Comment: Hands free harvest points to agri AI revolution

Last week’s remote controlled harvest of the ‘Hands Free Hectare’ of spring barley at Harper Adams University College was the culmination of an impressive experiment to grow a crop using robotic machines. No human had entered the plot from establishment to harvest - even the collection of grain samples to see if the crop was fit to combine was performed by drone.

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While small scale and relatively ‘Heath Robinson”, the Harper trial shows the way the industry is moving. Both John Deere and AGCO completed deals to acquire precision and robotics technologies this month - these traditional engineering businesses see the need to invest to keep up in this field. At the same time, major crop protection businesses are increasing their “big data” capability through collaborations with data providers and platforms.

We are still at an early stage in the marriage of data and field machinery, linked to satellite observation of weather, water and crop progress. But it is clear we are on the brink of agricultural artificial intelligence (AI) that uses sensors to measure weather, soil and crop conditions, using data to decide when to authorise robotic systems to implement field operations.

In time, this automation must include the delivery of essential inputs to the point of use and post harvest collection, grading and transport of the resulting produce into the food chain. It will be socially disruptive, in terms of jobs, but also require capital investment.

Meanwhile, back in 2017, traders continue to grapple with the fallout of the long, drawn out combinable crops harvest, which is by no means complete in some areas. It is taking time and money to identify where the quality is, and which crops have been downgraded by exposure to wet weather after ripening.

Will the brave new world of artificial intelligence be able to replace this too?

Posted on September 12, 2017 .

EU OKs Red Tractor biofuel grain

The European Commission has granted a temporary approval for Red Tractor assured crops to be use in biofuel manufacture, with the new approval backdated to the former expiry date.

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The move follows the expiry of the previous five-year approval which had been reported as causing grain movement problems, although the extent of this is hard to gauge.

The Commission has informed all EU-approved biofuel assurance schemes that the Red Tractor scheme should continue to be considered as compliant with EU Renewable Energy Directive (RED) sustainability criteria until November 5th 2017, pending its full five-year re-approval. The previous five year approval had expired in early August, meaning   Red Tractor-approved crops could theoretically no longer enter the European biofuels market.

The NFU says the extension will end “the severe disruption experienced by farmers recently in ex-farm grain movements”. While the issue attracted plenty of comment on farmer forums, grain supplies to the two major wheat bioethanol plants were not disrupted, with no reported incidences of contract defaults. However, there could have been a problem had the Commission not reacted so quickly with a temporary approval. Even so, some merchants had to invest in contingency arrangements, and there is criticism that the approval was allowed to expire in the first place, with little communication of the problem and its potential impact before the busy harvest period.   

A Red Tractor spokesman stated that the body had applied for renewal in February this year. However, the process was complicated by the need to incorporate those growers who had converted land to arable production after January 1st 2008.

“Although all the required data was supplied, delays processing the information within the European Commission led to a lapse in recognition. This has now been resolved with the granting of a three-month extension. While the delay was frustrating, the good news is that the changes to the scheme have been fully accepted, so every grower in the scheme will benefit,” he said.

“The extension is also backdated to August 6th 2017, which means that any Red Tractor crops destined for the biofuels market will be recognised as approved by the RED. So, if any growers had issues with outgoing crops or grain, these should now be resolved. Furthermore, the Commission has confirmed that there is nothing outstanding or further required from Red Tractor, to achieve a full five-year renewal of the scheme, which should be granted in the next few weeks. 

NFU combinable crops board chairman Mike Hambly observes: “An expedited temporary solution was needed and this is what we have received. We are pleased the EU Commission has been able to respond to the need for market certainty and to avoid further disruption. The Commission confirmed that the Red Tractor standards, as expected, would qualify for approval. We look forward to full five-year re-approval early this autumn.”

 

Posted on September 12, 2017 .

UK lags EU within ForFarmers H1 results

Interim results from European feed manufacturer ForFarmers show a 34% fall in profitability and 7% in revenues at the UK operation, which the company attributes to Brexit uncertainty delaying herd size recovery. But Group results are up as EU farmers benefit from rising dairy and meat prices.

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ForFarmers’ UK arm made an operating profit of €5.50 million on revenues of €315.65m in the six months to June 30th 2017, compared to €8.38m and €339.1m in H1 2016. Domestic volumes manufactured at 1.48m tonnes, were also down on the prior period’s 1.54m tonnes.

The company says UK profitability was affected by currency, with a negative exchange rate of 9.1%, in addition to competition for sales in the pig sector as ongoing consolidation leads to fewer but larger accounts buying bigger volumes on longer contracts. But a new dairy product range, based on the Dutch Feed2Milk concept, was positively received by customers and helped lift margins.

Lower ruminant and pig numbers contributed to the 3.9% fall in feed volumes, as did the divestment of the Leafield former feedstuffs operation to SugaRich at the end of the prior first half. But poultry volumes were up.

“There is great uncertainty about the consequences of Brexit for the agricultural sector in the UK,” notes the company. “This is why ruminant and swine farmers are reticent, among others, to recover their herd sizes, which were reduced last year. Despite this, the market appears to be recovering slowly.” It adds that UK farmers also tended to opt for cheaper, lower margin feed products.

UK operating expenses were 15.4% lower in the period. First half 2016 included a €1.6m restructuring charge, while a lower headcount, reduced vehicle leasing costs and the lower manufactured volume all helped savings in the latest period.  The half saw the business centralise its UK administration at a new HQ building in Bury St Edmunds.

