Europe's largest animal feed manufacturer, ForFarmers, said
that Brexit is holding back its UK operations in the short term, as European
environmental measures threaten to constrain dairy and pig production in
Holland and Germany.
The Dutch-based co-operative has a 6% share of the EU's 155
million tonne annual finished feed market, with operations across Holland,
Germany, Belgium and the UK.
Last year's sharp devaluation in sterling after the UK voted
to quit the European Union has reduced the contribution to ForFarmers of the
group's operations in the country.
While overall group feed volumes and profitability increased
in the first three month of 2017, ruminant and pig feed sales fell in the UK.
Despite recovering milk prices, dairy herd rebuilding is not
yet evident in Britain, nor are pig numbers increasing as animals fetch a
higher market return.
"UK farmers are uncertain about the financial consequences
of the Brexit for the agricultural sector," ForFarmers noted.
"They are therefore cautious in taking investment decisions
with respect to possibly increasing of their herd size or expanding or
improving their farm businesses."
Pigs vs dairy
Both Dutch and German farmers had benefitted from higher pig
While feed volumes in the Netherlands rose in the period,
the company warned of the impact of EU measures to reduce dairy phosphate
emissions that came into force there in March.
"It is expected that the measures will lead to a reduction
in the number of animals in 2017 and consequently to a limited decline of the feed
volume to the dairy sector," the group said, adding that this would affect
results for the second half of the financial year.
Similarly in Germany, pig farmers "are increasingly faced
with new sustainability and environmental regulations which can limit their
expansion possibilities and increase their business costs".
ForFarmers chief executive Yoram Knoop said the ongoing
rollout of the company's Horizon 2020 strategy had spurred growth in feed
volumes and cost control.
"The first quarter results make us feel confident that we
are on course with the realisation of our Horizon 2020 strategy," he said.
This includes meeting a target of growth in earnings before interest,
tax, depreciation and amortisation (ebitda) of "mid-single digits at constant