The mild winter weather so far, combined with high forage stocks – the reverse of the previous year – have reduced the Carr’s Group’s UK finished feed and feed products sales.
A trading statement released at the company’s annual general meeting this week noted that the Agriculture division traded below the Board’s expectations during the first three months of the financial year, with full year performance now likely to be “moderately behind”.
Agricultural markets are challenging both in the UK and US. Domestically, the Group says lower cattle prices and downward pressure on milk prices, while input costs rise, are depressing livestock farm incomes. These factors, combined with the continuing uncertainty over Brexit, are reducing farmer confidence. At the same time, the “unseasonably mild and dry weather seen over the prior year” and large forage stocks on farms have led to reduced farm spending on feed and animal supplements. As a result, the Group has seen reduced UK sales volumes over the first quarter, despite a good start to the financial year.
In the US feedblock market, Carr’s says demand has fallen in line with reduced cattle prices and a delayed start to winter feeding. However, it notes that cattle values are starting to rise, while most US states now have sufficient moisture to sustain grass growth, after a sustained dry spell, which is favourable for feedblock demand.
“Despite a challenging start to the year in our Agriculture division, due to a number of weather and market factors, we are confident in the medium-term prospects for Agriculture,” says Group chief executive Tim Davies. “These near-term challenges in Agriculture are expected to be offset by a stronger than expected performance in our Engineering business.”