NWF Agriculture has grown to be a leading national supplier of ruminant animal feed, feeding one in six dairy cows in Britain. The business supplies over 4,750 farmers from Scotland to Cornwall.
- Margins and volumes are in line with our expectations for this time of year
- Our mills in the North, Cheshire and the South West are fully operational
- We are aligned to the needs of our farming customers in these key areas of the country
2017 was a year of investment for Feeds whilst operating in a volatile market environment. Low milk prices at the start of the year depressed market volumes for feed over the summer. As milk prices increased, feed demand recovered and for the year as a whole ruminant feed market volumes were ahead by 1.5%, albeit with the growth coming from sheep feed. In addition, commodity prices increased significantly through the year, increasing by 17% from the start of the year until March 2017, since when they have eased back.
The new feed mill in Longtown, Cumbria, was completed in the year, although later than anticipated, and the automated blends production facility in Cheshire opened in line with the project plan. These investments complete the operational reorganisation for Feeds and the exceptional costs incurred relating to this project. This provides world-class operating units close to our key farming customers from the South West of England to Scotland and gives an effective platform for further development.
Revenue increased by 16.5% to £158.2 million (2016: £135.8 million) as a result of increased volumes, feed prices and additional sales of traded products in the year. Headline operating profit was £1.5 million (2016: £2.1 million) as a consequence of the impact of increasing commodity prices on margins. Total feed volume was 1.6% higher at 589,000 tonnes (2016: 580,000 tonnes).
A key strategic priority for the business remains to increase the nutritional focus in Feeds by providing high quality advice and value added products to our farming customers. This has been of particular importance in the year to support our farming customers as the milk price has increased and farmers look to increase yields.
Average milk prices in Great Britain increased during the year by 6.4p per litre to 26.9p in May 2017, a level that, positively, is above the average cost of production and therefore reducing the hardship faced by dairy farmers at the start of the year. Despite this, milk production fell by 5% to 11.8 billion litres (2016: 12.4 billion litres) as the UK herd size had reduced as a consequence of a low milk price.
Feeds has a very broad customer base working with over 4,750 farmers across the country. This base, and the underlying robust demand for milk and dairy products, results in a reasonably stable overall demand for our feed in most market conditions.