Kinloch, Meigle, told members at the annual meeting that the profit of £409,195 came after a weather-related dip the year before to £259,887.
The 2012 harvest had been a difficult one but there had been a recovery in 2013, and the co-op had benefited from having 20 new members.
“Turnover was up by over £2m to £20.8m and total capital and reserves now stand at £3.5m.
“New business term loans of £1.8m were taken out to fund the balance of investment in the new dryer and store, but cash generation has been strong and we are confident of paying off these loans in a relatively short time frame so that further development becomes possible,” said Mr McLaren.
“As I am always at pains to stress, financial performance is only half the story.
“It is therefore pleasing to report strong performances for all our grain pools, too.
“It is impossible to catch the top of every market with all sales or at least not without taking huge risks and enjoying a large slice of luck.
“In years of rising markets such as 2012/13 the pools are better than early season values but do not match harvest prices.
“Conversely in years of declining prices such as 2013/14 the pool cannot match early season values but are better than harvest values.
“EOSF members have enjoyed consistent returns through volatile times without the stress of following market developments and making decisions on when to sell,” he added.
Speaking to The Courier ahead of the meeting EOSF general manager Robin Barron said he was pleased that the Coupar Angus facility had handled 75,000 tonnes in the 2014 harvest, some 10,000 tonnes more than ever before, on behalf of the 160 grain-growing members.
The new 40-tonne-per-hour dryer and adjacent 15,000-tonne store had completed its second season and had boosted output as planned.
Land and planning permission for a duplicate set-up was in place, but he thought it might be another five years before the plans became reality.
“I compare the business to a three-legged stool,” Mr Barron said.
“One leg is the supply of grain, and with 20 new members we have had a boost in that direction.
“The second leg is the facilities we have available, and with the recent investment and the ability to handle 75,000 tonnes we are covered on that front.
“The third leg is the market, particularly for malting barley. At the moment that is the area which needs the biggest emphasis.
“The sticking point in Scotland is the lack of malting capacity. All the maltings are working flat out, and that is the bottleneck.”
Industry figures tend to back this up, with annual distilling demand at least 1m tonnes, heading towards 1.3m tonnes as new developments come on stream.
Malting capacity in Scotland is however believed to be only 900,000 tonnes, despite recent investment in new plant.
Asked whether he saw this as an area which EOSF could diversify into, Mr Barron was quick to point out that malting was a specialised business best left to the companies with the necessary expertise.
As regards the current low cereal prices, Mr Barron said: “I see these as a blip following two good back-to-back global harvests.
“I am optimistic about the future in Scotland, largely because of the good demand from the distillers.
“Concerto will continue to be our number one variety for 2015, with Belgravia number two.
“Marketing pools are difficult to operate with more than two varieties, but there are actually very few options. Odyssey has had some success, but there are concerns about skinning and splitting in a wet year.”
Mr Barron also confirmed that EOSF had no intention of “breaking the mould” of a business which had performed reliably over the years, and he prized the independent approach taken to marketing the membership’s grain crops.