In May, ForFarmers UK acquired Wilde Agriculture, the Wigton, Cumbria-based livestock consultancy business that includes the John Peel feed buying group. It paid €2m including a €0.5m contingent consideration. The business is also on track to bring its new £10m feed mill near Exeter on-stream by the end of the year.

The ForFarmers Group, which covers Holland, Belgium and parts of Germany as well as the UK, has posted an 18% rise in profitability on 3.7% higher revenues. It made an operating profit of €38.7m on sales of €1.11 billion in H1 2017, up from the €32.8m and €1.17bn from the previous first half. The business says the devaluation of sterling since the end of June 2016 cost it €6.0m or 3.4% in the latest six months.

Total feed volumes were up 3.6% to 4.73m tonnes, with compound sales growing by 6.2% to 3.3m tonnes, largely through last year’s purchase of the Dutch Vleuten-Steijn pig feed operation.

“Volume growth in the Netherlands and Germany/Belgium was higher than the volume decrease in the UK,” notes the company. “As of mid-2016 the financial situation for farmers in Europe has significantly improved due to enhanced milk and swine prices, which partly explains the volume growth in compound feed within total feed.”

“The first half-year results show that our Total Feed approach is gaining more and more momentum,” notes ForFarmers Group chief executive Yoram Knoop. “In our innovative Total Feed solutions we are combining feed products, advice and tools. Products and advice are aligned with one another to lead to a better return on the farm.

But Mr Knoop warns that the rate of growth is unlikely to persist into the second half, due to factors including the slow UK recovery; the impact on phosphate limiting regulations on dairy farmers in Holland and the as yet unknown effects of the fipronil-contaminated eggs issue in Holland and Belgium.

“Our customers are currently in better financial shape than a year ago, when milk and pig prices were under pressure. Farmers, especially in the Netherlands and Germany/Belgium, are buying more high quality feeds again to increase their production. There is large uncertainty in the UK about the consequences of Brexit, but in spite of this, the market there appears to be recovering slowly,” Mr Knoop concludes.

Posted on September 12, 2017 .

Kent Wool Growers goes under

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Kent Wool Growers (KWG), the long established farmer-owned business based in Ashford, has called in the receiver. A British Wool spokeswoman confirmed that the KWG situation would not affect its registered producers, and the collection and grading of the 2017 wool clip will go ahead as normal.

Steve Absolom and Will Wright from KPMG have been appointed joint administrators for the KWG business, which blames a downturn in both retail and account sales for its demise.

The business distributes feed made at Duffield’s’ Wingham mill, and a range of horse feeds under the Baileys, Dengie and Dodson & Horrell brands. It has three rural retail outlets at Ashford and Eastry in Kent and at Handcross West Sussex; a fuel brokerage service; and acts as an ‘A’ merchant for the British Wool Marketing Board, collecting and grading wool from across Kent and East and West Sussex.

KPMG says the business is continuing to trade while they seek a purchaser for all or parts of the business as a going concern.

 “We have received a number of expressions of interest in the business and assets, and so our efforts are focussed on achieving a going concern sale which will secure as many jobs as possible,” states Mr Absolom. “The stores remain open and KWG continues to support the farming community as best it can in these circumstances.”

Kent Wool Growers was founded in 1920 and currently employs 48 staff.

Posted on September 12, 2017 .

NWF recovers from H1 loss to full year profit

Feed manufacturer NWF Agriculture has bounced back from a first half loss to report better than expected full year figures. With its delayed feed capacity restructuring project now complete, it is confident of future growth.

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The company, one of three divisions of the NWF Group, has reported a headline operating profit of £1.5 million on revenues of £158.2m in the year ended May 31st 2017, compared to £2.1m and £135.8m from the previous year. However, after exceptional costs of £1.2m, operating profit is £300,000. Delays in commissioning the additional capacity in Cumbria, plus redundancy and relocation costs, resulted in the exceptional charge of £1.2m.

In June, the Group had warned of a reduction in full year volumes and revenues, following NWF Agriculture’s earlier first half loss of £300,000 on revenues of £65.1m.  

NWF says low milk prices, averaging 20.5ppl at the start of the year in May 2016, depressed the feed market over the summer, but an increase in milk prices from the autumn to 26.9ppl by the year end, saw a rise in feed demand. While the company’s full year ruminant volumes were up by 1.5%, the growth came from sheep feed products. NWF’s total feed volume for the year was 589,000 tonnes, up from 2016’s 580,000 tonnes.

But production costs were higher too, due to volatility in the commodity and foreign exchange markets. NWF’s feed materials cost increased by 17% from the start of the financial year until March 2017, since when they have eased. But the market couldn’t absorb these extra costs, leading to tighter margins.

The year saw a £5.2 million investment programme to match production capacity to the company’s trading area. The former SC Feeds mill in Staffordshire was closed and the Jim Peet mill at Longtown, acquired in 2015, expanded significantly. The business also invested in automating the blend plant at its Wardle headquarters in Cheshire to meet growing demand and secure efficiencies. The additional capacity is now fully operational - it “provides world class operating units close to our key farming customers from the South West of England to Scotland and gives an effective platform for further development.”

NWF says increasing its focus on animal nutrition through providing high quality feed advice and value added products for its 4,750 farmer customers across the country remains a key priority. This strategy has been particularly important in recent months as milk producers seek to increase output in the light of better prices.

