Price war on feed market fatal for ForFarmers

The fierce price competition on the feed market in Northwest Europe in the first six months of this year turned out to be fatal for ForFarmers. The listed feed group with its head office in Lochem saw feed sales shrink by 4,8% and underlying profit fall by 74,3%. Due to non-recurring expenses, ForFarmers ended up with a loss of €12,8 million.

ForFarmers announced this this morning. Total feed sales in the first half of 2023 amounted to 4,3 million tonnes, a decrease of almost 5%. Compound feed sales fell by 6% to just under 3 million tonnes. Sales of pig feed fell due to the fierce price competition in this market. This price war is encouraged by the shrinking livestock in Northwest Europe, ForFarmers explains, which means that there is overcapacity in the feed industry. ForFarmers also sold less broiler feed due to the welfare concepts in the Netherlands and bird flu in the United Kingdom. The group did note growth in ruminants, such as cows, in particular in the United Kingdom. 

ForFarmers ended up with a gross profit (Ebitda) of €20,4 million, a decrease of 51,8% compared to the same period last year. At the bottom of the line comes an underlying profit from ordinary activities of €4,4 million, a decrease of almost 75%. Due to non-recurring charges, a loss of €12,8 million was ultimately recorded, compared to a profit of €11,1 million the year before. These non-recurring charges mainly concern the write-down of the Belgian activities that ForFarmers sold to this spring Arvesta. 

“Price competition has intensified in volatile market conditions, putting further pressure on our volumes and with it our gross profit. The answer to this challenge lies in the execution of the strategy", says Pieter Wolleswinkel, CEO of ForFarmers, in a statement accompanying the figures. ForFarmers has previously announced that it will reorganize the company, opting for more local responsibility and commercial flexibility. "Fewer management positions and short lines to the customer", so Wolleswinkel explains: "This approach should lead to an improvement in our volume development and therefore gross profit."

Eric the Thrush

Eric is a member of the editorial staff of Boerenbusiness. As a descendant of an arable family, farmer's blood flows through Eric's veins. He considers himself a generalist, but with a preference for economics, trends, markets and marketing.

e.delijster@boerenbusiness. Nl

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