UK – Avara Foods, one of the largest food businesses in the UK has announced plans to close its factory in Abergavenny, South Wales, blaming the rising costs following the Covid-19 pandemic and falling demand for UK-produced turkey for the decision.
According to Avara, since the Covid Pandemic, the company has faced significant inflationary pressure in fuel, commodities and labour, which has driven up pricing and significantly reduced demand for UK-produced turkey in the retail market.
“To maintain a competitive customer offer, Avara has started to reengineer its turkey business to operate a more efficient operational footprint focused on fewer, better-invested facilities,’ the company said in a statement.
The firm said it had looked in depth at a range of options to enable its wider business to compete effectively in the market in the future, including different uses for the Monmouth shire factory.
“Regretfully, this process identified that volumes could be processed more efficiently in other operations and with lower capital investment.”
However, the government indicated that the announcement came as a major blow for more than 400 workers putting their jobs at risk and also for the community in general.
“We are aware of Avara’s announcement, which will come as a major blow for workers and the community. We are in touch with the business to explore options and stand ready to support those impacted by the news,” a government spokesperson noted.
Previously at the beginning of the year, Avara had reported a slump of losses of more than £20m amid ‘inflationary pressures in the previous years.
The group revealed that it had posted pre-tax losses of £21.3m for the year to 31 May 2022, compared with profits of £22.7m in 2021 which nullified a turnover increase from £1.19bn to £1.26bn over the same period.
Avara added that impact of post-Covid re-normalization of global supply chains, Brexit changes to the UK labour market and in EU trade, and the economic shock created by Russia’s invasion of Ukraine in February 2022 have created structural changes in its operating environment and heralded a very challenging year.
This follows the recent closure of poultry giant 2 Sisters’ Llangefni factory on Anglesey, citing concerns over high production costs.
While Abertillery-based Tillery Valley Foods went into administration last week with the loss of nearly 230 jobs also blaming inflationary pressures with spiralling food and energy costs impacting cashflows.
Headquartered in Brackley, Avara Foods has eight other processing sites across the English border including in Telford, Dudley, Market Rasen, Hereford and Newent Gloucestershire.
It was set up in 2018 as a joint venture between US agri-food giant Cargill and UK group Faccenda Foods.