ForFarmers bent on consolidation of compound feed sector

By Jane BYRNE

- Last updated on GMT

ForFarmers bent on consolidation of compound feed sector

Related tags: Compound feed, Netherlands

The recent acquisition of HST Feeds in the UK shows leading compound feed manufacturer ForFarmers to be unwavering in its goal of European sector consolidation.

The Dutch group announced yesterday that it acquired 100% of the share capital of the UK feed company, saying the price paid was based on an enterprise value of €15m including cash. 

HST Feeds Limited is based in Cheshire and sells approximately 140,000 tonnes of ruminant and poultry compound feed to customers throughout the North West. ForFarmers said the company will operate within the Dutch group’s existing UK business, BOCM Pauls.  

“As we have seen in other parts of the country, the livestock sector in the North West has consolidated over recent years and is now characterized by committed, professional producers.

ForFarmers will continue to play its leading role in the consolidation of the animal feed sector, both in the UK and in continental Europe,”​ said Iain Gardner, COO of ForFarmers UK.

In 2012, the Dutch group acquired the Hendrix nutrition business in the Netherlands, Belgium and Germany from Nutreco and the BOCM Pauls business in the UK. 

These two acquisitions put the Dutch firm into the leading position of European compound feed producers with a total sales volume of animal feed of 8.6 million tonnes, 2,200 employees and a turnover of €2.6bn. 

Consolidation to ensure low costs ​ 

SNS Securities, in a November 2012 report on ForFarmers, outlined how the Dutch group is present in markets with low underlying growth rates – the Netherlands, Germany, Belgium and the UK – one of the main factors triggering the drive to consolidate. 

Mergers and acquisitions, said SNS Securities, offer the company the potential for synergies in production and logistics, leverage of R&D know-how and to a lesser extent in purchasing. 

And the report noted how the compound feed market in Europe is fragmented: 

“Based on the EU-27, ForFarmers as the leading compound feed producer ‘only’ has a market share of 4.3%. The top 10 producers together have a market share of 24%.  

The total market size of the four markets that ForFarmers operates in is about 56m metric tonnes. In these markets, the aggregate market share of ForFarmers is more than 11%.” 

Logistics efficiency ​ 

The analyst’s report also stressed that the Dutch company's approach to logistics - in terms of the supply of raw materials to the feed manufacturing sites, the actual logistical process in the factory itself and the delivery of compound feed to customers is one of its “competitive advantages”.

“Part of the focused strategy of ForFarmers is to have strong regional market share to optimize efficiency. This also enables the company to have species-specialized feed mills.

This is all especially important in compound feed activities where logistics costs are an important part of the overall cost structure,” ​notes the SNS Securities report.

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