“There is still good territory to gain in the UK. If we see opportunities to broaden our portfolio in the region, we will target those.
We are applying this growth strategy to all the markets we operate in.
We are not yet the number one or even number two compound feed player in either Belgium and Germany so we are also chasing additional assets to consolidate our position in those two countries,” Stijn Steendijk, director of strategy and organization at ForFarmers, told feednavigator.
The past two and a half years has seen the Lochem headquartered group acquire several UK feed companies - BOCM Pauls, Dairy Direct, HST Feeds and Wheyfeed. And last week, the Dutch group announced those units would be rebranded under the ForFarmers name.
“The idea is that we show one face to the market – that the brand reflects and leverages the potential of the entire organization. It will also enable a more uniform way of working throughout the group,” said Steendijk.
The UK operations, which include 12 compound feed manufacturing sites, six blend plants, a co-products and by-products division as well as premix and mineral sector activities, generate an annual turnover of around £590 million ($949m) for ForFarmers.
In a consolidated market such as the European compound feed and farming sector, it is critical to increase scale and to continue to expand, said Steendijk
“We still have room to improve in terms of our total feed business model in the UK and elsewhere. A new approach is to forge alliances with suppliers to address those gaps – something we did not do so readily in the past.
We are exploring opportunities in early animal nutrition and other adjacent sectors. Discussions have been underway with parties in this regard and we will be in a position to reveal more in three to six months’ time,” he said.
He notes the underlying growth trend in the four markets that ForFarmers operates in has been strong despite the continuing challenges of tight margins and high costs for its farmer customers.
The group posted an overall operating result for the first half of 2014 of €27.2m ($34.8m) - a jump of 33% compared to the €20.5m reported for the same period 12 months previously.
Dutch benchmarking scheme ‘positive’
ForFarmers, historically, has been very strong in the Netherlands.
And Steendijk said the recent benchmarking scheme rating feed companies against the level of antibiotic usage on Dutch poultry farms has been a positive trend for the firm: “That initiative really illustrated the nutritional quality of our feeds compared to those of some of our competitors.”
ForFarmers, he said, has been actively focused on building its network of animal nutritionists. “The more knowledge you gain the greater the chance of growth in a consolidated environment,” said Steendijk.
He said a balanced portfolio that covers all livestock species is critical in terms of riding out the fluctuations and volatility that can occur in each segment, and feed efficiency, of course, will continue to be central to the Dutch group’s business model.
“It informs everything we do. We change formulations daily to optimize feed efficiency given changes that are occurring on the market, whether they stem from customer needs, new regulations or crop quality.
For example, next up, we will be analyzing the new harvest, as we do every autumn, and adapting feeds accordingly to ensure we get the nutrient profile we need in our products,” he said.
ForFarmers is still majority owned by the original co-operative.
In terms of it going down the initial public offering (IPO) route, a move endorsed by the co-operative in November 2013, Steendijk said the company has commissioned a study examining the benefits of such a tactic. “We are taking steps to see if such a move would be appropriate,” he added.