Cost squeeze pushes glasshouse producers into administration

Two major UK producers of lettuce and herbs have gone into administration amid rising energy costs, inflationary pressures and labour challenges.

Chichester-based Madestein and Fresh Willow, sole suppliers of curly leaf lettuce to UK supermarkets, are continuing to trade while administrators consider the options for the companies.

See also: Dwindling farmer confidence will dent food production, NFU warns

Steve Baluchi and Philip Armstrong, of specialist business advisory firm FRP, were appointed as joint administrators on 11 April 2023.

Madestein and Fresh Willow specialise in glasshouse-grown lettuce and herbs using advanced hydroponic growing processes.

They had invested substantial capital in promoting a proposal to develop a new glasshouse on a greenfield site, but this was unsuccessful.

It is understood that this investment, combined with high energy costs, other inflationary pressures and labour challenges, had left the companies unable to meet their financial obligations.

Mr Baluchi and Mr Armstrong are continuing to trade the companies to allow continuity of supply while they consider all options, including the sale of the businesses as a going concern.

Savills and specialist asset advisory company SIA Group have been instructed to jointly handle the sale.

Mr Baluchi described Madestein as a “well-established business with an excellent customer book and a deservedly strong reputation in the market”.

“Unfortunately, despite the best efforts of the management team, it has not been able to navigate through the challenges facing the food production sector at this time,” he said.

Challenges

Jack Ward, chief executive of the British Growers’ Association, said the organisation had been cautioning against those challenges for the industry in general for some time.

“In many instances, the returns for growers are not covering the cost of production. You cannot run a business when you are getting less for a product than it is costing you to produce it,” said Mr Ward.

Madestein and Fresh Willow combined occupy a freehold site with 26,829sq m glasshouses, adjoining storage, packing and office accommodation.