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He comments: “Throughout the year,


YEAR Despite very challenging trading conditions relating to reduced farm incomes and unseasonal weather early in the year that adversely affected sales in a number of seasonal product categories, Mole Valley Farmers encouragingly managed to improve performance and achieve an increase in revenue over the previous year to £426 million. Mole Valley Farmers chief executive,

Andrew Jackson says to achieve such positive results in very difficult trading conditions has been “no mean feat”.

demand for many agricultural products has been subdued, particularly, within the dairy sector as understandably many of our farming customers became disheartened and increasingly anxious about a reducing milk price outlook, so naturally cut back expenditure on non-essential farm requisites. “By maintaining a strong competitive

offering and an improved emphasis on differentiation in a number of areas and farm services, pleasingly we did experience some positive growth in the second half of the year in a number of established product categories. This resulted in overall like-for-like customer transactions increasing significantly over the previous year. The business also implemented a number of re-organisational changes aimed at modernising business processes to make efficiency savings.” A drive to improve competitiveness has

enabled the business to retain gross margin at 14.7%, increase year on year EBITDA margin

to 13% (£7.9m) and improve profitability. The group pre-tax profit for the year ending 30th September 2016 increased to £2.3m - up £1.2m on the year. The company closed the year with a

strong balance sheet with net assets of £47 million - up 4% on prior year. Throughout the year, the business has

continued to offer savings and benefits to its members, with vehicle sales alone bringing total savings in excess of £600,000. In the year, the business saw:

• Farmer shareholder numbers increase to 8,487. • New manufactured farm buildings sales increase by 9%.

• A 10% increase in ruminant feed volume. • A 15% increase in visitors to its online retail site. • Overall capital investment totalling £3.2 million, which included the acquisition of the long established and well regarded feed business; A. Nichols Cow Mills Ltd.

DECREASE IN EU COMPOUND FEED PRODUCTION IN 2016 (-1%) A further drop expected in 2017 due to avian influenza & environmental restrictions

Compound feed production estimates for 2016 The industrial compound feed production for farmed animals1 EU-282

in the in 2016 reached an estimated level of 153.4 million tonnes,

i.e. 1% less than in 2015, according to data provided by FEFAC members. As regards cattle feed, the picture is extremely contrasted

throughout Europe. The Netherlands and Poland have seen their production of cattle feed increase by more than 8%, whereas France moved in the opposite direction, reflecting diverging national milk production following the abolition of dairy quotas. Overall, due to low milk prices, dairy farmers were not encouraged to purchase high performing feed to maximise milk production, resulting in an aggregate downturn of EU cattle feed production of 1.5%. Although poultry feed production was expected to perform rather

well in 2016, the Avian Influenza outbreak at the end of 2016 severely impacted several poultry producing regions of Europe, in particular France where a 4% decrease in poultry feed production was recorded. All in all, EU poultry feed production remained almost stable and is still the leading segment of EU industrial compound feed production, well ahead of pig feed. On the pig feed side, after two years of moderate growth,

production decreased by 1.5% in 2016. This can partly be explained by the effects of African Swine Fever in Eastern Europe, which weighed heavily on the development of pigmeat production, but also by low market prices for pigmeat in the first half of 2016 and large availability of feed grade cereals at low prices which benefitted on-farm mixing.

million tonnes Cattle feed Pig feed

Poultry feed Total

2015 42.0 50.2 53.7


2016 41.4 49.4 53.6


%Var 2016/2015 -1.5 -1.6 -0.2 -1.0

For the third year in a row, Poland was one of the best performing

countries, with annual growth of +4.7%, boosted by the demand for poultry feed which has turned Poland into the largest poultry producing country in the EU. The Netherlands, boosted by the demand for dairy feed, recorded a 1% growth vs. 2015. Germany, Spain and Belgium saw their total compound feed production fall by 1-2%, whereas France saw its production drop by 4%. Germany strengthened its

position as the leading EU country in terms of total compound feed production, ahead of Spain and France. The final estimate and detailed breakdown of the 2016 figures will be issued in June 2017.

Market Outlook for 2017 FEFAC market experts are relatively pessimistic concerning industrial compound feed production in 2017. The dairy sector still needs to recover from the severe milk price crisis, thereby likely negatively impacting the dairy herd in 2017, while also national adjustments to meet environmental criteria play a role. These developments may lead to a further reduction of cattle feed production by 2%. The expected stabilisation of pigmeat production in Europe could induce a moderate reduction in demand for pig feed (-1%). Poultry exports will continue to be affected by Avian Influenza, thus putting pressure on EU poultry production and subsequently the feed segment (-0.5%). Overall, this would lead to a further 1% decrease in compound feed production in 2017 vs. 2016. A number of parameters will evidently affect this outlook.

The evolution of outbreaks of Avian Influenza and African Swine Fever will be decisive, in particular in terms of EU export capacities preservation. The scope for reestablishment of Russian imports of EU pork as a result of WTO conclusions on the illegality of the Russian sanitary ban introduced in 2014, may on the other hand offer some opportunities for certain EU countries, although it is unlikely that this development will lead to action in the short term. This case is one among many political factors that undoubtedly will affect the market in the EU and worldwide. Cereals market quotations are now on a moderate upward

trend, after reaching a record low level in autumn 2016. However, the relatively comfortable level of end stocks at global level, the good prospects for the South American harvest and the good state of EU winter cereals plantings should maintain prices at a low level in the first half of 2017. As regards soybeans, signals from South America are positive both in terms of acreage and yields for the spring harvest. An additional positive indication is predicted increase in the US soybean acreage for 2017. Nevertheless, with the demand for soybeans and soybean products increasing at global level by 4% per year, the balance sheet remains tight.

1. From 2016 on, FEFAC no longer includes dry petfood production in its statistics, since a large part of the production was missing in national statistics. 2. Greece, Malta and Luxembourg excluded


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