Avara Foods, the UK poultry supplier co-owned by agri-food giant Cargill, is proposing to shut another plant.
Plans to close its facility in Newent, Gloucestershire, in south-west England, come less than five months after the company announced its intention to close its factory in Abergavenny in Wales, impacting 400 employees.
Avara Foods has not said how many workers will be impacted if the closure of the Newent facility – planned for Spring 2024 – goes ahead. Local media outlets have put the number of workers at the site – previously known as Freemans of Newent – at 320. The facility provides chicken for the likes of restaurant chain Nando’s.
Explaining the rationale for its latest decision, Avara Foods blamed the economic climate.
“Like all UK food businesses, we have faced significant inflationary pressure in fuel, commodities, and labour over the past two years. While some price increases have been achieved, they have not been sufficient to mitigate the full impact of rising costs on our margins,” it said in a statement.
“In today’s trading environment, sustainable businesses must provide a competitive offer to consumers and sufficient margin to allow reinvestment in the food supply chain. These can only be achieved if inflation can be sufficiently offset and that, in turn, demands excellent productivity and efficiency.
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“We have taken steps already in this regard, including the recent closure of our Abergavenny facility. However, we have recognised the need to take further action, to continue to deliver a fifth of UK-produced chicken every week, through the most efficient operational footprint.”
Avara Foods added its existing chicken volumes and full product range could be processed more efficiently, and with lower capital investment, by focusing on fewer, better-invested facilities.
“This decision has not been taken quickly, but through long-term business planning focused on delivering a sustainable poultry model able to supply a significant percentage of UK poultry supply now and into the future,” the company said.
Avara Foods, which was set up by Cargill and UK group Faccenda Foods in 2018 as a venture to house their fresh poultry assets in the country, will begin a collective consultation process with the employees affected by the plans.
Announcing plans to close its Abergavenny site in May, Avara again cited macroeconomic factors as reasons behind the decision, including falling demand for “UK-produced turkey” in the country’s retail channel.
Apart from Newent, the business has another seven processing sites in England.
The most recent set of accounts for Avara Foods filed at Companies House was lodged in February and covered the year to the end of May 2022.
Its turnover stood at £1.26bn ($1.56bn as of February), versus £1.19bn a year earlier. The company booked an operating loss of £21.3m, compared to an operating profit of £23m the year previous.
The accounts show a loss after tax of £16.1m. A year earlier, Avara Foods made a profit after tax of £16.9m.