BORDERS AND Lothian agri businesses have been devastated by the collapse of grain merchants Alexander Inglis and Son, and are amongst the 166 unsecured creditors UK-wide owed more than £6m by the group.

However, with huge question marks relating to the amount of grain held in storage by AIS and that held on farm by cereal producers, the total deficit for the company is estimated to be around £50m.

In May, 2021, AIS entered administration, leaving businesses more than £2m out of pocket, with a dozen farms facing individual losses of more than £100,000.
The group has experienced liquidity issues over the last two years, but the problems date back to 2010 when it took over the grain trading company Philip Wilson Ltd, costing £20m in stock exposure and various guarantees.

The Scottish Farmer has been told the collapse of the group was no reflection of the barley and whisky market but is due to subsequent land investment losses that had not delivered the forecast level of returns.

AIS held large quantities of grain at the time of administration, including that of customers who had bought in advance but left it in storage, third parties storing at the premises and suppliers claiming retained title for unpaid stock.
The administrators have found significant discrepancies between the claims from third parties over stocks held by the company, and what is actually in store. 

Wheat stocks are estimated to be around 30k metric tonnes – 90% lower than claims received, and malting barley stocks are 60% less. It is a similar picture for other grains such as feed barley and oil seed rape.

One of the farmers owed more than £100,000 by the group told The Scottish Farmer that they had lost an entire wheat harvest. 
“We have been totally hung out to dry! Not only have we lost all of last year’s harvest, which has taken a huge chunk out of our cash flow, but we already have to start thinking about how are we going to pay for next year’s harvest,” said the farmer, who has asked to remain anonymous.
“We can’t afford to take a break and are having to tighten our belts elsewhere. The report said the group had sold 90% of their wheat – where has this money gone?
“We all want answers but are being kept in the dark. We are almost being treated like criminals. We don’t know how long we are going to have to wait to receive any compensation.”

He added that many affected businesses have outstanding bills and contracts to be met.
“Lots of growers are tied into contracts to pay for fertiliser and seed but haven’t been paid for their grain, so it is a double whammy. Businesses will also have to tighten up on purchases of machinery and other items which means dealers around here will be hit as well. There are going to be ramifications across the supply chain.”

He said growers ahould have had protection in the form of an insurance charge on credit of their sales: “If you sell livestock though the market, so much is taken off for insurance. This doesn’t happen with grain; it is all done in good faith. There needs to be protection for growers.”

The grain stores and other facilities owned by AIS are currently under offer from buyers, and the SF was told that steps have been taken to ensure growers are protected for the 2021 Harvest.

“We understand the sites have been retained within the grain trade and quite a significant proportion of sites should be available for harvest 2021,” reassured NFU Scotland’s combinable crops committee chair, Willie Thomson.

He said that the collapse of AIS had been a ”bolt out of the blue” and added that there are numerous businesses who had been dealing exclusively with the group for decades, who are deeply concerned.

“This has caused a lot of upheaval and distress for farmers and the losses faced by some of the farms are frightening. It will take a long time to recover from this, but hopefully it is not going to be terminal for the businesses concerned.

“The big unknown is will there be any money left? It does look like there will be something, but it will be a pittance from what is owed.”

NFUS are offering legal advice for those out of pocket and have confirmed that other merchants will step in, to offer contracts made to growers for this year’s harvest. Mr Thomson also explained that longer term, the way forward must include looking at having farmer cooperatives dealing directly with maltsters and distillers.

“The worry is that there are only two or three grain merchants controlling the market price. Moving forward, we would want to retain more control in farmers hands through cooperatives, but this has to be industry led,” he concluded.