Brexit effect causing livestock farmers to put off investment decisions, feed firm says
PUBLISHED: 12:12 17 August 2018 | UPDATED: 12:12 17 August 2018
The Brexit effect is making UK livestock farmers reluctant to take investment decisions to grow their businesses, an animal feed farm said.
But ForFarmers, which is based in Lochem in the Netherlands and has its UK headquarters in Bury St Edmunds, said market circumstances in the UK appeared to be “improving”.
It saw UK feed volumes fall in the first half of 2018 compared to the same period last year, but also a higher gross profit, up 4.8%.
“Although the financial situation of livestock farmers has improved in the recent period, farmers (small and medium- sized farming businesses) remain reluctant to take investment decisions to grow their businesses, primarily because of the continuing uncertainty about the impact of Brexit,” the company said in its half-year report.
Total feed volume in tons was 1,448,152t in 2018 compared to 1,475,064t in the first half of 2017, a fall of 1.8%.
Compound feed volume in the UK was “more or less stable” as a result of growth in the ruminant sector and a reduction in the swine sector, it said.
Across the business, which also operates in Germany and Belgium, total feed volume rose by 2.1% to 4.8m tonnes, despite the UK decline.
Overall, gross profit, at 217.7m euros (£195m) was up 5%.
ForFarmers chief executive Yoram Knoop said: “We are satisfied with the progress we have made in the first half of 2018 with regard to all four pillars of the Horizon 2020 strategy. Our focus on improving on-farm returns was once again reflected in an improved feed efficiency for the animals of our customers. In addition it helped us win more new customers.
“Total Feed volume saw like-for-like growth and the relating gross profit showed even stronger growth. It is encouraging that we were able to realise a like-for-like improvement in underlying EBITDA (earnings before interest, taxes, depreciation and amortization) in all the clusters, with Germany/Belgium in particular achieving a satisfactory increase.”
Demand for feed increased in the ruminant sector, mainly because there was less roughage available, ForFarmers said. The number of UK dairy farmers was declining while the dairy herd remained fairly stable, with milk prices lower than in the first half year of 2017.