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."
Both Dutch and German farmers had benefitted from higher pig meat prices.
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 currencies".
By Jamie Day