ForFarmers faces Brexit fallout as drivers flee UK

The company reported that the reliability of its service to its customers in the UK was negatively affected by a shortage of drivers.

“We had an issue with our delivery given the higher than usual turnover of drivers and the fact that these appeared difficult to replace [as] many non-UK drivers are leaving the UK due to concerns around Brexit,”​ said Caroline Vogelzang, director of investor relations and communications at ForFarmers.

The feed group said it incurred additional costs to deploy third party logistics providers, in order to ensure regular service levels in the UK, meaning its operational costs in that market were temporarily higher. It said the rollout of its previously announced supply chain optimization plans in that market is delayed due to those developments.

However, Vogelzang said ForFarmers is already seeing signs of recovery in relation to the logistics challenges, due to the actions the company has taken.

When asked how the group is managing the insecurity generated by Brexit in general, she told FeedNavigator:

“We have mentioned in previous releases that there is uncertainty in the UK about the consequences of Brexit, leading to the fact that farmers show caution in taking decisions to expand their businesses. ​

“Having said that, we also have stated previously, and repeated this today, we are positive about our mid to long term UK strategy given the low self-sufficiency rate particularly in the swine sector in which we have a prominent position.”​

While market circumstances remain difficult in the UK, the company reported increases in its Total Feed [comprising feed, products, advice and tools] volumes in that market for the first time this year.

The company said it sold more volume in Q3 in all the countries in operates in including the Netherlands, Belgium, and Germany; it reported limited growth in its underlying earnings before interest, tax, depreciation and amortization (EBITDA) for the third quarter.

Volume growth in compound feed was larger than in its Total Feed portfolio in all markets, it added.

Dutch dairy feed results defy expectations 

Contrary to its earlier announced expectation that feed volumes in the Dutch dairy sector would decrease following the local phosphate measures​​ enforced in March, it saw an increase in volumes of dairy feed sold in the Netherlands.

“The development in the [Dutch] dairy sector was, indeed, not expected.​

“Farmers [in the Netherlands] are now focusing on optimizing milk production per cow, also due to the current milk price, and, consequently, we see the demand for performance feed increasing. It is noted, though, that the number of dairy cows has decreased due to the enforced measures,” ​added Vogelzang.

ForFarmers said all indicators point to an improved financial situation for farmers in general.

“Milk prices are higher than last year. Pig prices have started to decline in the third quarter of 2017, but are generally still on a historically high level,”​ it said.