With an operational platform comprising three equally spaced feed mills along the western side of England, and improved milk prices, NWF Agriculture says it is well placed to grow organically and to seek further market consolidation opportunities through purchasing volume. But any acquisitions will need to be synergistic with the existing business, capable of development and have a proven management team.

The NWF Group posted full year operating profit of £9m on revenues of £555.5m, up from £8.7m and £465.9m in the previous year. It says strong performances at its Fuel and Food divisions helped offset the difficult year for Feeds.

“NWF delivered a solid performance last year with increased activity in all three divisions and the benefits of the diversified business model resulted in record earnings per share,” notes Group chief executive Richard Whiting. “The increase in profitability and strong cash generation also enabled the Group to continue its investment strategy, with major feed mill expansions completed in the year.

“We continue to see opportunity for further strategic and operational progress and our performance in the current financial year to date has been in line with our expectations.”

Posted on September 12, 2017 .

Gafta to end its UK store and transport assurance

The Grain & Feed Trade Association (Gafta), the London-based body representing international grain and feed material traders, is to withdraw from the storage and haulage elements of its Gafta Trade Assurance Scheme (GTAS).

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The decision will affect 92 storekeepers in the UK and the Ukraine and some 400 UK haulage businesses. GTAS is   independently audited by NSF Certification UK.

Gafta says the move follows a review of its trade assurance service provision, including GTAS and the Approved Registers, to ensure it is meeting the needs of its members as the industry continues to change. This concluded that Gafta’s core purpose is supporting and developing the ancillary support services used by its international trading members, such as supervision, arbitration, fumigation and analysis, rather than the storage and transport functions which are duplicated by a “plethora of schemes across Europe”.

This process led to last month’s Gafta Council approving plans to develop and rebrand the trade assurance offering, aligning it more closely with Gafta contract terms.

As a result, Gafta will create a new Approved Register of Fumigators alongside its existing Approved Registers of Superintendents and Analysts, which themselves will be enhanced.

The GTAS changes include the phasing out of the codes of practice for Road Transport (hauliers) and Bulk Storage. The Analysts and Supervision codes of practice will be revised to support the requirements of the existing Gafta Approved Registers, while the Fumigation code of practice will be updated and become a requirement of a new Gafta Approved Register.

The association says members affected by the changes – particularly those using the haulage and storage codes - will be contacted individually. It plans to phase out the two codes over an 18 month period to the end of 2018.

“There are a number of alternative food and feed safety schemes in the marketplace and Gafta will continue to support members of these codes throughout the transition period,” it states. “The GTAS scheme is audited by NSF Certification with whom Gafta has worked since the launch of GTAS in 2005. It is hoped this relationship will continue as the scheme develops its codes of practice for analysts, fumigators, supervision and trading.

“Training courses will be developed to help members meet the requirements of the new codes of practice and to improve standards across the industry. Gafta remains committed to providing first class services to its members and is in a unique position to raise the standards of the ancillary support services in international agricultural commodity trading.”

The AIC, aware that Gafta has announced its withdrawal of transport and storage assurance in the UK, says it has written to all GTAS participants to update them on its Trade Assurance Scheme for Combinable Crops (TASCC).

“Assurance is a vital part of the supply chain that delivers feed and food safety,” notes John Kelley, managing director of AIC Services. “TASCC is an up-to-date scheme with many benefits that delivers this assurance. We look forward to helping former GTAS participants meet their new assurance needs.”

Posted on September 12, 2017 .

Comment: Brexit divisions unhelpful for UK agrifood sector

One year on from the EU referendum, with Article 50 triggered in March, the uncertainty over the UK’s approach to Brexit remains. Cabinet infighting only adds to the impression of disarray.

The prime minister’s failure to secure a mandate for her Lancaster House Brexit vision in last June’s election has lead to an apparent consensus building under Philip Hammond for a more economically sensible transition period out of the EU. But this has yet to be agreed at cabinet.

New Defra Secretary Michael Gove has spent his first few weeks telling his audience what they want to hear – he told the NFU in June that he backed high quality food production, while in July he unveiled his Green Brexit vision to an audience of environmentalists. But there was a clear signal that public support will move from production to public goods, and away from larger businesses.

That was the easy bit – Mr Gove now has to distil these views into a workable agricultural policy, and enshrine this in law through an Agriculture Bill. Assuming the present administration lasts, this can only pass through the Parliamentary process with the support of Scottish Conservatives and the DUP in Northern Ireland – both areas where agriculture forms a greater part of the regional economy than in England.

Of course there are opportunities for a post-Brexit UK agriculture to benefit from technology and innovation, and to be less constrained by a common European policy. But divisions this early over trading standards in food products between Defra and the international trade secretary don’t bode well for the UK competing in global food markets.

Posted on August 3, 2017 .

Carr’s acquires Mortimer Feeds

Carrs Billington Agriculture, part of the Carr's Group of companies, has confirmed its acquisition of Mortimer Feeds, the Macclesfield-based ruminant feed merchant business, as its parent group reports a recovery in its UK agriculture operations.

Mortimer Feeds, first established in 1987 as Balanced Feeds, is mainly focussed on the Cheshire trading area, with business in Shropshire, Derbyshire and North Wales.  It retails ruminant compound feeds and blends made to its own formulations alongside minerals, grass seed, silage additives and bucket lick products. Carr’s was a supplier to the company.

