UK feed market reduces AB Agri profit

AB Agri has reported a 14% reduction in operating profit on 11% higher revenues from its latest full year’s trading. The company signalled a fall in profitability due to reduced margins at its UK and China feed operations in its pre-close trading statement, following strong competition, higher raw material costs and investment in new businesses.

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The Agriculture division of Associated British Foods (ABF) made an adjusted operating profit of £50 million on revenues of £1.2 billion in the year ended September 16th 2017, compared to £58m and £1.8bn in the previous 12 months.

The UK feed businesses suffered from weak demand, while the smaller 2016/17 sugar beet crop reduced the co-product volumes available for the Trident Feeds business to market. Revenues were lifted by a full year contribution from Agrokorn, the Danish alternative proteins business acquired in February 2016. The integration of this business into existing operations has extended AB Agri’s capability in alternative proteins and created a platform for further animal nutrition, pre-mix and milk replacer development, as well as enabling geographic expansion.

The Primary Diets young animal nutrition business saw growth in exports from the UK to Poland, while construction of its new starter feed factory in Spain was completed by the year end.

AB Agri launched the Amur brand for sales of AD products and services in July 2016,  and has now opened its own £15m AD plant close to its Sherburn-in Elmet feed mill in Yorkshire. Vivergo Fuels, ABF’s bioethanol manufacturing business, has developed new liquid co-products for the animal feed and anaerobic digestion (AD) markets. These partly offset the reduced availability of feed co-products from the food and drink industry during the period. 

Feed micro-ingredient specialist AB Vista performed well in Europe, North America and Asia, with strong enzyme sales both in the traditional pig and poultry sectors and into the ruminant and aquaculture markets.  Enzyme sales in Asia weakened in the second half after a strong start.

The company says its China operations saw lower margins and profitability due to the “more challenging environment” there - egg prices fell to their lowest level in for 20 years. The business relocated its feed mill in Shanghai to a new site with increased capacity, and it also opened its first standalone feed pre-mix site in China, to meet a growing demand for specialist, tailored feed ingredients.

Frontier Agriculture, the joint arable marketing venture between ABF and Cargill, saw grain trading activities adversely affected by the smaller UK wheat crop and low market volatility, while the crop inputs and agronomy side of the business benefited from firmer grain prices and good growing conditions.

“AB Agri’s extensive experience across the farming industry, combined with the greater availability of on-farm data and the use of proprietary technology, are being leveraged to provide greater insight into on-farm management,” sates ABF chairman George Weston. “This is aimed at assisting farmers to increase productivity and improve animal nutrition.”

British Sugar’s results are consolidated into ABF’s international Sugar division, which saw operating profit increase by 537% to £223m and revenues by 33% to 2.17bn.

UK profitability also “improved significantly” after British Sugar reduced its contracted beet area to help reduce high EU sugar stocks. The smaller 2016/17 crop area produced just 900,000 tonnes. With EU sugar quotas and export restrictions abolished from October 2017, the company increased its 2017/18 crop area by one third - with favourable growing conditions, the sugar yield is estimated at 1.4m tonnes.

Vivergo Fuels, which is part of the ABF Sugar division, made an operating loss due to higher UK wheat costs and lower ethanol prices. The plant is to close for maintenance on November 20th. The company notes the UK government proposal to raise the proportion of transport fuels from renewable sources to 9.75% by 2020 (currently 4.75%) but to cap crop-based sources at 4% until 2020, falling to 3% by 2026 and 2% by 2032. “Whilst we support the increase in the renewables mandate we are concerned about the reduction in the crop cap after 2020 and will maintain a close dialogue with government on this,” says Mr Weston.

The ABF Group saw operating profit grow by 22% to £1.36bn on revenues that were 15% higher at £15.4bn. With over 60% of its operating profit earned outside the UK, last year’s post-Referendum devaluation led to an £85m currency benefit. The euro’s strength in H2 lifted British Sugar margins.

Looking ahead to Brexit, Mr Weston notes:  “Changes in legislation and trade agreements provide significant opportunities for the food industry to replace imported food and build export markets and, for UK agricultural policy particularly, they have the potential to benefit our group.

“In common with many other businesses, we share a concern about the risk of abrupt changes to the UK’s customs procedures. We therefore welcome the government’s intention to have a transition period beyond March 2019 in which to implement the necessary systems and processes.

