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days of talks in Brussels. Rather than let the proposal go by the board, I understand that


discussions will continue at a future meeting with February 22 being mentioned as a possible date, by which time Feed Compounder will have gone to the printers. It appears that some member states want the discussion to continue; however, it also appears that much will depend on whether the French can be persuaded to reverse their opposition to the draft regulation as other states opposing the measure are considered unlikely to change their view. FEFAC had previously called on member states to urgently


adopt the 0.1 per cent solution. FEFAC President Patrick Vanden Avenne warned that the EU livestock sector, in particular the pig farmers, was currently facing what he called ‘the most severe crisis for decades’. This was backed up by Irish Farmers Association President John Bryan who said that at a time of rising input costs, it was ‘critical’ that Irish producers were not left at a disadvantage because of delays in authorising feed ingredients, adding that pig producers, in particular, had been under severe pressure as a result of the dramatic rise in input costs since the summer of 2010. Bryan’s members are reportedly losing €15 for every pig they produce and, indeed, as Feed Compounder went to press, it was reported that an Irish pig producer ranked in the top five of Irish pig farmers has started to wind down a 2,300 strong sow herd due to ‘unsustainable’ losses. I also hear that the EU farmers’ union, Copa-Cogeca, has called upon EU countries to agree to the proposed new rules, warning that, if this is not achieved, EU livestock farmers’ input costs will increase still further by hundreds of millions of Euros with producers being forced out of business. Independent impact assessments of continuing the zero-tolerance policy suggest a cost increase approaching €4 billion for partners in the feed chain, livestock industry and EU consumers, a sum that could go even higher should the EU be prevented from sourcing soybean meal from South America where GM soya varieties are becoming ever more popular. Apart from some member states’ desire for further discussion of


the 0.1 per cent tolerance level, I understand that there is also the possibility of a legal challenge to the Commission’s draft regulation. This is on the grounds that the draft Regulation attempts to use feed compliance legislation rather than GMO legislation where the zero tolerance policy was established. It looks as if feed manufacturers’ hopes of an early ending


or, at least, significant modification of the zero tolerance rule is not going to be realised any time soon. Given raw material price prospects in the next few months, this is an unpalatable prospect to say the least.


WYNNSTAY REPORTS The Wynnstay Group (of which, see more in our Out & About article elsewhere in this issue) reported its results for the year ending 31 October 2010 on 26 January last, just too late for inclusion in the February 2011 edition of Feed Compounder but none the less interesting for that. The Group generated sales of £243.74 million, £28.78 million or


13.4 per cent up on the previous year. Of this total, the Agricultural Supplies operation which includes the Feed Division contributed £178.02 million or 73 per cent of total sales, a figure that was


PAGE 8 MARCH 2011 FEED COMPOUNDER


10.8 per cent higher than the previous year. Wynnstay has also developed a significant country stores operation which supplies a wide range of specialist products to farmers, smallholders and pet owners. The Feed Division operates two compound feed mills, one


at Llansantffraid and another at Carmarthen where there was significant capital investment during the year. It also has blending facilities at Rhosfawr in North Wales. A look at a map demonstrates that the mills’ location and that of the blending plant offer the opportunity, as the Group puts it, for ‘logistically efficient delivery’ throughout the Group’s trading area, including the important milk pools of North and, increasingly, South Wales. The Group also has feed toll manufactured in order to satisfy additional seasonal and geographic requirements. Wynnstay report that feed sales for the year were ‘excellent’,


with increased volumes of compounds and blends contributing to a fourteen per cent like-for-like growth over what the Group describes as the ‘more difficult year’ in 2009. Wynnstay note that raw material prices rose steeply towards the end of their financial year and that, while the majority of the increases were recovered by higher product pricing, there was an inflationary effect on sales revenue. However, Wynnstay report that feed Gross Margins in their 2011 financial year are ‘in line’ with expectations. While Wynnstay has traditionally concentrated on ruminant


nutrition, in recent years it has developed a thriving poultry feed business. The underlying strategy has been to build a presence as a supplier to the free range eggs market and to this end, the Group works closely with the major egg marketing business Stonegate. Wynnstay has not, however, forgotten its dairy farmer customers and notes that low ex-farm milk prices present ‘a challenge’ for dairy farmers’ profitability although I suppose that recent announcements about higher milk prices have allowed some degree of catch-up, as it were. This has clearly been a satisfactory year for the Group by any


standards. Net debt has been substantially reduced, from £5.72 million in


the previous financial year to £3.47 million in the year ending in 2010. Based on shareholders’ equity, this implies gearing of 7.3 per cent on 31 October 2010 compared to 14.5 per cent on the same day in 2009. And while Wynnstay has not yet succeeded in reinstating the average 19.4 per cent Gross Profit ratio it achieved between the years 1994 to 2006, it has been making steady progress in the last three years with a Gross Profit ratio of 15.9 per cent in 2010. The only apparent fly in the ointment appears to be that debtor


days rose, as noted by the Group, from forty-three days in 2009 to fifty-five in 2010, a development that I suspect will have been mirrored in other feed manufacturers accounts. Wynnstay attribute this to the effects of re-emerging commodity


price inflation towards their financial year-end which impacted on working capital requirements along with higher levels of inventory and receivables. Trade and other receivables increased to £36 million, a 39 per cent increase on the previous year’s figure. This was partly driven by higher commodity prices that starting to come through towards their October year-end. Additional factors included the peak trading period at Woodheads, their newly acquired seeds


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