“The acquisition adds incremental feed volume and converts some existing merchant business into direct sales, and is in line with our stated strategy of strengthening our presence in our current geographies and leading in dairy nutrition,” states CBA.

Meanwhile, a trading update from CBA parent the Carr’s Group ahead of its year-end in early September, notes that the recovery in UK agriculture continues, and is expected to steadily improve. “All aspects of the business performed well. Feed volumes and like-for-like retail sales are running ahead of the prior year, while machinery revenues are significantly ahead of the prior year.”

The Group adds that feed block sales in the UK remain in line with expectations, with volume growth during the main selling season. But its US feed block business had a “disappointing” year as  “significantly lower cattle prices” affected feed block sales volumes in that market. “The recovery of the USA market continues as anticipated and trading remains in line with our expectations,” it says.

Overall, the Group expects the recovery in UK agriculture to steadily continue, with “early positive indications” of a revival in the US feed block market as cattle prices gradually recover.

“It is pleasing to see UK agriculture continuing to improve, buoyed by the improvement in farmgate milk prices,” says Carrs’ Group chief executive Tim Davies. “With green shoots of recovery in the US market, we are confident of the medium term prospects within our agriculture division.”

At the half year stage, Carr’s Agriculture division reported a pre-tax profit of £7.23 million on sales of £160.5m in the six months to March 4th 2017, compared to £6.95m and £139.32m in the same period of 2016.

The UK feed business had returned 11% volume growth in the period against a national feed market that was 1-2% down. The company’s UK feedblock sales grew by 6%, but US volumes dropped by 10%. Earlier this year, Carr’s acquired the Horse & Pet Warehouse retail business in Ayr for its retail chain, and it has since announced plans to build a new blends plant near Stone in Staffordshire.

Posted on August 3, 2017 .

New blends plant for CBA

Carrs Billington Agriculture (CBA) is to invest in a new feed blending plant in Staffordshire. This will be its sixth blending facility.

The company is to partner with the B & R Deane farming business to construct a purpose-built blends facility at Micklow in Staffordshire.  The new plant is located a few miles from the CBA compound feed mill at Stone, allowing the company greater economies of scale across the two sites.

The investment includes a bin-based feed materials storage system with blends manufactured through a Forberg-type mixer. The new plant will be able to produce a range of high quality blends and coarse mixes, with distribution either in bulk or by tote bins.

“This investment is another step in the development of Carrs Billington’s feed business, states CBA operations director Paul Steeples. “It demonstrates our commitment to the UK livestock farming industry.”

As well as feed mills in Carlisle, Lancaster and Stone, CBA operates blend plants in Cumbria, Lancaster, Newtown, Northwich and Carmarthen.

 

Posted on August 3, 2017 .

Agrovista acquires Terra Firma for its amenity division

Agronomy services company Agrovista UK has bought the Terra Firma (Scotland) business to integrate into its Sherriff Amenity turf and landscaping division.

Stirling-based Terra Firm was established by Simon Gough in 2000, and has grown into one of Scotland’s largest suppliers to the amenity and local authority markets.

Agrovista is to combine the two operations in Scotland under Mr Gough’s leadership and the Sherriff brand. It says the integration of the existing technical expertise and broad product ranges into a single business will provide land managers, local authorities, contractors, groundsmen and greenkeepers in Scotland with a full agronomy service, research driven advice, new product innovation and access to an extensive local distribution network.

“We are delighted to welcome Simon and his team from Terra Firma into Sherriff Amenity,” says Agrovista managing director Chris Clayton. “The acquisition will strengthen the business in Scotland and provide synergies across the business which will ultimately benefit our customers. This, combined with further product developments, will generate exciting opportunities from the combined business.”

Mr Gough adds: “Terra Firma joining with Sherriff Amenity is a really exciting prospect. The combination of both companies’ industry knowledge, experience and customer service ethos will form a strong, sustainable and service focused business model moving forward.”

Posted on August 3, 2017 .

Saxon completes its office move

Saxon Agriculture, the UK arable marketing business owned by GrainCorp, has completed its office move from Kings Lynn to Swaffham within the county of Norfolk in time for harvest 2017. The new premises were officially opened at the end of June by GrainCorp chief executive Mark Palmquist.

At the same time, the company has moved its Saxon Organic business, located in Bury St Edmunds for historical reasons, to the new site. Saxon managing director Nigel Gossett says the imminent expiry of leases at its “tired” Kings Lynn site, where the business had been based for 25 years, and at Suffolk, prompted the relocation into a new, purpose built single site office.

With more space and better telecommunications, the new office is both more efficient and pleasant to work in, notes Mr Gossett, while remaining close to its East Anglian customer base. “Our strong association with quality crops and the high level of personal service provided to our farmer customers drives this business. We enjoy a high level of forward contracting, can supply market information and strength through our global parent to support our growers, plus we have the local trading experience to take advantage of market opportunities.”

Saxon was established in 1993 to procure malting barley for Moray Firth Maltings, now part of Baird’s Malt which was acquired by Australian multinational GrainCorp in 2010. Saxon specialises in marketing higher value and specialist crops including malting barley, milling wheat, pulses, linseed and High Erucic rapeseed.

Posted on August 3, 2017 .

New owner for European Oat Millers

The UK and Europe’s second largest oat processor, European Oat Millers (EOM), has been acquired by Canada’s biggest agribusiness, Richardson International, in a move to expand the latter’s global footprint. Both companies are privately owned and financial details are not available.

