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other products. BPEX say that there are no specific limits on the quantities that can be put into store but Member States are required to inform the Commission twice a week on the quantities for which applications to conclude contracts have been submitted. Meanwhile, there is still the fundamental problem of how to get producer prices up to the level of, at the very least, break-even. The British Pig Association has kicked off a campaign under


the slogan ‘Pigs are Still Worth It’ which will feature a rally outside Downing Street on 3 March, just as you receive this edition of Feed Compounder. This will be a re-run of the 2008 campaign when producers were also losing around £20 a tonne. I noted with interest, however, that Asda is reportedly to pay its Pork Link producers an eight pence per kilo deadweight feed price supplement for the three thousand finished pigs they supply each week, in recognition of currently high feed cost and low market prices.


POULTRY FEED PRICES I have observed, in this and previous issues, that it is very difficult to get hold of contemporary data on compound feed prices and that, in fact, data for the last quarter of 2010 will only become available next month. It is no secret that high wheat and non-GM soya bean meal


prices have driven up poultry compound feed costs. I am told that a tonne of broiler feed can now cost some producers £360 with layer feed weighing in at £275! I have no idea how accurate these quotations are but I


understand that the NFU has written to retailers setting out the effect of these costs, and is in the process of meeting with retailers. Whether anything will come of it is doubtful.


NWF REPORTS ON FIRST HALF The NWF Group recently issued its interim report for the period 1 June to 30 November 2010 and, from the feed side, it shows a dramatic turnaround for the same period twelve months earlier. Mark Hudson, the Group Chairman noted, in commenting on


the results, that NWF’s feeds business had delivered ‘a very strong first half as a result of increasing NWF’s market share of compound feed direct to farmers and implementing price increases to offset the significant price increases in key commodities’. Sales increased to £48.5 million compared with £41.2 million in the equivalent period of NWF’s 2009-10 year; up by 17.7 per cent. Operating profits tripled, from £500,000 in first half 2009-10 to £1.5 million giving an operating profit ratio of 3.09 per cent, in stark contrast with the 1.21 per cent achieved in 2009-10. The latter was the worst first half figure for years whereas the first half operating profit ration was the best since the 3.14 per cent achieved in 2004-05. The awful 2009-10 result stemmed from larger-than-normal stocks of feed wheat and the excellent grazing conditions that characterised the autumn of 2009. The increase in feed sales to £48.5 million reflected price


increases and volumes which increased by 16,000 tonnes or 8.2 per cent to 212,000 tonnes. The sharp improvement in operating profits was attributed to a ‘continued focus on working directly with farmers to improve yield and growing market share in this segment’. NWF also ‘implemented’ price increases during the period to offset significantly higher raw material costs, noting that wheat prices


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PAGE 10 MARCH 2011 FEED COMPOUNDER


had increased by nearly seventy per cent during the period, a trend replicated across the majority of commodities. I have to say that I was surprised by this figure; taking the simple average of ex- farm wheat prices in June to November 2010 as £134.50 with the average for the equivalent period in 2009 at £95.65, the increase was around forty per cent. However, as I can get no decent data on delivered feed wheat prices into NWF’s backyard, I cannot really comment any further on their figure. Nevertheless, NWF were quick to emphasise that their feed price increases were lower than the rises in spot raw materials in that the Group, in common with the rest of the trade, purchases a proportion of its raw materials forward which helped to reduce the impact of rising commodity prices on the Group’s livestock customers. As far as their feed business is concerned, NWF and their


shareholders will be rightly pleased by this first half outcome. I shall look forward to their full year figures with interest, particularly in light of their continuing ability to persuade their customers to pay the higher prices demanded by continuing volatility in commodity markets.


ECONOMIC WATCH I noted, in last month’s issue that ‘There are two pieces of potentially nasty economic news which were scheduled to emerge after this edition of Feed Compounder was put to bed. The Consumer Price Index is likely to show an upwards leap in inflation as the effects of the increase in VAT kicks in’. Actually, I made a stupid error in that the figures published


on 18 January 2011 related to the Consumer Price Index in December last year, before the increase in VAT which took place on 4 January 2011. Nevertheless, the news for December 2010 was nasty indeed; the Consumer Price Index rose by 3.7 per cent in December 2010. Prior to the release of the January data, there was much speculation that the Consumer Price Index might rise by over four per cent, double the government’s two per cent inflation target. The speculators proved to be well informed; the CPI rose to four per cent while the Retail Price Index rose by 5.1 per cent. According to the Office of National statistics, the increase in the rate of consumer price inflation was driven chiefly by the increase in VAT and the rising price of crude oil. But the set of figures that really caught the men in suits on the


hop was the data on Gross Domestic Product in the final quarter of 2010. GDP actually shrank by 0.5 per cent, an outcome far worse than


predicted by the most pessimistic of the City pundits. Weather was, of course, blamed as the chief culprit and, as the Office of National Statistics drily put it, ‘The disruption caused by the bad weather in December is likely to have contributed to most of the 0.5 per cent decline, that is, if there had been no disruption, GDP would be showing a ‘flattish’ picture rather than declining by 0.5 per cent.’ In fact, if one interprets ‘‘flattish’ as meaning zero or, even


optimistically, 0.1 per cent growth, this was still well towards the lower end of expectations, even taking account of the bad weather that kicked in towards the end of November 2010. The inflation figures combined with the dismal GDP data for


the fourth quarter of 2010 inevitably raised questions of whether the UK economy was headed for a bout of ‘stagflation’; slow or no


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