Farmers on the Dorset-Somerset border are getting higher grain prices after the opening of a multi-million pound poultry feed mill by egg producer Paul Crocker.

Mr Crocker’s birds lay a quarter of a million eggs a day – 1.5% of UK consumption – and his plant will process 20,000t of locally grown wheat in its first year. Of this, 60% will be fed straight to his chickens with the rest sold to other poultry farmers.

“We have made pledges to our farmers to pay the Farmers Weekly feed wheat price plus 4/t for the next three years, and not to charge any weighbridge fees. We are almost having to turn people away, because it is more than they will get elsewhere,” said Mr Crocker.

Despite the 2m cost of the computerised mill, 10% of which was grant funded, Mr Crocker reckoned he would soon be saving money.

He expected to save 6-7/t on his wheat requirement even before any processing – which costs 10/t – had taken place, simply because of lower transport costs.

“We are not going to be able to get any more for the product, so we must take costs out of the business. The mill will do that.

“Wheat has priced itself into the market at 60/t compared to other feeds, such as tapioca, which are nutritionally better but cost 80/t.”

Mr Crocker said he was also looking to launch low-cost “Easyjet-style” sales over the internet to use some of his huge spare capacity at the 150,000t a year factory.

Some local farmers were sending in as little as 10t a year and many received part payment in chicken muck, which they used to fertilise future crops.

But contract farming company Velcourt will supply a large part of Mr Crocker’s wheat requirement, according to director Richard Williamson.

“The main thing is to get a price structure which is fair and doesn’t need endless renegotiation. That means a contract with a degree of tolerance, so the ups and downs of the grain market are shared by both parties.

We’re also looking at option contracts or futures to separate the transaction from the physical supply of wheat.”

Local farmer David Hole said he grew milling wheat varieties at present, but thought supplying feed wheat to the mill could be well worth it. “It would save a lot of miles.”

Speaking at last week’s official launch of the mill, which is next to Wessex Grain’s silos at Henstridge, Dorset, former DEFRA minister, Lord Whitty, said: “If farmers are confident, there is still a living to be made from agriculture. This project shows farmers’ confidence and I think it will prosper.”