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BM AGRI
Celebrating 20 years in
business in a turbulent world
In 2023, the BM Agri general partnership turned 20 years old, but it was
a low-key celebration due to a challenging intermediate year. BM Agri
attempted to address difficult circumstances such as war, inflation and
extreme weather by hedging prices on the commodity exchange and
preparing for future years.
When BM Agri’s CEO Per-Arne Gustavsson looks back at 2023,
he describes it as being full of challenges after the record enough, and the gains couldn’t quite offset the large volumes of the
year of 2022. The company had its 20th anniversary, but
there was no big celebration.
“We should have celebrated more last year when we broke records for
both net sales and earnings,” says Per-Arne Gustavsson. “We’d rather
celebrate a year when we made money.”
CHALLENGING EXTERNAL EVENTS
When Russia invaded Ukraine, grain prices soared, which meant that
the year’s harvest was purchased at a high price and since then, prices
have plummeted.
“From the beginning of the year until the spring, prices fell, and this
meant that we lost a lot of value in what we had in stock at that time,”
says Per-Arne Gustavsson. “It was a tough start. We saw a decline in
customer demand and had to agree to longer delivery times, longer
payment terms and other things to secure business.”
When the summer came, with great fluctuations in the weather,
the farmers had a hard time. First they were hit by drought, followed
by rainfall that almost drowned the crops. For this reason, the 2023
harvest was much smaller than usual.
“Of course, this isn’t good for us,” says Per-Arne Gustavsson. “We
make our living trading grain, oilseeds and fertilizers and want to have
a lot to trade. In this case, all commodities were affected, but it was
mainly trade in grain that was affected – in terms of price, volume and
quality.”
COPING WITH CHALLENGES THROUGH THE
STOCK MARKET
When BM Agri looked ahead at the start of 2023, expectations were
high, with hopes of a billion Swedish kronor in net sales and turning a
profit. Unfortunately, it turned into an intermediate year. Net sales were
at the expected level as the company delivered large volumes to its
customers, but low prices and poor-quality raw materials affected the
business, resulting in a loss for 2023.
“We’re not satisfied with this at all,” says Per-Arne Gustavsson. “The
year has been full of challenges that we couldn’t avoid. We’ve simply
had to do our best to cope by hedging our trading on the commodity
exchanges so we can make money that way. Our customers under
framework agreements also continue to buy from us, which is positive.
Absolut Company buys a lot of wheat and extended its three-year
contract during the year.”
Unfortunately, the trading on the commodity exchanges was not
2022 harvest that lost value.
“Predicting weather, supply and demand is something we’re used
to,” says Per-Arne Gustavsson.“Predicting war and its impact on the
amount of grain leaving Ukraine is something we haven’t been able
to plan for. With another war between Israel and Hamas affecting oil
prices and exchange rates, we’ve had to adopt a war perspective in
our risk analyses during the year. We’ve done what we could, and it’s
been clear that all our colleagues have been struggling to improve
our financial performance. Unfortunately, the external circumstances
haven’t exactly been in our favour.”
NEW EMPLOYEES ENSURE FOLLOW-UP
During the year, a marketing controller and a sales rep/purchaser were
hired to enable BM Agri to develop further and increase its presence
in Skåne. The company now receives better reports and can quickly
follow up on transactions and get an overview of the potential outcome.
“We now receive regular reports and up-to-date figures on inventory
levels and boat positions,” says Per-Arne Gustavsson. “This has meant
that our reporting is much better on both a weekly basis and at the
end of the year. We now have a better understanding of what we have,
where we have it and why it is the way it is. We’re also pleased to
welcome new employees to the company.”
Preparations for 2024 are currently underway, and some business
has already been finalized. BM Agri has made a strategic decision
to receive fewer physical commodities for 2024, as possessing high
levels of inventory is capital-intensive. There will also be further work
on back-to-back trading and more transactions across the Paris and
Chicago exchanges.
“We’re simply choosing to take less risk for future years,” says
Per-Arne Gustavsson. “We’ll be working more in Sweden with both
farmers and the companies we usually do business with.I’m absolutely
convinced that this is an intermediate year and that next year will be
much better in terms of earnings.”
Per-Arne Gustavsson, CEO
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