 “We are engaged at all levels with a number of UK government departments to ensure that the full range of opportunities and risks, as they affect us, are recognised.”

Gleadell markets doubly loss-inhibited urea fertiliser

Gleadell Agriculture has begun importing a new second-generation stabilised urea fertiliser that it says “takes stabilisation technology to a new level”.

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The first 3,200t shipment of Alzon neo-N unloaded at Immingham last week is the first of five cargoes booked to the end of January to meet rising demand for stabilised urea in the UK, says the company.

The new product is manufactured by SKW Piesteritz, Germany’s largest producer of ammonia and urea and a specialist in stabilised urea products. Gleadell has worked closely with the German company over the last ten years. While sales of Alzon neo-N will largely be focused on Germany, Gleadell is one of a small number of selected partners in other countries chosen to distribute the product.

UK growers are seeking to cut rising losses to the environment and improve fertilisation efficiency, advises Gleadell fertiliser manager Calm Findlay, especially as increasing temperatures and moisture extremes during the growing season  lead to more nutrient wastage.

 The UK has set ambitious targets to reduce greenhouse gas emissions, which will continue after it has left the EU, he adds.  It is committed to reducing five key pollutants including ammonia under the EU National Emissions Ceiling Directive.

“Detailed within this, the Air Pollution Action Plan, due to be published in 2019, will include an ammonia code, which will contain advice on how farmers can reduce emissions,” Mr Findlay notes. “Although voluntary, it will be important that high levels of take-up are seen to help the UK to meet its commitments, otherwise regulation may result.”

Germany has already legislated that its farmers must either inject urea-based fertilisers or use products with an inhibitor to reduce ammonia emissions from 2020, says Mr Findlay.

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Alzon neo-N is a granular, 46% N urea fertiliser which contains two inhibitors to reduce both ammonium and nitrate losses.  In common with some other stabilised urea products on the market, it has a urease inhibitor to slow the conversion of urea to ammonium, so reducing the risk of volatilisation losses. In addition, the product contains a nitrification inhibitor to reduce the rate at which ammonium is converted to highly mobile nitrate, which can either leach in ground water or be lost to the atmosphere.

“Trials have shown have shown Alzon neo-N’s integrated inhibitor system can reduce nitrate leaching by up to 50%; nitrous oxide emissions by up to 75%; and prevent ammonia losses almost completely,” states Mr Findlay. “This combination ensures a higher proportion of nitrogen is taken up by the plant, which is good for the pocket as well as the environment.”

More information from Mr Findlay on 01427 421244 or calum.findlay@gleadell.co.uk

Posted on November 17, 2017 and filed under Fertilisers, Products and Services.

Gove reverses UK neonics support

Defra secretary Michael Gove says the “growing weight of scientific evidence” is behind his decision in principle for the UK to support further European Commission restrictions on the use of neonicotinoid crop protection products on non-flowering crops, due to their effects on bees and other pollinators. But industry sources say the decision is not justified by science.

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The government’s advisory body on pesticides advised the scientific evidence now suggests the environmental risks posed by neonicotinoids to bees and pollinators are greater than previously understood. “Unless the scientific evidence changes, the government will maintain these increased restrictions post-Brexit,” states Mr Gove.

Since December 2013 three neonicotinoids – clothianidin, imidacloprid and thiamethoxam – have been prohibited for use in the EU on oilseed rape, spring cereals and as a foliar spray on winter cereals. The Commission’s latest proposal would restrict their use to glasshouse crops only, meaning neonics would no longer be allowed for sugar beet or the seed treatment of winter cereals.

“Should this proposal be adopted, the UK would have the right to consider emergency authorisations,” notes Mr Gove. However, “We would only do so in exceptional circumstances where there is a real need for the products and the risk to bees and other pollinators is sufficiently low”.

I recognise the impact further restrictions will have on farmers and I am keen to work with them to explore alternative approaches both now and as we design a new agricultural policy outside the European Union.

I have set out our vision for a Green Brexit in which environmental standards are not only maintained but enhanced.

Manufacturer Bayer Crop Science called the decision “bizarre and one that flies in the face of sound science”.

