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Major meat processing company announces UK operations sell-off

November 26, 2012
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EINDHOVEN, Netherlands — Concerns over the future of the UK''s meat processing industry have been raised, following the announcement that one of the largest food processing companies, Dutch-based Vion, is planning to sell its UK operations and withdraw from the market.

Vion runs pork, red meat and poultry units in the UK and employs about 13,000 people at 38 sites across the country. It has been operating in Britain since the late 1990s, after its acquisition of Key Country Foods, Tranfield and the Grampian Country Food Group in 2008.

The news comes shortly after Vion failed to find a buyer for part of its business — the Hall''s of Broxburn plant, which accounts for more than two-thirds of pork production in Scotland — and had to close it. Vion UK chairman Peter Barr said that the company is already in talks with a number of potential buyers who have declared interest in taking over different parts of the business and detailed discussions with them are in progress. Vion is planning to shift the focus of its business to mainland Europe, mostly in the Netherlands and Germany.

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According to Stephen Rossides, director of the British Meat Processors Association, Vion''s decision to sell off is indicative of the challenging market environment for many UK businesses in the sector. The fact that such a key player on the market is withdrawing is inevitably going to have an impact on the UK meat processing industry and raises many questions about its future and about how other businesses will react to the new market environment, he added.

Vion''s decision has sparked fears among workers and farmers, but was no surprise to the majority of industry representatives. Analyst David Pattison told Farmers Weekly the move was anticipated. The UK meat processing market has grown by about 5 percent on an annual basis but competition has become fierce, particularly at the top end, with major businesses fighting for a bigger market share and more profitable contracts, he commented.

While employees are worried about their jobs, farmers are concerned about their future contracts. However, Pattison believes that the situation might present producers with new opportunities to renegotiate contracts and end up with better terms, since at present they are working on very small margins.

Commenting on the news, National Farmers'' Union (NFU) chief livestock advisor Peter Garbutt said that livestock and poultry suppliers for Vion have been reassured by the company that operations will not close but just change management. He explained that the NFU is analyzing the potential implications of Vion''s move for its members and is soon to meet company representatives for talks.

Experts believe that Vion''s business is likely to be broken up, with different buyers taking over various parts of it. Several factors are predicted to define the future deals, including geographical location and the type of operation. Industry analysts believe that added-value products processing sites will be the most attractive to potential buyers, as well as branded production and sites with more modern and advanced equipment.

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