The total feed volume that it sold in Q3 (like-for-like) also decreased slightly.
Besides the market challenges in general and the cautiousness of farmers pending the outcome of the Brexit on the agricultural sector specifically, ForFarmers said the devaluation of sterling has had a negative impact on the contribution of the UK to its consolidated results.
ForFarmers said a reorganization of its operations in the UK is now underway: “Furthermore, plans are currently being finalized in order to optimize the supply chain. The positive effects of the reorganization and the process changes will contribute to the results as of 2018.”
Dutch market
However, in the Netherlands, ForFarmers said it shifted higher volumes of feed in the quarter than in the comparative period last year, particularly in the ruminant and poultry sectors.
It noted a combination of a significant volume growth for layers but less volume for broilers as the demand for welfare concepts such as lower density housing, continues to grow.
“In swine, although import demand from China had a positive impact on the price for pig meat this has as yet not led to a structural improvement in this sector which still suffers from a reduction in the number of animals. Accordingly, in line with the first half year, less volume was sold to [Dutch] pig farmers in Q3.”
Its organic feed line, Reudink, reported strong volume growth in the quarter in that market.
ForFamers also announced that a deal was struck between parties concerned to reduce phosphate production in the Netherlands: “The agreement comprises three pillars: giving premiums to farmers who reduce the number of cows, introducing a penalty discount for delivering surplus milk and diminishing the phosphate levels in compound feed.
“ForFarmers understands and supports these measures in light of retaining the derogation. The manner in which the agreed upon measures will be implemented remains to be seen, but will lead to some reduction in the volume sold to Dutch dairy farmers in the coming year.”
Germany and Belgium
The volume of ‘total feed’ sold in the German and Belgian markets also saw a hike in Q3, again in the poultry and ruminant segments, reported the feed company. “More volume was also sold in the swine sector in Germany, mainly as a result of adding a new dealer,” said ForFarmers.
However, on a like-for-like basis, the UK market did not perform as well as the company’s other markets, with fewer ForFarmers feed products bought by producers there in Q3 2016.
“The structural reduction in the [UK] dairy herd accelerated, due to the difficult market circumstances. This resulted in a larger decrease of volume in the quarter than in the first half year.
“The volume sold in the swine sector also dropped due to the reduced number of animals. This reduction started at the beginning of the year as a reaction to the low meat prices. In the meantime the price for pork meat has substantially increased in comparison with the situation in the first half year,” explained ForFarmers.
But the company remains optimistic about prospects for the livestock sector in the UK, in particular the pig sector following Brexit: “The production of the British swine sector currently meets 60% of local demand. Therefore, some 40% of the required pork meat needs to be imported. Given the fact that this has become more expensive following the devaluation of sterling, a growth in the swine sector could be expected in the medium term.”