UK-based agriculture group Camellia is set to “wind down” operations at fruit supplier Bardsley England after “significant losses”.
Camellia took an 80% controlling stake in its fellow Kent-based business, in 2021.
At the time, Camellia paid £15.7m ($21.8m) for the stake and said it would also make a loan to Bardsley of £9.3m. A few months later, Camellia bought the remaining 20% stake for £1.7m.
However, the group has now revealed Bardsley “has consistently failed to perform to expectation incurring significant losses in each year”, causing an “unacceptable outcome”.
Camellia expects to close Bardsley’s operations in its second quarter, which runs to the end of June.
The group shuttered Bardsley’s farming operations in West Kent and closed the River Farm packhouse in September.
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In a filing, Camellia wrote that labour costs and high inflation in electricity and fuel due to the war in Ukraine have contributed to this decision.
“Although consumers have experienced significant food inflation, key retail customers have continued to resist any meaningful selling price increases,” it stated.
“The sales programme for the Bardsley’s 2023 harvest is in place but unfortunately prices achieved are insufficient to make any meaningful headway into the cost inflation experienced over the last two years. Attempts to mitigate cost increases through the restructurings undertaken in 2021 and again in early 2023 have had limited impact.”
The conglomerate recognised that most of the “UK top fruit sector is experiencing difficulties” and “many producers have removed orchards, discontinued planting and in the worst cases stopped farming”.
Nevertheless, Camellia said there was “no reasonable turnaround plan which would result in a profitable business” for Bardsley, as the apple grower seeks to maximise the value realisation from its assets.
At the time of the acquisition, Camellia believed that the deal would be “earnings enhancing” in 2022.