“Our recent acquisitions, coupled with our R&D resource, make us a leading player in UK organic feed,” Simon Caughey, marketing manager, Devenish Nutrition, told FeedNavigator.
Consolidation continues to be a factor within the whole of UK agriculture, and the organic feed industry is not exempt, he said.
The purchase of Vitrition for £750,000 represents the second deal in the organic segment for Devenish in the past two years – in April 2013 the firm snapped up British organic feed manufacturer, Hi Peak Feeds.
“We have been delighted with the success of the Hi Peak business since we acquired it and so we are already well established in the UK organic feed market. Strengthening our position further will allow us to use our considerable research and development facilities, nutritional expertise and experience to increase and improve our organic farm offer for our customers.
We are looking to bring innovation to the organic industry, and to be leaders in this market as we are in the conventional one. The organic offering is and will continue to be a significant part of our business,” said Caughey.
Demand for organic feed
Market dynamics would seem to favour organic sector development in the UK. A 2015 report from the UK's Soil Association shows sales of organic products increased by 4% in 2014 to £1.86 billion. It called this ‘remarkable growth’ in a year when food prices fell by 1.9% and consumer food spending by 1.1%.
“Organics has weathered the last recession well and there are firm indications that organic food consumption is rising.
Organic consumers are loyal and, at present, imports are required to meet organic food demand. We see this not only as a sign that the 3,700 plus current UK organic producers will stay with the sector, but that they will be joined by others – and that their prospects are good.
If you look across Europe, it is continuing to grow there also, with sales of organic produce in Finland, for example, also up 5%. In line with organic consumption and increased confidence, demand for organic feed is significantly up on last year and we predict that trend to continue,” said Caughey.
Dairy market dynamics
He said that while there has been a spate of organic milk producers leaving the industry in recent years, there are clear signs that that trend has ceased.
“With demand for organic milk increasing and organic farmgate milk prices holding up there is good reason to suggest that the trend out of organic milk has not only abated, but that it will be reversed over the next five years. It also leaves a group of hardcore producers committed to organics who will help grow the market,” said Caughey.
He said consumption of organic milk in the UK is up around 5% and there is now a tangible premium for organic milk over conventional – in some cases upwards of 8p per litre.
Meanwhile, in an interview with this publication in December last year, following the acquisition of Yorkshire-based A-One Feed Supplements for an undisclosed sum, Owen Brennan, CEO and chairman of Devenish told us: “Our objective is to grow organically and by acquisition so more acquisition activity is likely. It will be governed by our ability to identify businesses that are of interest for one reason or another or by business locations.”
He said Devenish, which manufactures nutritional products for the pig, poultry, ruminant, companion animal and equine sectors, would be focusing its search on Ireland, the UK, the US, East Africa, the Caribbean, India and Pakistan, and confirmed that the group was in “advanced stage negotiations” in North America.
The group, which has global sales in excess of £140m ($219.6m), operates four manufacturing sites in the UK and two in North America.