Profitability Prospects

摘要

While wheat prices surge and commentators talk of a rerun of 1973 when, as very senior members of the feed trade will remember, raw material prices soared, it is important that the feed industry keeps its eye on what is happening immediately and closer to home. Following the huge rise in raw material costs which took place in 2007-08, compounders were forced to raise farmgate prices in order to avoid a catastrophic fall in Gross Margins. The recent easing of feed material commodity prices - at leastfor the moment - has seen feed prices stable or posting gradual falls as compounders have responded to competitive pressures while avoiding a stampede in the direction of lower prices. Falling feed prices are reflected in data collected by DEFRA on a voluntary basis from the industry. These can be matched against spot raw material prices available from various trade sources to give an indication of the direction in which Gross Margins are heading. Roger Dean has been scanning the data and reckons that Gross Margins could remain under pressure for some time.