Farm Group leaves £4M of bad debt for Dairy Crest

13-Feb-2012 - Last updated on 14-Feb-2012 at 11:14 GMT

The Farmright recievership has created £4M of bad debt for Dairy Crest

Farm Group’s decision to go into administration threatens 133 jobs and has saddled Dairy Crest with £4M of bad debt.

Grant Thornton has been appointed administrator at four subsidiaries of the Farmright Group – Farmright, Quadra Foods, Dairystix and Stickpack Europe.

A statement from Grant Thornton blamed the group’s failure on its inability “to attract the equity funding it needed to invest in new technology and to break into new markets in the UK and overseas”.

Dairy Crest said that the £4M bad debt provision was the total debt owed by Quadra Foods and that it was examining options to reduce the amount involved.

“We expect to treat any charge as an exceptional item in 2011/12 and as such it will not impact on our dividend considerations,” according to a statement from the milk, cheese and dairy products business.

Isolated incident

“Dairy Crest has annual sales of £1.6bn and this is an isolated incident. It will have no material effect on our year end borrowings.”

City analyst with Investec Securities Nicola Mallard described the bad debt as a headache rather than a serious problem. “It’s not a big profit hit – just a bit embarrassing that it [Dairy Crest] has been lending money to someone who could not pay it back,” Mallard told FoodManufacture.co.uk

“But the firm is not the first to find itself in this position and it will not be the last.”

Meanwhile, redundancies at Farmright cannot be ruled out, said Grant Thornton. Farmright employs 11 people and is based at Elberton in Gloucestershire.

Quadra Foods runs a 5,570m² dairy processing site at Langage Science Park in Plymouth. It employs 122 people and is best known for its Dairystix coffee shop and airline liquid milk pouches.

Dairy processors

The technology involved in the production of the pouches is owned by the other two subsidiaries.

Quadra Foods buys millions of litres of milk from farmers across the UK which it then sells on to dairy processors.

The administrators were reviewing the position of both Quadra Foods and Farmright in order to establish if trading can be continued.

Grant Thornton is also studying if all or any part of the Farmright businesses can be sold.

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Posted by DB, 13 February 2012 - 20:51 GMT

Farmright is the part of the company that buys milk from the farmers not Quadra Foods. Quadra seems to be the victim of bad management from the top to the bottom of the Farmright Group. Ask the farmers who have not been paid in months for their milk by Farmright. Various farmers' forums back that up. Quadra Foods needs to be judged on what the company has achieved with the Dairystix product and the potential growth of this brand worldwide - not on the failings of the farmright.

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