The following information has been taken from Feed Facts Quarterly 2006 - Number 3 (Ref:Simon Mounsey Ltd).

Traditionally, the compound feed industry could be divided into three broad categories of company. Recent changes mean that the whole question of how compounders are classified will have to be considered in the near future. The matter is already under review in DEFRA.

The currently accepted definitions of different types of feed compounder are:

1. National Compounders
2. Country Compounders
3. Co-operative Compounders

National Compounders

Twenty years ago, there were six 'national' companies; BOCM Silcock, Dalgety Agriculture, RHM Agriculture, Pauls Agriculture, Bibby Agriculture and Nitrovit.

Today, just two companies, BOCM PAULS and ABNA, manufacture and distribute compound livestock feeds on a nation-wide basis. However, only BOCM Pauls operates across the product spectrum while ABNA produces only monogastric feeds.

BOCM PAULS has a share of the market estimated at around 22-23 per cent, equivalent to just over two million tonnes in 2005. From 1992 until 1998, the company was owned by the chemicals and plantations group Elementis (previously Harrisons & Crosfield). This followed its purchase, by Pauls plc, of the Unilever-owned company BOCM Silcock. The company celebrated its centenary in 1999.

In November 1998, Elementis plc sold its shareholding in BOCM Pauls to Accruechart Ltd and a management buyout team for £69 million. Accruechart is now known as Agricola Holdings Ltd. According to the most recent data available, BOCM PAULS accounts for around 95 per cent of Agricola Holdings Ltd's sales although the two companies had slightly different accounting periods.

Having formerly eschewed mill closures, BOCM Pauls started on a rationalisation programme in April 2002, closing its monogastric mill at Crediton, Devon. It also announced the closure of its Chilton mill as part of the reorganisation of its operations in northern England. In a relatively unpublicised move, it closed its Alton and Burstwick mills in November 2003. In 2004, it entered into an agreement with Tamar Feeds, the feed manufacturer then jointly owned by Cornwall Farmers and Countrywest Trading, to lease and run Tamar Feeds' Launceston mill in conjunction with its own mill near Exeter. It also acquired the business of GB Mathews, a Dorset-based compounder, the Purns mill being subsequently closed.

In May 2005, the company entered into a deal with Countrywide Farmers whereby the latter ceased compound feed production, leased its Presteigne mill to BOCM PAULS and closed its Melksham mill. Subsequently, the company has closed its Renfrew mill and entered into a toll milling agreement with Davidson Brothers (Shott) Ltd. An even more recent agreement has been to sell its Shepshed mill to Geo. L White Ltd who will manufacture monogastric rations for BOCM Pauls while producing ruminant feed formerly produced at its Clarence Street mill in Burton on Trent This deal will come into effect from March 2006

In the year ending 31 December 2004, BOCM PAULS reported sales of £318.38 million, an increase of £23.61 million or eight per cent up on 2003. The company incurred a pre-tax loss of £5.61 million compared to £2.05 million in 2003. This reflected the £5.98 million of costs incurred in closing the Unitrition oilseed expelling operation that ceased operation on 31 December 2004; the remaining feed material upgrading operation closed on 31 March 2005. At the operating profit level, BOCM Pauls made £3.06 million on its continuing feed manufacturing operations, more than double the level of 2003.

The second major player in the UK compound feed industry is the animal feed and related businesses owned by Associated British Foods plc.

Originally, these consisted of two distinct organisations. ABNA Ltd, the former ABN renamed on 1 February 2001, incorporated the former Bibby Agriculture together with Trident Feeds and KW Agriculture. The company also made a number of acquisitions of which the largest was the purchase, for £10.51 million, of five former Dalgety mills in October 1999.

The second pillar of ABF's agriculture-related activities was Cereal Industries, which included the Fishers Group. As far as animal feed manufacture was concerned, CIL also incorporated Fishers Feeds, a pig and poultry feeds specialist, Blended Feeds, which deals in feed ingredients together with the recycling of bakery and food factory by-products and Yorkshire Country Feeds Ltd. The Fishers Group acquired Dalgety's Gainsborough mill as part of Dalgety's abandonment of its livestock-related activities and became a substantial regional compounder in its own right.

In 2000, ABNA acquired the business and net assets of several of Cereal Industries Ltd's trading divisions for an outlay of £52,359,000. During the year ending September 2001, ABN and Fishers' activities were integrated in a move that resulted in the closure of Fishers' Cranswick mill and the centralisation of feed material buying, laboratory services, quality control, finance and administration.

