NEW START WITH CHALLENGES
BM Agri is a wholesaler of cereals, oilseeds and fertilizers. As a privatelyowned company, it is a challenger in a market dominated by member-owned cooperatives. Over the past year, the company gained both a new partner and a new MD in Johan Andersson. He is tasked with taking BM Agri to the next level. However, the summer of 2018 brought drought.
BM Agri was founded some 15 years ago by Mats and Britt-Marie Eriksson. Mellby Gård joined in 2011 through the acquisition of a minority holding, while the Eriksson family retained a majority holding of more than 50 percent. Last year, however, the opportunity appeared for a star recruitment in the shape of Johan Andersson who has extensive experience of agricultural operations from highly senior positions at Scan, Danish Crown and Lantmännen. The recruitment entailed Johan Andersson acquiring 15 percent of the shares, with the other two owners reducing their holdings. The Eriksson family decreased to 49 percent and Mellby Gård to 33 percent. Accordingly, no individual shareholder has its own majority in the company.
“I know this industry and am convinced that BM Agri has a fine future ahead. After many years as an employee, I am pleased to have the opportunity to also be a partner,” says Johan Andersson.
BM Agri trades mainly in wheat, malt and rapeseed, purchasing from farmers throughout Sweden. The company maintains very small inventories of its own, collecting directly from the farms instead. This permits cost-efficient and flexible operations. The largest individual customers are Viking Malt, one of the world’s leading suppliers of malt for beer breweries, Absolut Vodka, and oil and fat company AAK. A large proportion is also exported.
BM Agri is also a fertilizer retailer, purchasing from Yara of Norway, for example, and selling to Swedish farms.
“Our competitive advantages include having no cause to exert pressure on prices paid to farmers for grain, since we do not make purchases of our own for processing. Furthermore, as a small company, we can maintain good personal contacts with those who sell to us, providing them with smooth and responsive service,” says Johan Andersson.
He points out that one of the keys to this industry is having good access to ports, since increasing quantities of cereals are shipped by boat, mainly for export. BM Agri has a well-developed network of port facilities through lease contracts.
“We have relatively small volumes compared with Lantmännen, for example, but we have the highest share of exports among companies operating in Sweden. When, for example, we fill a boat with 3,000 tonnes, 80 lorries drive simultaneously to collect the grain directly from the farms around Sweden,” he says.
In 2017, profitability was restored following a difficult 2016 in which a stock of fertilizer had to be written down due to falling prices, and several companies within Lantmännen stopped purchasing grain on the open market to buy internally instead, within their own cooperative.
Johan Andersson took office in May 2018, as the sun parked itself over Sweden. The summer’s drought will go down in history as the worst in southern and central Sweden since the Swedish Meteorological and Hydrological Institute began taking measurements in the 18th century. This will affect operations with reduced volumes and poorer grades in future financial years.
“We sympathize with the farmers whose harvests were halved and of poorer quality. Many have not been able to deliver what they had previously sold through forward transactions. As a result, we have been forced to exit transactions we had previously entered into, pressuring profitability both for us and for our growers,” says Johan Andersson.
Accordingly, Johan Andersson has taken over a company facing plenty of challenges. He nonetheless views the future with confidence:
“We will consider how we can develop the business with additional products. It is also important that we take new steps in digitalization,” he says.
“With my background from organizations with thousands of employees,” he continues “it is unaccustomed but simultaneously exciting to work in a small company that is challenging the market. From that point of view, it is important for me that we have long-term owners contributing strength and stability.”