Fallout for Scots farms after £50m Aitkens collapse
Contributing to this catastrophic shortfall has been a major discrepancy between the stocks of grain appearing in the company books and the reality of what was actually in store.
Most of the likely financial loss will fall on cereal growers in the south of Scotland and the north of England. Dozens are predicted to face six figure losses and, it is understood some growers are down by more than a million.
These unsecured creditors delivered their grain into the four main bases operated by Alexander Inglis. The business, trading in grain and fertilisers, has been under the management of former Scottish rugby captain Jim Aitken since 1985 when he became the majority shareholder after taking over from the Inglis family.
Apart from the main base at Ormiston, Tranent, the company had expanded to operate stores at Charlesfield, St Boswells, Swarland, in Northumberland and Errol in Perthshire. Combined these units were estimated to be capable of storing in excess of 200,000 tonnes of grain.
The Administrators, Chad Griffin and Thomas MacLennan of FRP have now confirmed that stocks of grain held by the company have been over-estimated by around 30% with sales being made in order to cover for adverse moves on the grain futures market.
Recovery from this ‘short stock’ position did not prove possible the Administrators reckoned because of the company’s cash flow situation. They also comment that trading conditions were difficult in recent years with narrow margins in the grain market as well as restrictions on trade last year due to the covid pandemic.
In addition to there being an actual shortage of stock in store, the Administrators’ findings show that wheat stocks at 30,000 tonnes were 90% lower than growers’ claims while 50,000 tonnes of malting barley grain stocks were 60% less than farmers who had supplied the grain claimed. Other grain stocks of oats and feeding barley were also lower than appeared in the company books.
Most of the grain in store - and including grain that has already been shipped out - has lost its identity after being lumped into heaps with grain from other farms.
The ownership of the grain in store is still being challenged with some customers having paid for grain but having left it in store. They face a double hit having already paid for the grain.
Also, some suppliers have claimed they have retained title on the grain in store and are pursuing these claims. A further complication comes with customers storing their grain in Inglis’s premises. The merits of such claims are still being assessed, according to the Administrators.
Not long after the company went into Administration a spokesman for NFUS commented that the collapse of the company would have a significant impact on many local rural communities and the agricultural sector.
The truth of that observation has arrived with a list of around about 200 creditors including many local haulage contactors and tradespeople. As Brian Henderson noted in Friday’s Scotsman, these unsecured creditors stand to lose just over £6 million.
Few are likely to see any meaningful financial reimbursement for their services with preferential creditor and company banker, Macquarie Bank, standing top of the queue.
Part of the company’s financial problems can trace back to 2010 with a costly takeover of another grain trading company Philp Wilson. Aitken reckoned the exposure to Philp Wilson was in the region of £20 million.
Part of that deal saw Inglis become involved in property development at Wallyford in a joint venture under the title East Lothian Developments Ltd but the Administrators reported this venture has not delivered the forecast level of returns due to ‘increased cost overruns.’
With the 2021 harvest approaching, one of the first actions of the Administrators saw them put the various grain store storage sites on the market.
The Administrators realised the importance of sorting the ownership of these premises out quickly. Following advertising and the setting of a closing date, eleven offers for the properties have been received and all four properties are currently under offer with the Administrators targeting completion of any property transfers by the end of this month (July).
A message from the Editor
Thank you for reading this article. We're more reliant on your support than ever as the shift in consumer habits brought about by coronavirus impacts our advertisers. If you haven't already, please consider supporting our trusted, fact-checked journalism by taking out a digital subscription.
Want to join the conversation? Please or to comment on this article.