BM Agri

2022 was a year of global turmoil, rising inflation and war in Ukraine. These events have had a major impact on commodity markets, where prices have increased significantly. Higher prices, high demand and a weak Swedish krona have worked to BM Agri’s advantage. Before the year began, BM Agri set the target of reaching SEK 1 billion in net sales and an operating profit of one to two percent. This goal was achieved by investing heavily in the 2021 crop and being able to quickly adapt to the current situation and time the market. BM Agri achieved net sales of SEK 1,177 million and a profit of SEK 29.1 million – making 2022 a unique record year!

LARGE INVENTORY AND TIMING ENABLED RECORD
Ahead of the 2022 financial year, BM Agri purchased large quantities of the 2021 crop that was sold off last spring. This investment tied up a lot of capital, but was made possible with the help of the company’s owners, who contributed part of this capital. The existing stock purchased in 2021 was sold during the spring to new and existing customers and to destinations the company had not previously sold to. At the beginning of the year, BM Agri identified rising prices in the market, and the outbreak of the war in Ukraine increased demand along with the price of grain, which has never been higher. The company’s CEO, Per-Arne Gustavsson, explains:

“We had full stocks when the price reached its peak and were therefore able to sell off the 2021 crop when the price reached a record level. The low value of the Swedish krona also contributed to the record year. We export more than we sell within Sweden, and so we find it gratifying and beneficial to have a weak Swedish krona. For this reason the currency has had a positive impact on us, boosting our ability to pay a reasonable price to farmers.”

Another reason for this year’s success is BM Agri’s employees, whose ability to adapt to market fluctuations and prevailing circumstances has contributed to the record profit.

“We have some of Sweden’s best grain merchants in the company, a stable and effective finance department and owners who provide good input via the Board,” says Per-Arne Gustavsson. “And we shouldn’t forget our suppliers, the farmers. Without them, we’re nothing. It’s our suppliers who entrust BM Agri with managing their grains and oilseeds and who buy fertilizer from us. Many are both suppliers and customers, which means we work closely together.”

SUSTAINABILITY AIDED BY DIRECT FLOWS AND TRACEABILITY
BM Agri is experiencing greater demand from its customers for sustainability, which the company is constantly working to improve. In 2021 Absolut Company declared that 400 farms in southern Sweden needed to adapt their operations to a number of sustainability requirements. These include increasing traceability and reducing the use of fossil fuels. BM Agri offers traceability throughout the chain, from the farm where the crops are grown to the customer. Another sustainability initiative that has also reaped economic benefits is the shift from large boat loads of fertilizer to truck flows going straight from producer to customer. The price of sea freight had already risen between 100 and 200 percent the previous year. This led to fertilizer becoming a very expensive commodity to trade. That is why it has been advantageous to have direct flows, as BM Agri then avoids major investments in fertilizer and, primarily, expensive transport costs. At the same time, driving distances and thus also the climate impact are minimized through the direct flow of trucks.

FURTHER EFFORTS TO IMPROVE PERFORMANCE
Going forward, BM Agri wants to continue to develop and make everything a little better all the time. With a new business controller and new business models, the company will become better at quickly following up on deals to gain an overview of the outcome at an earlier stage, something which they hope will lead to them having the confidence to do even more, and bigger, deals. This will generate greater profit and enable BM Agri to take a stronger position in the market.

“Farmers enjoyed a good harvest in 2022, so right now there’s a lot of grain to trade, which is positive, but less fertilizer, which may make it difficult to achieve the same level of sales next year,” says Per-Arne Gustavsson. “The company is expecting the market situation to have normalized to a greater extent in 2023, with prices remaining high for grain, fertilizer and shipping – albeit not as high as in 2022.”