DAVID Loane, the retiring chief executive of Farmway, has described the role as the toughest job he has ever had.

Since he joined the farmers' co-operative eight years ago, he has had to tackle all the problems and challenges thrown up by BSE, salmonella, e-coli, and foot-and-mouth in addition to all the other problems, pressures and difficulties which have affected everyone involved in agriculture.

Eight years ago Farmway employed about 250 - today the figure is 98.

But next week, when Dr Loane hands over the reigns to Peter Hull, currently senior finance manager, it will be in the knowledge that the company can look forward to the future with confidence.

"It has been the toughest job I have ever had," said Dr Loane," There have been difficult times and really tough decisions ... very tough decisions ... but not unique to Farmway."

At a pre-annual meeting press conference it was announced that stringent cost control and pursuit of partnerships in grain trading and feed manufacturing had resulted in a profit of more than £250,000 in 2002.

Chairman John Hutchinson described it as a "solid performance, considering the general level of profitability in the supply industry".

The results for the year ending November 30 showed an improved margin on the previous year, despite a reduction in turnover of about £3m on core activities.

That was put down to the closure of Farmway's farm machinery business half way through the previous financial year and a reduction in the value of key commodities such as animal feeds and fertilisers.

Core turnover was £20.59m, compared with £23.53m in 2001, but when the GrainCo joint venture was included, the total turnover was £38.74m compared with £40.83m the previous year.

Costs were slashed by 12pc to £20.53m to produce a pre-tax profit of almost £255,000.

At the end of the trading year the company had no bank debt and had cash in hand of £167,000, a reversal of the situation three years ago.

The board is recommending the annual meeting to approve a payment of 3.5pc interest on members' share capital - £158,000 will be transferred to reserves taking the balance sheet to a healthy £4.3m.

Mr Hutchinson said it had been a year of continuing progress but also a year of major changes which had brought Farmway to a "very sustainable position giving us confidence to take the business forward".

Principal changes were moving from the old offices in Darlington to new ones at the Piercebridge complex and the joint feed manufacturing venture with Shropshire-based Lloyds Animal Feeds, which will help secure the competitiveness of Farmway brand feeds.

The joint venture grain trading business with GrainCo also made a valuable contribution and saw its activities expand into Scotland. It has secured a controlling share in UCOS, the single largest farmer-owned grain marketing business in Scotland.

"We are now one of the biggest traders in grain in the North-East and Scotland," said Mr Loane.

During the year capital projects totalling more than £600,000 were completed and £1m had been budgeted for the current year, including a replacement Countryware Store in Leyburn.

During 2002, the nine Countryware Stores generated an all-time record turnover and profits, underpinning some of Farmway's pure agricultural activities.

Its continued expansion into the equestrian market and even pet food supplies had paid dividends and offered further opportunities.

On Monday Farmway also announced its acquisition of Hallshaw Farm Supplies, a major supplier of animal health products in West Auckland. Principal shareholder and managing director, Kevin Shaw, will join the Farmway management team.

Mr Loane said it was another example of an exciting opportunity for Farmway to develop its existing animal health business. "It forms part of the overall plan to grow the company by acquiring strategically important companies which will enhance the existing offering to members and increase the specialist sales knowledge," he said.

Mr Hutchinson said Farm-way was carrying out a strategic review of its operations. "Necessary consolidation and rationalisation within the still very fragmented farm supplies industry has seen many once familiar names disappear," he said.

"As market pressures continue, there is a real danger that farmers' choice of supplier could be severely restricted. There is a greater need than ever for the maintenance of a strong, independent and financially sound farmer-controlled presence in the farm inputs market.

"To maintain a meaningful place in this marketplace, Farmway must be alert to, and have the resources to respond to, an increasingly unpredictable environment."

Mr Loane paid tribute to the company's farmer board of directors which, he said, was very active in planning the future of the business.

The annual meeting is at Headlam Hall Hotel, near Darlington, on Thursday