A third quarter trading statement from feed manufacturer ForFarmers shows that UK feed volumes were down year-on-year for all species, but the rate of decline was slower than in the first half of 2020. Compound feed volumes declined by more than the company’s total feed offer.
UK ruminant feed volumes were under pressure in the July to September period. Dairy feed demand fell as producers reduced intensity as food service and catering sectors used less milk and dairy products due to coronavirus restrictions, while good summer grass growth also meant less need for supplementary feeding. Beef feed volumes continued their downward trend during the quarter.
Poultry feed volumes also dropped in line with the effect of coronavirus measures on foodservice outlets, while the company’s pig feed volumes fell slightly as the company continues to focus on more profitable customers.
ForFarmers’ overall UK margin per tonne declined due to a temporary deterioration of the product mix.
The wider ForFarmers Group of country businesses saw a 2.8% third quarter fall in total feed volumes, which was a smaller decline than in the first half of the year. Sales were stable in Germany and Poland, but fell in Belgium, the Netherlands and the UK. Compound feed volumes followed the same pattern, with a 3.7% drop compared to Q3 2019.
Group net revenues fell as both volumes feed materials prices were lower in the period, while gross profit for the quarter fell by 6.8% due to the reduced volumes. The Group has announced a €7 million cost savings programme by 2023 based on 2020 expenditure, through “operational excellence programmes and business process optimisation”. It achieved its previous €10bn savings drive which necessitated the closure of four feed mills, two in the UK.
“Volumes in the third quarter were lower than in the same period last year, when there were no COVID-19 measures,” ForFarmers chief executive Yoram Knoop. However, compared to the second quarter, when the coronavirus impacted all, volumes increased somewhat.
“As of March, it has certainly not been an easy time for farmers, who saw both their markets decline and prices for their products come under pressure. It remains to be seen how long COVID-19 will still lead to drastic measures. Farmers, consumers and companies remain cautious in their spending.
“We will continue to invest in innovative concepts and solutions to help our customers achieve better returns, especially in changing market circumstances. That is why cost efficiency and scale are essential – we are therefore making the next step in enhancing the efficiency of our organisation.”