Concerns that JV could mean higher costs for poultry farmers
Concerns have been raised that a feed deal between 2 of Europe’s largest poultry businesses could lead to higher costs for farmers.
The UK’s Competitions and Markets Authority (CMA) has said the anticipated joint venture between Dutch-based ForFarmers and the UK’s Boparan could lead to farmers paying more to feed their birds.
ForFarmers and Boparan (through 2Agriculture) manufacture and supply chicken and other types of poultry feed in the UK. They plan to combine their animal feed milling operations in a joint venture, with the firms operating 19 mills across the UK.
Competition concerns
Following its Phase 1 investigation, the CMA has found the deal raises competition concerns in East Anglia, North West England and North Wales, where it could lead to higher prices for poultry feed, lower quality feed or worse quality of service.
While both businesses currently compete for customers within each of these local areas, the CMA is concerned that the combined business would not face sufficient competition after the merger. The Authority, an agency of the Department for Environment, Food and Rural Affairs, is also concerned that the joint venture could unfairly favour Boparan’s chicken farming and processing businesses, resulting in less choice for smaller producers and processors.
During its first phase of the investigation, the CMA received several complaints from customers and other market participants in relation to the impact the joint venture might have on the choice of feed suppliers and poultry feed prices.
“…it is vital we don’t allow a reduction in competition between poultry feed suppliers…”
Sorcha O’Carroll, CMA senior director of mergers, said: “Feed is the biggest expense faced by farmers when rearing chicken, the UK’s favourite meat. With food prices already increasing and the wider cost of living crisis, it is vital we don’t allow a reduction in competition between poultry feed suppliers, which could make the situation worse – both for farmers and shoppers at check-out.”
ForFarmers and Boparan have been given 5 days to submit proposals to address the CMA’s concerns. If suitable proposals are not submitted, the CMA will progress to an in-depth second phase of the investigation.
