Administrators have been appointed at AF Biomass, a subsidiary of the Norfolk-based AF Group.

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A statement was released to members of AF, the agricultural buying group formerly known as Anglia Farmers, which has its HQ in Honingham Thorpe, near Norwich.

AF Biomass, which sources straw for the energy, food and farming sectors, has contributed more than £800,000 to the AF Group since it started in 2013, it was confirmed. It marketed straw used in straw-fired power stations, for animal feed, animal bedding and used by vegetable growers.

The statement from the AF Group was posted on Twitter by a farmer and also shown to this newspaper. 

It said: "An inter company debt of £1m owed by AF Biomass to AF Group will not be fully recovered by the administrator. However, AF members who supplied straw in 2021 have been paid."

The statement announced: "Following a review of AF Group’s strategic plan and in the context of a volatile and fast-changing market, the directors have concluded that AF Biomass has no realistic prospect of being able to meet its contractual obligations to supply straw to the power stations.

"In these circumstances, the directors have been advised that AF Biomass is insolvent and cannot continue to trade. It has therefore been decided to appoint administrators to oversee the administration of AF Biomass Ltd."

AF Group chairman Nigel Savory (pictured) said in the statement: “There is no way AF Biomass can trade its way out of the current position. With Brexit, changes in farm subsidies and a focus on climate change mitigation, our members are facing significant disruption to their businesses and our response has been to put members at the centre of our plans.

"Our focus today is on our costs, our procurement intelligence, technology and delivering the highest standard of service to our members. Unfortunately we must exit certain legacy businesses but I am certain that this difficult decision will benefit our members overall."

The statement added the market for straw had '"changed dramatically" since the establishment of AF Biomass in 2013.