Coylton Mill cuts feed costs in SW Scotland

The new £7 million ruminant feed mill at Coylton in Ayrshire, a joint venture between Mole Valley Farmers (MVF) and J C Fergusson, is now fully operational. Designed to service a wide geography across northern England to the central belt of Scotland, it is already having a disruptive effect on the regional feed market, says MVF head of agriculture Keith Ockenden.

The Coylton site, owned by J C Fergusson, has had a blending plant for over 20 years, originally in partnership with Norvite, and more recently with NWF Feeds. NWF was making some 35,000 tonnes of blends there and transporting 50,000 tonnes of finished compounds from its Cheshire mill to Ayrshire for local distribution. But NWF’s decision a couple of years ago to establish its own blending plant at Dumfries left an opening for a new partner.

Mr Ockenden says MVF wasn’t seeking to expand north of the border – at the time it was still integrating the Farmway acquisition in the North East, itself a significant geographical expansion for the Devon-based co-operative. But the decision to take part in the Coylton opportunity was helped by the arrival of NWF northern feed manager Alan Callaghan at MVF as head of feed, bringing some of his former sales team with him.

Over the last year, JC Fergusson has invested £7m in installing a new intake-to-product compound animal feed mill at Coylton.  Joint venture partner MVF will provide the working capital and manage the operational and commercial functions in running the plant and distributing its products.  This keeps the cost relatively low for MVF with no impact on its balance sheet.

The Coylton facility now has the capacity to make in excess of 120,000 tonnes of compounds and 60,000 tonnes of blends each year. Starting with an existing blends facility has enabled an unusual integrated blends and compound mill to be designed, where the bulk raw material bays are used to feed both the blender and the press lines by wheeled loader. This means the traditional feed mill elevator towers are not necessary. The raw material storage and intake area has been extended to cope with the higher throughput, as has the finished product storage. The result is a more flexible system, and the first new compound mill to be built in Scotland since Harbro’s Strathclyde plant at Birkhill, say the partners.

As part of the development of the new mill, a full range of compounds and blends have also been specifically formulated to meet the needs of the various farming systems throughout Scotland and the north of England. The MVF team of specialist nutritionists can formulate feed rations that meet the nutritional requirements of the cow whilst maintaining cow health and performance.

Technically, Mr Ockenden says the new mill has been planned and built to maximise efficiencies at every stage of production, in order to enable cost savings to be passed to the farmer.  “This is the most efficient and low cost mill within Mole Valley Farmers. We are looking to minimise production complexities and maximise production runs, to deliver what farmers need,” he said.

The installation includes the first two PTN Progress 1000 presses to be supplied to the UK by the Dutch engineering company.  “Each press is capable of producing up to 18 tonnes per hour of finished 6mm pellets,” says John Fergusson, managing director of J C Fergusson. “These auto control systems are the future of animal feeds - this automated feed manufacturing system will help meet increasing demand for pelleted and blended feeds.”

“The intake system can transport feed ingredients at rates of up to 80 tonnes per hour to 16 bins, and there is a total intake storage capacity for over 500 tonnes of feed materials. The manufacturing line has also been designed to handle and process molassed blends and finished meals,” Mr Fergusson continues.

“The site is using flat storage for both feed materials and finished product, and has a capacity of 4,000 tonnes of open storage.” As it is mainly servicing the dairy and beef sectors, the mill can schedule longer production runs, which also aids efficiency.

Mr Fergusson adds that the site’s location, only 40 minutes from Glasgow port, means that large stocks of feed materials can be sourced straight from the dockside, while the mill is also within easy reach of the port at Ayr.  Feed grains can be sourced both locally and from the central belt of Scotland, with quality grain co-products within easy reach from the Scottish distilleries.

As well as compounds and blends, a full range of ruminant requisites such as calf milk, feed supplements and minerals can be sourced from MVF through the mill. In the longer term, the partners also intend to develop a wider livestock farm inputs supply offer, ranging from animal health products and fencing materials to silage additives and films.

Mr Ockenden estimates that the market for compounds and blends in Scotland is around 500,000 tonnes per year, but points out that 50% of this is currently made south of the border. The new mill will be able to supply customers across a wide area across northern England to the central belt of Scotland, he notes.  “Up until now, much of the feed utilised on farm in south west Scotland has been produced south of the Scottish border, with feed trunked up from as far as Cheshire. The new mill will not only boost the local economy, but realise greater efficiencies in manufacturing and transport costs which will ultimately be passed back to farmers.”

Removing the cost of transporting feed from Cheshire and Durham to South West Scotland represents a £10-15/tonne saving, in addition to the efficiency savings through local ports for feed materials, the reduced power requirement from the new modern presses and fewer, longer production runs.

“Cost reduction, coupled with the handling and delivery expertise at J C Fergusson and the marketing and nutritional capability of Mole Valley Farmers, will ultimately lead to lower costs and therefore savings for our progressive farming customers,” says Mr Ockenden.

“The construction of the Coylton feed mill by John Fergusson, coupled with the presence of Mole Valley Farmers has already caused a reaction, ruffling the cosy supply infrastructure across Northern England and South West Scotland,” he continues. ”Some feed producers are offering pricing, reported to be unsustainable in the long term, aimed to protect market share. But with milk prices also at an unsustainable level, farmers are appreciating the current pricing environment,” he states.

“As a farmer owned business, MVF has a strong sense of purpose - the same purpose today as was laid out over 55 years ago - to ensure that our presence creates a competitive environment for farm inputs, preventing other supply companies from profiteering at the expense of farmers,” Mr Ockenden explains.

MVF needs the scale to compete in a consolidating farm supply sector, if it is to achieve its core purpose of creating a competitive environment for its farmer members, emphasises Mr Ockenden. "Whilst mindful that profit is important for any business, Mole Valley Farmers does not look to maximise profits from the farming sector as a core purpose, especially when so many producers are facing economic challenges with falling milk, red meat and cereal prices. We believe the supply industry needs a strong farmer owned business, operating to true co-operative principles, combining scale and leveraging greater value for farmers.

“As the market consolidates, a strong, efficient, farmer owned supply business with a large market share can only serve the best interests of farmers, rather than serving shareholders with no involvement in agriculture looking for the best rate of return on their investment.  Longer term, and similar to the large cooperatives operating in Europe, this model will offer farmers more protection and greater supply chain influence from the ultimate outcome of less choice and managed pricing.

While the short term farm gate price pressures will drive more industry consolidation, demand will increase. The UK has the right climate for dairying – it is already the third biggest milk producer in the EU – and the national population is forecast to grow to around 77 million people, the highest in the EU, within 15 years.

MVF is investing to ensure it can be in the game for the long term, but in a global market place, the industry needs to adapt to surviving periods of oversupply, concludes Mr Ockenden. The business will always assess expansion opportunities as they come along, as long as they fit with its core business model and objective of helping its farmer members.