EOM was founded by Bill and David Jordan on a site in Bedford in the early 1970s. Both are members of the long-established Jordans Cereals feed and flour milling and cereals manufacturing family business that was sold to Associated British Foods in 2008.

An equity investment by Conagra in the 1980s financed early expansion, with growth continuing after the Jordan family bought Conagra out a decade later. The business opened a second factory in Bedford in 2013.

EOM has grown to become the second largest oat miller in Europe behind Cheshire’s Morning Foods. It makes a wide range of oat products, including flakes, flour and groats, in addition to wheat and barley flakes, extruded ingredients and products. The company exports to continental Europe, Africa, the Middle East and Asia as well as supplying the UK.

Richardson is an integrated arable marketing, grain handling and processing business with its headquarters in Winnipeg. Tracing its history back 150 years, it operates across Canada’s grain belt, with two mills in the US states of Kansas and Nebraska. It became the largest oat miller in North America through the acquisition of three oat processing plants in Canada and the Nebraska mill. These were among a package of former Viterra assets, divested as part of Glencore’s takeover of Canada’s Viterra in 2013.

“We are excited to build on our success in value-added processing and extend our food manufacturing footprint to a new geography,” says Richardson president and chief executive Curt Vossen. “As the largest oat miller in North America, we now look forward to building a presence in Europe to enhance our ability to compete in the global marketplace.

“European Oat Millers is a solid, family-owned business that is well-established in the UK. We have been very impressed with both the quality of the business and its people and believe it is an excellent complement to our Richardson Milling division. Looking ahead, we will build on the investments that have already been made, including increasing manufacturing capacity, and will continue to seek opportunities to expand our global business.”

Posted on August 3, 2017 .

Comment – election upset halt Brexit cliff edge?

It used to be that a week was a long time in politics – now a mere weekend is long enough to turn the orthodoxy upside down. So where does the political upset following last week’s general election leave agriculture?

Theresa May’s reverse alchemy has wiped out her previous small majority in the House of Commons, and her new administration - however long it will last – is going to rely on the support of the Scottish Conservatives and Northern Ireland’s Democratic Unionist Party (DUP). Both are from UK regions that voted to stay in the EU – although the DUP backed Brexit – and both are areas where agriculture features heavily in the local economy.

Brexit negotiations are due to begin next week. The EU side has made it clear that there must be real progress towards an agreement on the UK’s financial settlement, the future status of EU citizens in the UK and UK citizens in Europe and on the Northern Ireland border, before any further trade discussions can begin. The UK is still holding out for parallel talks.

We know the DUP believes a frictionless border is essential for the economies on both sides of Ireland, a factor that is also high on the UK agrifood lobby’s wishlist. There is also a consensus behind a “softer” approach to Brexit, through a combination of the influence of the Scots and DUP on the Conservative party; the disappearance of the UKIP vote in the election and the assumption that the electoral drubbing was partly a reaction to Mrs May’s previous “hard” Brexit stance.

 Of course, we will never now know whether her hardline “no deal is better than a bad deal” position, set out at Lancaster House in January, was her actual belief, or an initial negotiating position with room for concessions in the actual horse trading process. Time and circumstanceswill tell what shape Brexit will eventually take.

In the election aftermath, Mrs May has replaced Defra minister Andrea Leadsom with Michael Gove. One of the key Brexiteers in the Referendum campaign, he was summarily returned to the back benches when Mrs May achieved the premiership in 2016. Clearly returned to the cabinet to neutralise any backbench opposition in her newly straitened circumstances, he will certainly be more hands on than Mrs Leadsom, who did or said nothing of note in her year at Defra.

Mr Gove’s Euroscepticism is reported to be born of a visceral hatred for the Common Fisheries Policy, which he believes did for his parents’ fishing operation in North East Scotland. As minister of education he relished standing up to the teaching establishment, to the extent where prime minister Cameron had to remove him, and he was just getting into his stride with the legal establishment as Lord Chancellor before the Referendum and his subsequent sacking by Mrs May.

So he is unlikely to be scared of the agricultural establishment in the crucial task of moving the UK from the CAP to an independent policy, assuming the May administration lasts. Interestingly, his appointment was broadly welcomed by farming organisations, but bitterly attacked by the green lobbies, particularly on his record of trying to remove climate change from the school curriculum.

So, to summarise, we have a weakened administration that will be relying on the Scots and Northern Ireland regions, a “disruptor” Defra secretary of state and a government trying to find a consensus just one week before the Brexit talks start in earnest.

The first May administration promised to maintain CAP payments at their present level until 2020, and the latest manifesto extended that pledge to the end of the current Parliament, which could be as long as 2022. Mr Gove is already on record as being committed to this, and to leaving the environment in a better shape than it is in now. He has also promised to consult with the industry over the question of labour availability.  

Meanwhile, the “green” lobby has coalesced under the Sustain banner, with a new post-Brexit agricultural policy manifesto calling for support to be switched from production to environmental benefits and for regulation on a hazard-based approach and using the precautionary principle.

Now is the time for the agribusiness coalition and farm lobbies to offer Mr Gove a single considered consensus on how a productive UK agriculture can both reduce the UK food deficit and increase its export potential, while leaving room for niche markets with higher environmental benefits.

Posted on June 22, 2017 and filed under Brexit.

