Farming may take longer than other sectors to rebound from recession, Lantmannen has warned, as it credited a cost-cutting drive for helping it achieve its first quarter of earnings for more than a year.

The Swedish co-operative, which is owned by 40,000 farmers, said that while the global recession appeared "to have hit bottom", agriculture could "take longer to recover from the downturn than other industries".

"Times continue to be tough for large portions of the sector, especially dairy and grain production driven by low prices," Lantmannen chief executive Per Stromberg said.

"Many farmers are struggling and are focusing on getting their costs down. This continues to be a very challenging situation."

Poor grain quality

This downturn would continue to hit sales at the group's agriculture and machinery divisions, where revenues continued to slide in the July-to-September period.

The core Lantbruk agriculture business reported a SEK41m operating loss, hurt by delayed fertilizer purchases as farmers await the abolition in January of a nitrogen tax on nutrients.

The unit was also hurt by a quality hangover from the 2008 crop, which meant much grain fell short of buyers' requirements.

"The quality problems have resulted in higher imports to meet customer demand and higher transportation and handling costs for transporting grain," Mr Stromberg said.

Back to the black 

Nonetheless, helped by better performances in food divisions and a dearth of one-off charges the group reported earnings of SEK168m for the period, following three quarters in the red – with losses totalling SEK287m – and one of breakeven.

"Our initiatives for confronting the downturn are beginning to have an effect on the bottom line," said Mr Stromberg, who in August detailed plans to cut annual costs by SEK400m by 2012, involving the loss of 400 jobs.