Following its Phase 1 investigation, the Competition and Markets Authority (CMA) has found that a proposed joint venture between two poultry feed companies, ForFarmers and 2Agriculture, raises competition concerns.
ForFarmers and 2Agriculture, a company owned by Ranjit Boparan, both manufacture and supply chicken and other types of poultry feed in the UK. ForFarmers and Boparan are planning to combine their animal feed milling operations in a joint venture. Between them, the firms operate 19 mills across the UK.
The CMA said there were 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 combined businesses would account for 50 to 60% of the supply of meat poultry feed to third parties in three of these local areas (Burston, Bury and Llay) and 40 to 50% in the fourth local area (Preston).
While both businesses currently compete for customers within each of these local areas, the CMA is concerned that the combined business would not face sufficient competition after the merger.
The CMA is also 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.
During its Phase 1 investigation, the CMA received a number of complaints from customers and other market participants in relation to the impact this joint venture could have on choice of feed suppliers and poultry feed prices.
Sorcha O’Carroll, Senior Director of Mergers at the CMA, said: “Feed is the biggest expense faced by farmers when rearing chicken, the UK’s favourite meat.
“With food prices already increasing and the wider cost of living crisis, it is vital that we don’t allow a reduction in competition between poultry feed suppliers, which could make this situation worse – both for farmers and shoppers at the check-out.”
The planned joint venture between ForFarmers UK and 2Agriculture was announced by 2Agriculture on 1 July 2022.
ForFarmers UK and 2Agriculture are considering their next steps.