Comment: Glyphosate - political controversy clouds future availability

The European Commission’s starting compromise on the highly politicised reauthorisation of glyphosate for use in the EU has pleased no-one. But could an independent UK authority do better?

The agrochemical’s 15 year registration period ended on June 30th 2015, and was extended for a temporary 18 months while the Commission sought to balance the agricultural demand for this product against the ongoing opposition from the “green” lobby.

None of the EU’s scientific advisers can find any reason to curb the product’s use. Farmers point out that the active is essential to low impact establishment techniques such as min-till and direct drilling. It enables them to achieve weed control without moving huge amounts of soil and the associated diesel use and loss of soil organic matter.

The Commission’s initial proposal of a 10 year authorisation period has angered farmers and their advisers who see no reason to reduce the traditional 15 year term, while displeasing the antis who want it banned altogether. The EU’s Health and Food Safety Commissioner has conceded that the issue has become politicised.

Less regulation and evidence based decision making was one of the Brexit benefits promised to UK agriculture before the Referendum. But will an independent UK government be stronger than the EU authorities in standing up to the environmental lobby on issues such as this?

Posted on May 31, 2017 .

Dawn acquires control of Dunbia in UK and Eire

Two major meat processing companies, Dawn Meats and Dunbia, are to combine their operations in Ireland and the UK, subject to regulatory approval. In total, the combined operation will be able to process 900,000 cattle and 2.6 million sheep annually.

Dawn Meats, based in Ireland, and Dunbia with its headquarters in Dungannon, Northern Ireland, have agreed a strategic partnership to create a joint venture business, majority owned by Dawn, which combines the UK operations of both businesses. At the same time, Dawn will acquire Dunbia’s operations in the Republic of Ireland. There has been speculation about Dawn Meats making a bid for Dunbia for some months, but with little information available from the two privately held businesses.

The UK JV, which will trade as Dunbia, will deliver enhanced scale and market presence to benefit farmer suppliers and wholesale and food service customers, says the company. It will slaughter and process beef and lamb at 15 facilities across Scotland, England, Wales and Northern Ireland. Chief executive will be current Dunbia CEO Jim Dobson OBE, with Dawn Meats chief executive Niall as chairman. It will be run from Dunbia’s Dungannon HQ.

In Ireland, Dawn Meats will acquire two Dunbia facilities – an abattoir in Slane and a boning hall in Kilbeggan, bringing its total there to nine sites, of which five are abattoirs.

Dunbia – originally Dungannon Meats - originated as a retail butchery business in 1976 and has grown to an £800m turnover. Dawn Meats was founded in 1980, and now has annual revenues exceeding £1 billion.

“We are both family businesses with a deep connection to farming and a culture and business ethos that is centred on quality and sustainability,” comments Mr Browne. “Given the uncertainty posed by Brexit, this partnership should further underpin the competiveness of both operations to the benefit of all stakeholders in the UK, Ireland and across Europe.

“We are very excited about the future of both companies and the opportunities that this transaction will bring for our staff, customers and suppliers. In our key operating markets we will be involved in three leading national businesses with Dawn Meats in Ireland; Dunbia in the UK; and Elivia, the second largest beef processor in France, as a JV with our co-operative partner Terrena.”

For Dunbia, chief executive Jim Dobson adds: “This is the right strategic partnership for Dunbia’s staff and customers, and sees us joining with a company with a shared heritage of excellence in the production of premium beef and lamb products. The new UK joint venture confirms our future as a leading supplier in the UK market. In a consolidating industry this deal makes strategic sense for both companies, our customers and our farmer suppliers.”

Posted on May 31, 2017 .

Brexit confidence rising among agri SMEs

Almost a year after the Referendum decision for the UK to leave the EU, a new survey has measured rising business confidence in a positive Brexit outcome amongst small and medium sized enterprises (SMEs) in agriculture.

Hitachi Capital Business Finance (HCBF) commissioned a YouGov survey of 1,200 nationally representative agricultural SME owners. Its British Business Barometer research measured confidence levels of 31% in Q1 2017, compared to 13% a year earlier.  52% of respondents were optimistic about opportunities outside the EU – the same as the Referendum result – while nearly one-third believed the greatest benefit will be a reduction in red tape and regulation.

Agricultural confidence has also risen over the last six months - in Q3 2016 only 17% of small agricultural business owners felt confident about their future prospects after the vote to leave. Despite the uncertainty over support payments and labour availability, the survey found optimism over the opportunities that the separation will bring. These included more UK consumers buying British food (25%); the effect of the weaker pound on UK exports (24%) and the ability to form business relationships with non-EU partners (14%). A 14% slice of the sample thought that the UK government will be obliged to do more to support British business outside the EU.

“Our research shows that small business owners in the agricultural sector are thriving under the anticipation of separating from the EU,” states HCBF managing director Gavin Wraith-Carter. “Confidence levels among agricultural SMEs took a dip around the time of the Brexit vote. However, levels have now bounced back to higher than those of a year ago.

 “We must support our UK producers and empower farmers to be competitive globally through innovation and the adoption of new technologies. SMEs have the ability to adapt quickly when required and what we are seeing overall – whether or not this reflects their own political beliefs – is a drive to make the best of any outcome to the Brexit situation.”

Posted on May 31, 2017 .

Wellgrain liabilities confirmed at £16m

A letter to Wellgrain creditors seen by ATN details the £16 million in liabilities found by administrator Grant Thornton. The full list of creditors is due to be published on the Companies House website shortly.

