A joint venture between animal feed businesses ForFarmers UK and Boparan’s 2Agriculture has been abandoned following an investigation by the Competition & Markets Authority.
2Agriculture, which like 2 Sisters Food Group is owned by Ranjit Singh Boparan, specialises in the production of poultry feed, which it then supplies to 2 Sisters’ Hook hatcheries business and to the wider poultry market.
The tie-up, first announced last July, had been touted as a move to improve the transition towards a “more sustainable way” of farming with enhanced returns, by 2Agriculture.
However, the CMA opened an investigation into the deal in October, before concluding in December that the jv raised “competition concerns in four local areas across East Anglia, north-western England and North Wales where it could lead to higher prices for poultry feed, lower-quality feed or worse quality of service”.
The CMA also said it was “concerned that the joint venture could unfairly favour Boparan’s chicken farming and processing businesses, resulting in less choice for smaller chicken farmers and processors, who might rely on ForFarmers and Boparan for their chicken feed”.
After the CMA considered suggested proposals to address these issues were “unlikely to be sufficient in addressing its competition concerns”, the competitions regulator then referred the deal for an in-depth Phase 2 investigation.
However, the pair decided this week not to proceed with the partnership, leading to the cancellation of the CMA probe.
A statement by the two parties said they had abandoned their plans after taking into consideration the “current impact on their respective businesses, the costs involved, [and] the impact this process has on both employees and farmers”.
They added they still believed the jv “would have made for a robust business, with improved expertise and presence across species, to successfully meet the changing demands from the entire value chain”.
Additionally, the proposed tie-up “would have invested in driving improvements and optimising services in the most efficient manner, with a focus on further improving production efficiency and feed quality to the benefit of both farmers and end consumers”, they said.
The proposed deal and its abandonment come amid a period of significant cost inflation across the entire food chain, with poultry and egg production among those to see bills for inputs such as feed rise the highest.
2 Sisters CEO Ronald Kers told The Grocer in December that the business (and sister company Bernard Matthews) had lost millions over the past year due to a combination of soaring production costs and the impact of avian flu.
The supplier also announced plans to close its Llangefni processing plant on Anglesey last month, citing the impact of rising costs, putting up to 730 jobs at risk.