The anticipated joint venture between ForFarmers and Boparan could lead to farmers paying higher prices to feed their poultry, the competition regulator has said.
ForFarmers is a European manufacturer and supplier of animal feed, based in the Netherlands. 2Agriculture, a subsidiary of Boparan, is one of the UK’s largest suppliers of poultry feed by volume produced and uses its production to supply Hook 2 Sisters, a company affiliated with Boparan, as well as farmers on the open market.
Both companies have announced plans in July to combine their animal feed milling operations in a joint venture. Between them, the firms operate 19 mills across the UK.
Following its Phase 1 investigation, the Competition and Markets Authority (CMA) on Wednesday said the deal raises 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.
While both businesses currently compete for customers within each of these local areas, the CMA said it is concerned that the combined business would not face sufficient competition after the merger.
The watchdog 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.
“Feed is the biggest expense faced by farmers when rearing chicken, the UK’s favourite meat,” Sorcha O’Carroll, senior director of mergers at the CMA, said.
“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.”
ForFarmers and Boparan now have five working days to submit proposals to address the CMA’s concerns. If suitable proposals are not submitted, the CMA will progress to an in-depth Phase 2 investigation.
2Agriculture said both companies are “considering their next steps” in response to the CMA decision.