Grant Thornton records that Ely-based grain trader Wellgrain’s problems started with a major customer being unable to pay its debt to the business. Wellgrain had supplied this customer with wheat for two years and was assisting it with securing flour contracts, with the long-term aim of a vertical integration between the two companies.

Wellgrain’s existing invoice discount service through the Royal Bank of Scotland Invoice Finance (RBSIF) granted a facility of £2 million for this particular customer, but increasingly late payments saw this exceeded – the debt was £3.3m at the time administrators were appointed.

This cashflow pressure affected Wellgrain’s ability to pay other suppliers, causing it to lose business and turnover, a situation exacerbated by the smaller 2016 cereals harvest which meant stores were more difficult to fill and competition to procure grain more intense.

Wellgrain’s parent Driftwell Investments attempted to sell its French flax processing subsidiary, Eco-Technilin in autumn 2016 to help to restore cash flow. But delays with the sale meant that completion and funds of £1.9m were not achieved until mid-February, by which time suppliers were deserting the business. With the invoice discount facility overdrawn, directors were forced to call in the receiver. The administrator also records  ”significant losses” from trading futures on a high risk customer accumulator market in 2016.

At the point of administration, the business had debts receivable of £5.7million, net of contra deals. There were 55 debtors, the largest being for £3.26 million. The company also had stock worth some £900,000.

The largest secured creditor is RBSIF, with £10.5m. Outstanding staff pay and entitlements of £24,000 are ranked as a preferential creditor. This leaves over 260 unsecured farmer and trade creditors totalling £5.5m in amounts ranging from £400,000 to a few pounds. This figure excludes any claims for breach of contract which “could raise the total significantly”.

As it stands, the administrator estimates that unsecured creditors could receive between 6.7p -1.4p in the £. Administration costs are estimated at £300,000 plus £146,000 in disbursements.

Posted on May 31, 2017 .

Losses force Countrywide to consider retail exit

A second consecutive full year loss has prompted the Countrywide Farmers board to consider divesting its rural retailing division, two years after the business sold its agricultural operations.

The Defford, Worcestershire based company made a pre-tax loss of £10.01 million on revenues of £134.2m in the year ended November 30th 2016, compared to a loss of £7.59m and sales of £169.57m in the 18 months to November 30th 2015. The latter figures were lifted by the disposals of Countrywide’s Agri feed and arable inputs distribution and grain trading businesses early in 2015.

The company’s retail division posted an operating loss of £7.83m on revenues of £116.30m in the latest period, compared with a negative £5.34m on sales of £141.17 in the previous 18 months. Like-for- like sales were down by 1.9% over the full year and were 3.9% lower over the second half.

The Direct Sales activities, comprising Countrywide’s Rural Energy and Turf & Amenity businesses, made a 2016 operating profit of £2.49m on a turnover of £17.96m, compared to £5.2m and £28.4m in the preceding 18 months.

Countrywide chairman Gareth Thomas, a former John Lewis executive, states that last year’s losses were “driven primarily by a weakening performance in our Retail business in the second half. This performance was impacted by disruption to sales through poor on-shelf product availability caused by a new IT system implementation, alongside challenging agricultural market conditions that depressed sales in farming, our largest product category. It also proved necessary to delay the full integration of the newly acquired Cornwall Farmers stores, with consequential additional cost”.

The company has installed a Microsoft Dynamics AX ERP (Enterprise Resource Planning) IT platform across the business in order to replace the majority of the legacy systems inherited through company acquisitions.  The project took three years and cost £6m before its completion in January this year. “This change proved to be more challenging and disruptive than we had anticipated, inhibiting capacity to develop the business and drive growth in the short term,” notes Mr Thomas. “Retail turnover was particularly hampered through the latter part of last year.”

Although Mr Thomas says the system is now providing an effective operating environment to enable future growth, the board has acted to reduce costs and improve profitability. Measures included a rationalisation of its cost base to save an annual £5m and the closure of 14 less profitable retail stores, three of which were newer retail park store locations that had failed to meet viability expectations. This brings the 68 store chain down to 53 branches.

“While the board believes the Retail business is now well placed for the future, we have recently appointed advisors to explore a potential sale of that business”, Mr Thomas advises. “It is clear to the board that the retail environment remains challenging and that to compete effectively for the long-term will require further rationalisation of the cost base along with potential further investment.

“With operational challenges, three business units all requiring investment and a legacy pension scheme to fund, the board has to prioritise the opportunities that it believes will deliver the greatest returns.”

Chief executive John Hardman says the business is the first UK retail company to implement a fully integrated AX suite of products providing a single view of product, stock and customers and with full multi-channel capability. It will also help lift online sales, which are currently a small part of retail revenues – part of the rationale behind the store closures – and further investment in digital marketing is planned. He also reports that Cornwall Farmers’ sales performance was in line with expectations and was not impacted by availability issues in the year. However, the former CF headquarters store near Truro was one of those closed.

The business has completed investment in its Defford distribution centre, with a new 1,800m2 building to support bulk throughput and storage, as part of its drive to multichannel growth and central distribution of product.

The Rural Energy and Turf & Amenity businesses continued to develop positively through the year and acquire new customers, he continues. Energy sales increased despite mild winters and a dry harvest which reduced the need for grain drying. The business is expanding into Cheshire, Devon and Cornwall, and has a new storage and distribution centre at Burton-upon-Trent. Turf & Amenity has successfully expanded from its core customer base. 

