By Dan Buglass
THE HEARLD
08/12/2006
Times have been tough for farmers, but the associated supply industries have also been hit hard and many have gone to the wall, especially in the compound feed sector.
Familiar names of a generation ago such as SAI - Scottish Agricultural Industries - and, more recently, BOCM Pauls have either disappeared or have closed feed mills in Scotland.
There are only a few plants manufacturing animal feeds in Scotland, but Turriff-based Harbro, which was founded 30 years ago, was pleased yesterday to welcome more than 300 farmers to its new £5m factory at Birkhill Commercial Park, near Lesmahagow, Lanarkshire.
For many years, Harbro was a company that concentrated its activities in the northern half of Scotland. However, during the last decade, it has expanded its activities to other parts of the country. This latest investment is seen by Graham Baxter, the firm's managing director, as one that will be of mutual benefit to farmers and the company.
"We are already the biggest suppliers of animal feeds to Scottish farmers with annual sales of 250,000 tonnes and a turnover of £51.5m, plus sales of a wide range of animal health products through our 12 stores," said Baxter.
"Our existing customers for feed include six of the top 10 dairy herds in Scotland, which demonstrates the high quality of our products and the technical back-up we provide."
Scotland has just 1300 dairy farmers, having lost more than 700 in the last seven years. Those who remain have tended to increase the number of cows on their farms.
The average Scottish herd size at 130 cows is the largest in Europe. Those producers are highly efficient and deserve the best service, according to Baxter.
"We see considerable scope for increasing our market penetration, particularly in the area south of the M8, which is the most concentrated dairying area in Scotland. Our new mill and dedicated technical team gives us an edge which none of our competitors can match."
The new mill certainly lives up to those claims with stainless steel storage bins and blending facilities that are at the least the equal of plants manufacturing food for the human population. However, current legislation, much of which comes from Brussels, is rendering on-farm mixing of animal feed increasingly difficult.
Feed costs are the most important factor in the profit-and-loss equation of many farm businesses. Grain prices have risen by almost 40% over the last 12 months and high protein ingredients look set to follow that trend.
Baxter commented: "Feed prices have risen by £6 to £10 per tonne and it is probable that there will be similar increases in the coming months.
Haulage is another big issue, but we aim to minimise those effects through being able to have four separate compartments in our 26-tonne wagons."
A negative feeling has been prevalent in the livestock industry for many years, but a new mood is emerging among progressive farmers, according to Ian Mennie, sales director with Harbro.
He said: "I think things are changing, and we are now finding a much more positive mood from our customers, most of whom are very committed to the future. Agriculture is changing fast and we want to be part of that process.
"We would not have invested in this plant unless we saw a good future. We will hope to expand still further and see opportunities for selling into Cumbria and further south."
Douglas Kerr, who runs two herds of about 600 cows in Dumfries and Galloway, was one of many dairy farmers who welcomed the opening of the feed mill.
He said: "Margins are slim and we all need a higher price for our milk, but this plant and the associated technical support, is the kind of good news that will keep committed dairy farmers in business."
