ForFarmers first quarter UK feed sales down but overall profits up

ForFarmers sold less feed in the UK in the first quarter of 2017, which it blamed on challenging market conditions, including the effect uncertainty over Brexit on investment decisions.

The company’s profitability in the UK was also hit by the strongly devalued pound, compared with the first quarter in 2016, which led to a ‘translation loss’ in its consolidated result (in euros).

However, growth in the Netherlands, Germany and Belgium more than compensated for this, as the company saw a small rise in profitability in the first three months of the year.

Overall, the total volume of compound feed sales increased in the first quarter of 2017, with revenue up as a result of this and higher raw material prices, which it said were being passed on to customers.

“The reported gross profit has increased somewhat, including a significant negative currency translation impact of the devaluated Pound sterling,” the company said in its first quarter trading update.

Challenging UK market

But it stressed that market circumstances in the UK ‘remain challenging in the short term’, with volume declines particularly affecting the ruminant sector.

The company said: “Farmers are uncertain about the (financial) consequences of the Brexit for the agricultural sector. They are therefore cautious in taking investment decisions with respect to possibly increasing of their herd size or expanding or improving their farm businesses.”

Low milk prices have forced dairy farmers to reduce herd size, with recovery taking longer than expected. For the pig sector, the company reported that the ‘prolonged volume decline has been brought to an end’ during the quarter, although ‘an increase of the pig herd is, however, not yet evident’.

“Moreover, the volume decline can be explained by the divestment, in the second quarter of 2016, of the non-core activities Wheyfeed transport and Leafield,” the company said.

But it said the reorganisation in the UK in the second half of 2016 had already led to a decrease in operational costs in the first quarter of 2017, although these were not sufficient to compensate the decline in margin. The new central office in Bury St. Edmunds, where several administrative departments have been brought together to improve operational efficiency, has recently been opened.

On the up side, the volume of feed sales increased in the Netherlands, Germany and Belgium. The volume growth includes like-for-like growth and the contribution of the pig feed company Vleuten-Steijn which was acquired in October 2016.

Reducing in-feed medication

Highlighting its Innovation programme aiming to provide advice and nutritional solutions that lead to healthier livestock and greater efficiency, ForFarmers said it was proactive in reducing in-feed medication, particularly in the UK ‘where this approach is still commonplace’.

It said: “Accordingly, a number of AMR conferences have been organised by ForFarmers in the past quarter to discuss this topic with UK pig farmers, veterinarians, processors and retailers.

“Recently, a concept to support gut health has been launched as part of the VIDA piglet feed range that is offered to all ForFarmers customers. Aside from a further improvement of the feed conversion, this concept leads to greater piglets vitality and higher growth rates.”

ForFarmers CEO Yoram Knoop said: “We are satisfied with the further roll out of our Horizon 2020 strategy which has resulted in a growing Total Feed volume and cost control. We continue to focus on selling more Total Feed to existing and new customers. Generally, our customers are in a better financial position than a year ago.”

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Editor of LBM titles Pig World and Farm Business and group editor of Agronomist and Arable Farmer. National Pig Association's webmaster. Previously political editor at Farmers Guardian for many years and also worked Farmers Weekly. Occasional farming media pundit. Brought up on a Leicestershire farm, now work from a shed in the garden in Oxfordshire. Big fan of Leicester City and Leicester Tigers. Occasional cricketer.