UK farming can expect a continued depressed market for more years to come according to Carlisle based Carr's Group as it sank to a five month low as interim results showed lower revenue and pre-tax profits.
"The Group is operating in challenging markets," said Chief Executive Officer Tim Davies as the Group's revenue was down 9.4% to £189.1m and PBT slipped 0.9% to £10.5m.
"The UK agricultural market has suffered from the depressed farm gate milk and livestock prices and we expect this to continue through 2016 and 2017, which will directly adversely impact our UK farm customers."
Group revenues were £189.1m, down 9.4% from the prior year (2015: £208.6m) primarily due to commodity price movements. Profit before tax decreased by 0.9% to £10.5m (2015: £10.6m).
Against a challenging backdrop of continuing mild winter weather and low farm gate milk and livestock prices, sales volumes of feedblocks are down 2.8% year on year.
Declining farm incomes has resulted in considerable weakness in the machinery market, with sales down 11.7% year on year.
This is expected to continue through the rest of this year and into the next financial year.
The global dairy market outlook will remain weak throughout 2016, but with more upward pressure on prices as we head into 2017, according to the Rabobank Global Dairy Quarterly Q1 2016 report.
Global dairy commodity US dollar prices have continued to stumble along a market floor largely determined by the level of EU intervention support. The short-term outlook remains pessimistic.
In the face of a cripplingly long price trough entering 2016, production growth in the world’s milk production regions has continued to slow.
"Looking forward, the news is by no means all bad for the dairy industry", says Kevin Bellamy, Rabobank’s Global Dairy Strategist.
"With the exception of Brazil—gripped by the worst recession in a generation, Rabobank sees dairy consumption continuing to grow in Asia, as well as in the US and EU."
Rabobank expects that, throughout 2016, slowing production growth will be matched by slow, but steady consumption growth in most main export regions.
