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impacted upon the profitability of the livestock feed industry at the level of the Gross Margin, typically represented by Sales less the Cost of Sales. Looking at the statutory Report and Accounts of a number of companies with important involvement in the livestock feed industry for years prior to and subsequent to the late 1980s and early 1990s, it is possible to detect a trend towards higher Gross Margins during the latter and subsequently, as the feed material costs of manufacturing animal feed became more appropriately related to the price that livestock farmers could afford to pay. The underlying key to these developments was, of course, the MacSharry reforms that were promulgated in 1992. Ray MacSharry, a former Minister of Agriculture and of Finance in


the Irish Government, was appointed EU Commissioner for Agriculture in the new Delors Commission in 1988 with a specific mandate to prepare CAP reform. This stemmed from the growing realisation in Brussels that the Common Agriculture Policy was, in its then current format – to use a currently fashionable term – unsustainable. On 21 May 1992, the Council of Ministers reached a political agreement on what were widely accepted as far reaching changes to the CAP, albeit it is important to stress that no fundamental changes were made to EU law or the three principles on which the CAP was founded. The basic policy instruments (namely intervention buying to support market prices and variable levies and export refunds to close the gap between Community and world market prices) were kept in place albeit at much lower levels. These instruments, however, were supplemented by new


measures designed to make Community agricultural products much more competitive in world markets, compensation for the price cuts being made in the form of hectare or headage payments. What has been the effect of these far-reaching reforms? In 1991, the year prior to the introduction of Ray MacSharry’s


reforms, total use in Great Britain of wheat, barley, maize, oats and other grains amounted to 3.36 million tonnes of which the majority constituted feed wheat. Total use of feed materials amounted to 10.29 million tonnes; cereal inclusion thus came to 32.7 per cent. In 2016, total use of cereals by the feed industry in Great Britain


amounted to 4.73 million tonnes, which constituted 42.1 per cent of all raw materials used by the feed industry during the year in question, a substantial increase compared to the year before MacSharry. In passing, it might be worth mentioning, with regard to those who decried the use of maize gluten feed in the late 1980s that, in 2016, the princely total of 58,400 tonnes was used by the feed industry in Great Britain; this compared with 551,200 tonnes in 1993. Partially, this substantial reduction in use of maize gluten will reflect concerns about where the maize came from – possibly GM-sourced – but it does not discredit the fact that cereals are now much more competitive when it comes to the raw material matrix of today. As regards total production of feed in Great Britain, it is too


early to say whether or not 2017 will turn out as another record year, following 2016 into the post 1992 history books. As they say, watch this space.


FEED COMPOUNDER MARCH/APRIL 2017 PAGE 21


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