In the year to 18 September 2004, ABNA made pre-tax profits of £8.57 million on total sales of £799.72 million, approximately one-third less than in the corresponding period of 2003 and representing a pre-tax profit ratio of 1.07 per cent. Sales were approximately 7.1 per cent higher than in 2003. The company achieved a Gross Margin of 9.9 per cent of sales, less than in 2003 and partly reflecting the rampant feed materials market in the second half of 2003. Shareholders' funds amounted to £103.06 million, a substantial increase on the level of 2003.

The company received £300,000 for the sale of its Bury St Edmunds-based ruminant business to Duffield's in 2002. At the end of 2003, it announced a very much more ambitious disposal programme; the sale of its ruminant feed business to Pye's for a net consideration of £15.1 million. At the end of January 2004, the company disposed of its one-third interest in Welsh Feed Producers for £100,000, resulting in Wynnstay and Clynderwen and Cardiganshire Farmers each taking a 50 per cent share in WFP.

Country Compounders

These companies, while not manufacturing and distributing on a national basis, nevertheless have significant manufacturing capacity in particular regions or areas of the UK, notably in the northwest. With a few exceptions, these companies operated a single mill and were often old-established organisations based on flour milling or the supply of agricultural requisites. Subsequently, a number of these companies acquired second mills following the dismemberment of Dalgety's feed manufacturing interests.

A significant development at the end of 2003 was Pye's acquisition of six ABNA mills that, in effect, made Pye's a national ruminant compounder. However, scarcely a year later, Pye Bibby sold three of the southernmost mills to the farmer-controlled company Mole Valley Farmers for an as yet undisclosed sum. Subsequently, Pye's went into administration in July 2005 with Carrs Billington Agriculture purchasing most of the remaining assets.

Another recent development has been acquisitions by independent companies of companies that cannot be said to be competitors. Examples of this to date are Norfolk-based Duffields' acquisition of Pen Mill Feeds in Somerset and Cheshire-based NWF's acquisition of the Devon independent JGW Thomas.

Joint ventures are beginning to acquire a significant rôle in the independent sector. Billington Agriculture is a long-time exponent of this form of organisation and has a joint venture with Carrs Agriculture; Carrs Billington Agriculture. Farmway has a joint venture with Lloyds (Animal) Feeds Ltd in FeedCo. Finally, Carrs Billington Agriculture has joined with the Wynnstay Group and Welsh Feed Producers (itself a 50:50 Joint Venture between Wynnstay and Clynderwen and Cardiganshire Farmers Ltd) to resurrect Bibby Agriculture from the wreckage of the W & J Pye debacle.

In many cases, the country or independent compounders are family-owned and with strong family involvement. Some of them have long histories stretching back to the late nineteenth century; others are more recent in origin. A recent survey suggest that, out of three hundred and five plants manufacturing prepared feeds for farm animals, sixty nine per cent had been in existence for ten years or more, eighteen per cent had existed for between four and nine years while fifteen companies were aged two years or less.

Co-operative and Farmer-controlled Compounders

These companies are either farmer-controlled and organised under the Industrial and Provident Acts or, as in recent years, have pursued the tendency for co-operatives to restructure their activities under the Companies Act. This allows them to escape the restraints imposed on co-operatives in that their capital must be entirely owned by the members. In most cases, farmer involvement in the companies concerned remains significant.

The number of co-operatives remaining true to the co-operative and mutual movement is declining. West Devon & North Cornwall Farmers Ltd with a mill in Launceston, Cornwall converted to Companies Act status under the name of Countrywest Trading in 2002. This company has subsequently been acquired, in November 2005, by Cornwall Farmers Ltd, a company that for the present retains its cooperative status. Farmway also retains cooperative status.

All farmer-controlled companies have substantial interests outside compounding, notably in retailing. For example, Mole Valley Farmers, which has significant compounding and blending facilities reported that, in its 2000 year-end results, 56 per cent of turnover arose from its retail branches with livestock feed and minerals constituting its second biggest activity at just over 20 per cent of turnover. The Wynnstay Group and Countrywide Farmers also have extensive retail businesses selling to the general public as well as the agricultural community; about 36 per cent of its sales are attributable to its feed manufacturing business.