2 August 2002

Market moves shake up live trade in north

Carlisle-based Harrison and Hetheringtons take-over of

the livestock business of major rival Penrith Farmers

and Kidds tightens the companys grip on the

north-wests auction mart system. Should livestock

farmers be reassured or concerned by the emergence of

this dominant operator? Jeremy Hunt investigates

Harrison and Hetheringtons Trevor Hebdon admits to liking a flutter on the horses. But away from the racecourse hes been busy studying the form of the runners that make-up the north-wests fragmented auction mart system.

Last weeks announcement that Harrison and Hetherington had bought out Penrith Farmers and Kidds livestock auction selling system, including a string of auction marts, is undoubtedly the firms biggest gamble.

But in this race for regional auction mart supremacy there will be no shortage of obstacles to clear in the coming months as farmers monitor how successful H&Hs selections have been.

Last month Mr Hebdon leaned back in his chair and gave a wry smile with a hint of mischief when questioned about future mart acquisitions – in particular that of major rival Penrith just 16 miles south on the M6 motorway.

"Nothing can be ruled out," he said, knowing that negotiations were well advanced for the PF&Ks deal.

H&H sells stock from its most northerly market at Lockerbie in south-west Scotland to its newly developed West Country sale centre near Bristol. But its in the north-west that the company now dominates the sale of livestock by auction.

It has been flexing its muscles for some time in a region where previous moves to restructure auction selling and achieve mart amalgamations have failed. The foot-and-mouth crisis – which produced valuation work to swell the coffers of several auction companies – equally deprived other markets of trade and intensified their existing financial pressures. Increased deadweight selling in the wake of F&M has also taken its toll.

Partnership deals

All this has brought about a spate of rumours concerning mart closures, but H&H has been willing to strike innovative partnership deals with those needing succour and support.

Earlier this year, H&H set up a "limited liability partnership" with Kendal auction mart, which includes the market at Broughton-in-Furness in south Lakeland.

"A limited liability partnership is a new method of operation. Its a hybrid between a limited company and a traditional partnership," said Mr Hebdon. Its a structure that he admitted has produced "a few waves" because the Broughton-in-Furness mart was previously operated by the owners of Ulverston market, a company so far remaining doggedly independent.

H&H has also conjured up a new-style deal with Lancaster Auction Mart where a "strategic alliance" has been set-up. This is a much "looser" association with no financial commitment; the joint remit of both partners is to find a "long-term, sustainable future for livestock marketing in south Cumbria and north Lancs."

Many believe the controversial take-over of Penrith will make the Lancaster arrangement appear obsolete and a clear buy-out to bring the operation in line with H&Hs other livestock trading is, in time, inevitable.

Mr Hebdon does not like the word "take-over" and, despite mopping up PF&Ks livestock business last week, says it is not the companys intention to own "a raft of auction marts".

Whether that will lead to the eventual closure of marts at Kirkby Stephen, Lazonby and Middleton-in-Teesdale – previously run by PF&K – is still the subject of much speculation among Cumbria farmers.

"The door was open long before F&M to sort out the auction system in this region. Its no good waiting for people outside the industry to tell us what to do.

"Were trying our best to control our destiny. The door is not closed on any further restructuring but there are those who are easy to do business with and there are those who are not."

Thats the clearest hint Mr Hebdon gave concerning the resistance of some north-west auction marts to join forces with H&Hs rapid expansion.

But he strongly refutes any suggestion that to have one company with such a rapidly number of livestock markets within its portfolio is removing competition and may create a monopoly situation that could prove disadvantageous to the regions livestock producers.

"Farmers need a strong, sustainable, financially sound auction mart structure which can invest in the future and that is what we intend to do."

Could even more auction marts soon become aligned, associated or taken-over by H&H? Mr Hebdon admits that the companys "immediate strategy" will not be completed until the end of the year.

"There are certain parts of our operation that still need to be developed and strengthened."

Fighting talk for a company that, even before the PF&K deal, had handled a cool £50m worth of cattle and sheep in restocking deals for farmers in Cumbria and south-west Scotland. &#42

&#8226 Penrith Farmers and Kidds will continue to operate:

&#8226 Stokesley Market in Co Durham.

&#8226 PF&Ks abattoir in Blackpool, Lancs.

&#8226 Cumbrian Fellbred Meat Marketing Scheme.

&#8226 Penrith auction market as a deadweight collection centre.

Cumbrian farmers offer their opinion

&#8226 Stephen Graham, Brampton: "For one auction company to have such a tight grip on livestock selling is not good news for farmers. Its almost creating a monopoly situation and taking away all the competition. Thats not a healthy situation for livestock producers."

&#8226 Steve Dunning, Tebay: "Rationalisation is a good thing. I am optimistic about the future but its the end of an era for Cumbrias livestock farmers and I can understand why some are concerned about one company having so much control."

&#8226 Will Cockbain, Cumbria NFU county chairman and Keswick hill farmer: "The announcement was a big shock for the farming community of Cumbria especially those within easy reach of Penrith Market who are now forced to travel much further to sell livestock. This is bound to have a huge impact on these family farms.

"Apart from the physical problems it will cause, the closure [of the livestock selling system] sends a worrying message to farmers about the state of the livestock auction sector. Some restructuring was on the cards but this was not anticipated.

"There is a vast amount of stock to be traded within Cumbria in the coming weeks and farmers had already been planning how they could best sell stock at their traditional autumn sales fixtures while adhering still to the 20-day rule.

"Now the calendar of sales has been changed and its bound to cause farmers even more difficulties as they face new dates and new sale venues."

But after a meeting with PF&Ks Stuart Bell on Monday (Jul 29) H&Hs David Tomlinson pledged to reorganise sale dates to minimise disruption to farming businesses in the area.