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Sales Profits Grow at Fane Valley

25 April 2014

NORTHERN IRELAND - Armagh based Fane Valley Co-operative has reported a significant uplift in both sales and profitability for the last financial year.

Group turnover, including share of its joint venture, increased by 17 per cent to £534 million, while profit on ordinary activities before taxation increased by 50 per cent to £8.72 million.

Group Chief Executive Trevor Lockhart (pictured left) described the performance as being ‘extremely pleasing’ with all divisions making a significant contribution to the year-end result.

He added that the Fane Valley Group, which includes Kettyle Irish Foods, Hilton Meats, Irish Country Meats and Linden Foods, Fane Valley Dairies, Fane Valley Feeds, Fane Valley Stores, A. Lonhienne, Linergy, Slaney Foods and Whites continued to develop in a ‘very positive way’. The improved performance was also reflected in a 15 per cent increase in the net assets of the company.

Addressing shareholders at the Annual General Meeting at the Canal Court Hotel, Newry, Trevor Lockhart said: “The 2013 year started with one of the most difficult winter and spring periods in recent memory and concluded with one of the better grazing and crop growing seasons.

“Farmers faced enormous challenges in managing land and livestock through to turnout, which in turn impacted on productivity levels and business cash flows. For many farm businesses it will take most of 2014 to fully recover.”

Within Fane Valley it was also a year of much activity and considerable change. Investment projects were successfully completed within Linden Foods Burradon, Fane Valley Dairies and Fane Valley Stores.

The final sale at Newtownhamilton Livestock Mart was also held in September 2013 as the facility closed as part of a joint initiative with Markethill Livestock Sales aimed at improving the provision of livestock marketing services in Co. Armagh.

Mr Lockhart added: “In Fane Valley Dairies we maintained our focus on increasing the proportion of milk supplied directly from supplier farms. During the year 100million litres were added to our growing pool.

“A further 50million litres has been added since the September year-end with the overall volume now surpassing our objectives for the project.

“Reaching this position has enabled the Board to look forward with confidence as we seek to fulfil our other strategic goals focused on enhancing the quality and functionality of the products we produce.

“A programme of capital investment within the Banbridge factory will now follow over the next three years.”

Referring to market conditions Mr Lockhart said: “The supply surge, which was the inevitable result of higher farm gate prices, is now having a dampening effect on the market demand situation as reflected in the 18 per cent fall in the GDT over the past three events.

“This can be expected to result in some weakening of farm gate returns over coming months as processors move off higher priced contracts.”

In relation to Fane Valley’s agri-businesses it was reported that Fane Valley Feeds recorded a 28 per cent increase in revenues with activity levels reflecting the lower quality and quantity of forages conserved in summer 2012.

The Fane Valley Group Chief Executive added: “As volumes through the Newry mill continue to grow we have now embarked on a significant investment to upgrade various elements of the facility including the installation of an automated production control system. This will enable the mill to cope with the additional demand in peak periods.”

Building on recent success Fane Valley Stores achieved a further 15 per cent growth in sales. According to Mr Lockhart this growth is being underpinned by a program of store upgrades and new store openings.

“Improvements to the yard area at Land Ends and a doubling of the size of the Augher retail shop have now been completed whilst a new store has been successfully launched in the new Markethill Livestock Centre”, continued Mr Lockhart.

“Since the year end we have also acquired three new locations formerly trading as McCaughan Animal Health. Upgrades to each of these premises is being planned as part of the integration of these outlets during 2014.”

Sales within the Linden Food Group (including the Slaney Foods joint venture) grew by 19 per cent during the year to reach £337 million completing another successful year of development within this division.

However since the year-end Fane Valley Group Chief Executive referred to the very significant change in the market dynamics for beef with the real impact of the ‘horsegate’ saga only being felt now.

“Yet again consumer confidence in beef has been rocked with the effect not being limited to the UK and Ireland,” explained Mr Lockhart.

“These events have led us into a whole new world with regard to customer specifications, production and processing standards and the associated controls and traceability.

“The full impact of post ‘horsegate’ changes within supply chains, a reduced consumer demand for beef across Europe and a lack of retailer promotional activity have resulted in a very substantial overhang of forequarter meat in the market. This has triggered a significant reduction in beef prices which is placing enormous pressure on producer and processor margins.”

The Fane Valley Group Chief Executive concluded by stating that the shape of Northern Ireland Agriculture will be significantly influenced by a number of key decisions to be taken by the Executive and the relevant Government Departments in 2014. Firstly, the basis for determining future levels of Single Farm Payment and also the level of resource allocated to the implementation of the recommendations contained within the Agri-Food Strategy Report.

“It is crucial that decision makers keep in the forefront of their minds the need to promote and encourage improved efficiencies and productivity in primary production as we seek to build an industry that can compete on an international stage,” said Mr Lockhart.

Fane Valley Chairman Mr William McConnell (pictured right) welcomed guest speaker Mr Ian Marshall Deputy President – Ulster Farmers Union to address the AGM. Mr Marshall spoke with great detail on a variety of current issues affecting the Ulster farmer, such as Budget, Active Farmers, Regionalisation and Young Farmers.

The UFU Deputy President also touched on more pressing local issues with Rural Crime, Farm Safety Partnership and Agri Food Strategy Board (AFSB) of main focus on the day.

TheMeatSite News Desk

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