The company’s UK spokesman Dr Julian Little says: "The government's own UK Biodiversity Indicators, published only this summer, show that butterfly, bee and hover fly population numbers have stabilised since 2011 - this was confirmed last this week in response to a Parliamentary question. The suggestion that the extension of this ban to non-flowering crops, which pollinating insects do not visit, will somehow improve the health of bees is farcical.

"We do know from talking to farmers that such a ban would seriously impact the UK's ability to grow high quality wheat, barley, sugar beet and some vegetable crops, just as UK farmers are trying to gear up to life after European subsidies. Farmers will have to resort to older chemical sprays to control damaging insect pests rather than the targeted seed treatments currently employed, and will have to use much larger quantities of slug pellets, just at the time when we are trying to reduce their use.

"Today's decision is therefore a kick in the teeth for UK agriculture: it makes farmers less competitive, it means less environmentally friendly chemicals being used in the countryside, it means no improvement in the lot of bees or other pollinators, and it says to the green lobby that if you make enough noise, you can trump evidence-based policy making.”

Kynetec and Agbioinvestor create new agchem and seeds data platform

The global agricultural and animal health market research company Kynetec is collaborating with Agbioinvestor to develop a new market strategy software platform for the crop protection and seeds sectors.

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Agbioinvestor was established earlier this year by Phillips McDougall (PMD) co-founder Dr John McDougall. The majority of the PMD staff joined the new company at the beginning of October. 

The partners say the new sigma Select platform will combine Kynetec’s global agricultural market research data with Agbioinvestor’s industry-leading top-down analysis in creating an agricultural business intelligence platform with “the most in-depth ex-manufacturer market research available on the market”. The platform will provide its users with market insights and trends at the regional, country, crop and active ingredient levels, as well as market shares for the leading manufacturers in these markets and ex-manufacturer sales for all commercially significant active ingredients in all significant country markets across all major crops and crop groups.

“Kynetec offers the most comprehensive farmgate market research in the crop protection and seeds industries via its sigma CP and sigma Seed products,” notes Agbioinvestor partner and senior sigma Select analyst Garry Mabon. “At Agbioinvestor, we are proud to announce that this market research will power sigma Select, with the most significant and growth markets covered in a level of detail unparalleled in other ex-manufacturer level offerings. sigma Select has been designed by Kynetec and Agbioinvestor’s leading specialists with our valued clients in mind, and it represents a novel, exciting and powerful analytical tool which will enable users to effectively answer their questions in an intuitive way.”

For at Kynetec, director of annual trend research Warrick Steptoe adds: “This is a terrific collaboration that introduces clients to a new use for a sub-set of our extensive sigma CP data. The team at Agbioinvestor is exceptional and we fully expect them to produce additional insights, bringing new benefits to both company’s customers.”

The platform will be backed by analyst support through both Kynetec and Agbioinvestor staff, while Agbioinvestor will integrate sigma Select data into its crop protection industry and seed trait industry reports.

New look EU animal health body

The EU trade association for manufacturers of animal health products has a new look and re-elected officer team.

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Formerly IFAH-Europe, the body will now be known as AnimalhealthEurope, a change unveiled at this year’s annual assembly as the body marked its 30th anniversary.

Wijnand de Bruijn of the Dutch livestock health business Dopharma was elected president for a second term, with treasurer Clint Lewis of Zoetis also re-elected.  There are two new vice presidents, Guenther Dittrich of MSD Animal Health and Santiago de Andrés from the Spanish national trade body Veterindustria.

“I am very excited and proud to continue at the helm of this newly invigorated association,” stated Mr de Bruijn. “As our new brand depicts, animal health is at the centre of everything we do as an industry, and I will do my utmost to promote the many benefits that healthy animals can bring in terms of public health, sustainable food production, and for both the environment and the society we live in.

“I will use this mandate to ensure that the business of researching, developing and producing medicines is fully understood, and will continue to promote a more streamlined and science-based regulatory environment that is conducive to innovation in its many forms.”

Left to right: Clint Lewis (Zoetis), Wijnand de Bruijn (Dopharma), Vytenis Andriukaitis (EU Commissioner for Health & Food Safety), Roxane Feller (AnimalhealthEurope), Santiago de Andrés (Veterindustria)

Left to right: Clint Lewis (Zoetis), Wijnand de Bruijn (Dopharma), Vytenis Andriukaitis (EU Commissioner for Health & Food Safety), Roxane Feller (AnimalhealthEurope), Santiago de Andrés (Veterindustria)

Posted on November 14, 2017 and filed under Animal Health, People.

