MBM Produce has gone into administration and its Bicker and Holbeach sites will cease trading on July 31.
The supplier, which has traded as MBMG since a merger in 2006 between MBM Produce Ltd and FW Gedney, appointed administrator Grant Thornton on July 10.
Grant Thornton’s Nick Kidd told freshinfo: “We were continuing to trade the fresh produce slice and dice vegetable business at Holbeach and the warehousing facility at Bicker while we pushed for going concern sales of these sites. We did have interested parties, but they have all walked away. These were loss-making businesses and so we have now moved into a wind-down phase.”
Kidd added that although the cessation of trading could have taken immediate effect on Wednesday when potential buyers were lost, administrators have acted to protect customer relationships and trade until the end of the month.
He blamed the firm going into administration on “pressure from its blue-chip customers on pricing and low margins over a sustained period of time - the prices have just been run down and down”.
As administrator, Kidd said that it was “unlikely” that MBMG’s creditors would see the money they were owed and that the cessation of trading at the two sites would lead to redundancies. MBMG has served all sectors of the industry including retailers, processors, wholesalers, caterers, large foodservice operators and the export market. The firm employs some 500 people in the UK. Its other sites around the country are continuing to trade.
QV Foods purchased the potato retail and foodservice division of MBMG in February, but historic liabilities for the division remained with MBMG.
Many in the industry were not surprised by this latest turn of events for what was initially a potato trading company dating back more than 30 years. One source in the potato sector said: “It is sad for the employees and frustrating for the suppliers as they won’t get paid, but really it has come as no surprise to anyone in the industry. The writing has been on the wall for the last 12 months.”
Others dated the problems of the company back several years, to the loss of key supermarket accounts with Sainsbury’s and Tesco and a change in management.
Another source said: “It is very important that businesses remember you can’t just run a set of accounts; we deal with very volatile products in this game and it needs people who understand that in charge. The day they removed the original directors of MBM, with all their expertise, was when things started to go wrong.”
Other industry insiders were much more direct. “The way the business has been run is a shambles,” said one. “Relationships with customers were very badly managed. Now there is the risk that it will take other businesses down with it. It is no great surprise, but it is a shame that it has happened.”
The failure of a well-known name in the industry also raises a host of questions for those that continue to trade, especially in a week when a government report has raised the question of domestic food security.
One insider said: “We can’t keep talking about food security if we don’t have the firms in place to supply year round. We can’t afford another company going to the wall like this. We need to produce more food so we need to be more in agreement along the supply chain on what is a sustainable price. Growers are not covering their costs and packers are not making any money. They just cannot continue to invest if they are seeing no return. It is all very well for retailers to discount a bag of apples to 99p, but when they cost 110p to produce, this is what happens.”
No comments yet