15 May, 2018 Case studies
Over the years, Origin Enterprises has been impressed by Coface’s expertise and commitmentDownload Case Study
Leading agri-services group, Origin Enterprises, reaps benefits of Coface’s flexible credit insurance and market knowledge.
Origin Enterprises was established as a standalone business in 2007 but its history goes back more than 100 years as part of the Irish Agricultural Wholesale Society (IAWS) which supplied fertiliser and seed to Irish farming cooperatives.
Now a public company listed on the UK and Irish stock exchanges, Origin Enterprises continues to supply agri-inputs and has also expanded into the provision of specialist agronomy services. It works directly with larger commercial cereal farmers to implement the latest soil, seed and crop protection technology in order to increase yields, even helping one UK farm to achieve a new world wheat yield record in 2015.
The Group currently operates in five countries: it has a 40% market share in the UK and 33% in Ireland and has acquired leading agronomy businesses in Poland, Romania and Ukraine. As well as consolidating its position in Eastern Europe, it continues to invest in R&D and make strategic acquisitions, including Pillaert-Mekosan, a UK Belgium-based fertiliser and nutrition business.
A flexible solution
For the last ten years, Origin has used Coface credit insurance to mitigate trade risk within its UK and Ireland operations and support its growth ambitions. “As a PLC, we want to protect ourselves from sudden shocks to the system,” says Group Treasurer, John O’Connell. “The cover provided by Coface Global Solution is cost-effective, flexible and the Terms and Conditions are right for us.”
Coface enables Origin to surmount the credit risk challenges within its sector, as John explains: “Agriculture is very different from retail or distribution businesses because the farm cycle is spread over one year and the credit terms are three to six months, rather than the conventional 30 days. Coface’s standard terms give us all the flexibility we need to compete in the market.”
In addition, the discretionary element of the policy gives the Group greater control of its own credit risk: “We provide agronomy services to more than 8,000 customers and it is not realistic to apply for a dedicated limit for each of them,” says John. “With Coface, we apply for credit limits on new customers but after a year, we can apply a formulated limit and make claims, provided we have evidence of their trading history. We only require dedicated limits for about 700 customers which helps us cut down on our administration.”
Over the years, Origin Enterprises has been impressed by Coface’s expertise and commitment, as much as the quality of its credit insurance cover.
“Coface has a very good ear for the agriculture market in the UK and Ireland,” says John. “It can be difficult to evaluate credit risk in the sector because so many farms are sole traders and don’t file accounts. However Coface are a valuable source of information about potential and existing customers and will go out and meet a customer if necessary. That adds significant value for us.”
He adds: “If insurance isn’t there for a rainy day than its value is debatable. Whenever we have had to make a claim under the policy, Coface has acted honourably and the process has been managed smoothly and expeditiously. In one case, the debtor had further assets and Coface was able to negotiate a settlement that reduced the amount outstanding to an immaterial level.
“Overall, we have been very happy with the level of service we have received from Coface and would recommend them to other companies.”
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