MPs criticise lack of joined-up food assurance

A Parliamentary Select Committee meeting has criticised a lack of co-ordination across farm and food assurance schemes.

Neil Parish MP

Neil Parish MP

The Environment, Food and Rural Affairs Committee of the House of Commons met last week to discuss recent allegations of food safety breaches at the 2Sisters Foods poultry meat plant in West Bromwich. These were uncovered by a national newspaper.

Executives from the British Poultry Council, Red Tractor Assurance and the British Retail Consortium were summoned to give evidence at the meeting.

Summing up, committee chair Neil Parish MP noted: “everyone seems to carry out separate audits, without talking to anybody else, allowing people to get away with bending and breaking the rules.” He said the ‘horsemeat’ scandal of a few years ago had demonstrated the need for better intelligence on the ground to show that operating procedures and standards were being met.

Mr Parish called for better co-ordination of existing assurance checks, both to ensure full compliance and to prevent bad practice from slipping through the gaps.

In their defence, the assurance bodies said there are confidentiality issues with some of the information.

The EFRA Committee will return to this issue in six months to measure progress.

ADM Capital invests in olive oil

The London-based investment fund ADM Capital Europe has acquired a controlling majority stake in Olivos Naturales (Innoliva) in Spain, one of Europe’s largest extra virgin olive oil producers.

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The purchase is made through ADM Capital Europe’s Cibus Fund, a vehicle that “aims to take advantage of the significant investment opportunities arising from global demographic changes, adoption of improved diets and the inability of many of the world’s fastest growing economies to meet increasing regional demand for certain high-value foods”.

With the US having to import 95% of the olive oil it consumes, at a time when demand for it is growing in line with healthy eating, there is a clear opportunity to create value, notes Rob Appleby, co-founder and joint chief investment officer, ADM Capital Group.

 “We are delighted to announce the Cibus Fund’s acquisition of Innoliva,” he continues. “The company’s pioneering olive oil production technologies have positioned it as one of the world’s most sustainable and lowest-cost producers of consistently high quality extra virgin olive oil. Our investment underlines our commitment to investing in industry leaders who place innovation and sustainability at the heart of their business, and whose goal is to help solve global food supply and demand imbalance.”

Posted on November 14, 2017 and filed under Company News, Crops.

Oilseeds dent ADM results at Q3

Multinational agribusiness Archer Daniels Midland (ADM) has reported lower profitability and revenues at both the Q3 and nine month stages of its current financial year, due to a “difficult operating environment”.

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The business has posted net earnings of $192 million on sales of $14.8 billion in the three months to September 30th 2017, compared to $341m and $15.8bn in Q3 2016. Nine months in, net earnings are $807m on revenues of $44.8bn, from $855m and $45.8m a year earlier.

The company says a number of factors are behind the downturn. Its crop Merchandising and Handling activities suffered from lower North American grain and global trading with US corn and soybeans less competitive in global markets. This also affected Transportation with low US exports of grain and a slower start to the North American harvest.

On the crop processing side, the Milling and Other segment saw volumes fall, mainly in the US. While Corn Processing had a strong quarter, Oilseeds Processing results were down year-on-year with compressed global crush margins and weak South America origination margins.

There was a weaker biodiesel result, caused by lower margins, but the Bioproducts segment saw better bioethanol margins.

“Our third quarter results were below our expectations, as the operating environment in our Ag Services and Oilseeds businesses was more challenging than anticipated,” comments ADM chairman and chief executive Juan Luciano. “Through the quarter, we took several actions to be even more competitive in the future, including: restructuring our global workforce; reconfiguring the Peoria ethanol complex; working to complete several operational start-ups; driving additional asset monetizations; and further reducing costs through our Project Readiness initiative.

“As we move through the fourth quarter, we are starting to transition from a period of costs and investments in acquisitions, new innovation centres and new facilities, to a period of lower capital spending and increasing benefits from these investments.”

Posted on November 14, 2017 and filed under Company News, Grain Trading.

New RUMA antibiotics targets, as UK usage falls

he UK livestock industries have set new targets to reduce, refine or replace antibiotic use across the farmed species. The move comes as government data shows a marked fall in antibiotic use in animal agriculture.