“Both LPG and Turf & Amenity are profitable parts of our business and in a strong position to build market share, drive profitable growth and enhance shareholder value,” says Mr Hardman. “But we have decided to explore the possibility of attracting a buyer for our retail business. This would be an organisation with the means to invest and build on our strong market position and take the business to the next level. We have also agreed funding facilities with our banking partners that support the requirements of the entire business for the foreseeable future.”

Posted on May 31, 2017 .

New look for Nidera

Nidera UK has been rebranded under Cofco colours following the completion of its parent company’s acquisition by the Chinese state-owned multinational in February.

From this week the worldwide Nidera and COFCO Agri operations are integrated into Cofco International under global chief executive Johnny Chi.  As part of the changes, the national arable marketing business, led by managing director Mark Dordery, will trade as Cofco International UK.

Cofco International is majority controlled by the $70 billion Cofco Corporation, with other shareholders including the Singapore sovereign wealth fund Temasek; the International Finance Corporation (a branch of The World Bank) and the UK-based Standard Chartered Bank.

Rotterdam-based Nidera was formed in the 1920s to ship agricultural commodities to international markets including those forming its acronym – Netherlands; India; Deutschland; England; Russia and Argentina. The company first entered the UK grain trade in 1998 through subsidiary the International Corn Company (ICC)’s purchase of Geoffrey Clarke (Grain) located in Framlingham, Suffolk and Braintree-based GE Unwin grain. It traded under these brands until 2003 when Nidera UK was unveiled.

The business is now headquartered near Ipswich, where it operates the portside Ipswich Grain Terminal, with a satellite procurement and storage operation in Yorkshire. Nidera UK acquired Suffolk-based Grainseed in 2015 and Criddle & Co, located in Liverpool, late the same year. It now has a trading and logistics centre in Liverpool and a procurement office at Wem in Shropshire, both former Criddle facilities. Its most recent investment has been in new land and warehouses at Langton Green, Suffolk.

 “Today, we embark on a journey to build on the past and embrace the future, to establish a brand new company based on the solid foundation of COFCO Agri and Nidera, maximizing its strengths,” says Mr Chi. “We are fully committed to this new company.

“We are a global agri-business with a six-continent supply chain. We have a deep understanding of the world’s largest agricultural importing markets, including China. We aim to create a vertically-integrated global agricultural supply chain, supported by COFCO's unique position in China, strengthen worldwide origination, logistics and trading capabilities, and grow our business globally.”

Mr Dordery adds: “Cofco International is simply the result of the former Nidera and Noble Agri names being united under a single entity worldwide.  In the UK, for example, our fleet of 35 HGVs will retain their distinctive blue colours but will carry the Cofco name and logo.

Referencing the recent failure of the Bernard Matthews and Wellgrain businesses, he continues: “It is more important than ever for farmers to be confident in the financial standing of the businesses with which they trade.

"Although the name will be changing, our commitment to our customers remains the same and the substantial investment our new shareholders are making shows real confidence in the UK industry moving forward. On a day to day basis little will change and we will continue to deliver the same high levels of quality and service our customers have come to expect of us.

 “By continuing to combine our own specialised knowledge of UK markets and practices with the international insight and resources of a major global player, we hope to bring even greater benefits to our customers in the future.”

Posted on May 31, 2017 .

Carr’s H1 feed sales grow by 11%

Carr's Group, the Carlisle-based plc that includes the Carr’s Billington Agriculture business, reports a recovery in its UK agricultural markets, although its US interests struggled.

The Group’s Agriculture division made a pre-tax profit of £7.23 million on sales of £160.5m in the six months ended March 4th 2017, compared to £6.95m and £139.32m in the same period of 2016.

The UK feed business performed particularly strongly with 11% volume growth against the national market which fell by 1-2%. Feedblock sales were up by 6%.

However, the US feedblock market, which has thrived in recent periods as the UK contracted, saw Carr’s sales volumes drop 10% in line with falling cattle prices. The company is proceeding with its new low moisture feedblock plant in Tennessee to supply the eastern US market.

Carr’s chain of 41 country stores in the UK saw like-for-like sales growth of 3.8%. The company continues to invest in refurbishments and opened a new outlet in Penicuik in December. Farm machinery sales were 43.4% up on the previous year and fuel sales volumes rose by 0.9%.

“It is pleasing to report that the challenging UK farming environment experienced in the last couple of years is showing signs of abating, helped significantly by improvements in the milk price,” notes Carr’s Group chief executive Tim Davies. “While it remains at early stages, we are optimistic about the year ahead for the UK farming community – the higher level of confidence looks set to continue into H2. However, this will only partly mitigate the full year impact of the US cattle market pressures on the division’s performance.”

Group half year figures, the first full period since the divestment of the Carr’s Milling division to Whitworths in September last year, show a pre-tax profit of £8.92 million on revenues of £176.8m in H1 2017, compared to £8.51m and £153.4m in the first six months of the previous year.

Pre-tax profit after exceptional items was £8.28m (£8.51m). These include £490,000 on contingent considerations associated with the £1.74m purchase of Phoenix Feeds last year and redundancy costs. There was net debt of £11.5m at the end of the period, up from £8.1m six months earlier.

“We remain committed to delivering organic revenue growth, supported by value enhancing acquisitions,” concludes Mr Davies. “The board's expectations for the full year remain unchanged."

Posted on May 31, 2017 .