AGRICULTURE

AB Agri procures grain and oilseeds from farmers and co-products from the food, drink and bioethanol industries. It manufactures and sells animal feeds and premixes to farmers and micro ingredients to farmers and feed manufacturers. It also provides agronomy advice and crop inputs.

In the UK, AB Agri sells services to the food supply chain, from farmer to retailer, aimed at product differentiation, efficiency and sustainability. It has facilities in the UK and China and markets products in 55 countries worldwide. Investments made in recent years, in new technologies, products and emerging markets, particularly for animal feed enzymes and premixes, are now developing into substantial businesses and will provide opportunities for more growth in the medium term.

Revenues were 18% ahead with growth achieved in all sectors, driven by commodity price increases in UK feed and strong development of feed enzymes, speciality feeds and nutrition. This growth, together with an excellent performance from Frontier, drove operating profit up 21% on last year.

UK feed revenues and profit both grew, benefiting from the long-term relationships developed with major customers. This was achieved despite a difficult year for the UK livestock industry which experienced one of the worst winters on record and agricultural commodities showing extremes in both the overall high level and in day-to-day volatility of cereal prices. At Premier Nutrition, sales of pig starter feeds and premixes continued to grow strongly, particularly in Eastern Europe and Russia. Expansion of the premix factory at Rugeley is progressing to plan and will come on stream next autumn. AB Vista achieved strong revenue growth and significant market share gains in feed enzymes, and sales in the US benefited from the regulatory approval of our new Quantum TR product in March 2011.

Good feed volume growth was achieved in China, as higher prices for pigs, eggs and milk led to increased farm incomes and a greater enthusiasm for agricultural investment. This market is nonetheless challenging, particularly with high raw material commodity prices driving up the cost base.

At Frontier, firm wheat prices and high volatility throughout the year created exceptional grain trading opportunities with record volumes purchased and traded. High crop prices underpinned good farm profitability resulting in strong growth in fertiliser and seed sales, and increased usage by farmers of crop protection products.