Farm Pride Foods: $2 million loss from high feed costs, closure of food service

One of Australia’s biggest egg producers Farm Pride Foods has reported a loss of more than $2 million. It follows two outbreaks of avian influenza in August.

Shock loss: Farm Pride Foods’ share price has plunged to 20 cents each in August from a high of 32 cents prior to its revelation it has been struck by an outbreak of avian influenza. Picture: Chloe Smith

FARM Pride Foods sees no end in sight to high feed and egg prices and tight supply from third party suppliers that has led it to record its second loss in as many years.

The egg producer, grader and packer issued a preliminary final report last week to investors that revealed a loss after tax of $2.17 million for 2019-20 reflecting a continuation of high feed prices throughout the year.

“While we indicated in last year’s report such conditions were likely to continue into 2019-20, we believed that much of the impact would have subsided by the end of the first half and trading conditions would be on a stronger footing in the second half of 2019-20.

“Unfortunately these unfavourable trading conditions have persisted … and were made more difficult by the onset of COVID-19,” the company said.

The ensuing shutdown of the food service industry has only made matters worse, resulting in a 7 per cent loss in sales in this sector.

Revenue however was up 4.25 per cent to $90.3 million.

The ASX-listed company ordinarily processes more than nine million eggs a week but has been struck by two outbreaks of bird flu last month.

Avian influenza was first detected at its Lethbridge farm on August 6, which resulted in the culling of 340,000 hens and a forecast reduction in net revenue for 2020-21 of between $18 million to $23 million.

Another outbreak was detected – this time the more virulent strain of AI, H7N7 – on a farm FPF leases in the Lethbridge area in late August that saw another 40,000 hens destructed.

Prior to 2018-19, when the company posted a $3.9 million loss due to a national egg oversupply and high wheat prices, FPF was viewed as a premium agricultural stock with six successive years of healthy profits and a 10-year return between 2006 and 2016 of 483 per cent.

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