CARR's Milling Industries is reaping the benefits of a £17 million investment in a new mill which is taking grain from an improved UK wheat harvest and shipments from overseas.

In an update to investors to coincide with its annual general meeting yesterday, the company said its food division is trading ahead of last year and in line with management expectations.

"Following the strategic investment, our new mill at Kirkcaldy is now fully operational and we are beginning to see the financial benefits linked to the improved operational efficiencies as well as commercial benefits from having a state-of-the-art-mill in a prime location.

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"The quality of the 2013 UK wheat harvest is significantly better than the prior year's poor harvest."

Both Carr's Flour Hutchisons at Kirkcaldy, whose roots lie in the first half of the nineteenth century, and a Carr's mill in Cumbria are benefit from their waterside locations.

Carr's said: "The portside location of our two Northern mills remains important to us as we continue to ship both home grown and continental wheat direct to Kirkcaldy and Silloth."

It said that sales volumes across its three mills, including Carr's Flour Greens at Maldon, Essex, were ahead of last year.

"We are optimistic about future opportunities," Carr's said.

Carr's said its agricultural division has started building a new country store at Annan in Dumfries and Galloway. Work is expected to be completed by the summer.

Carr's agricultural arm has a large Scottish presence with the likes of Ayr-based animal supplements business Scotmin Nutrition and retailer AC Burn.

Demand for feed blocks has softened in the UK due to prolonged mild weather, Carr's said.

Investec analyst Nicola Mallard said: "The group has made a solid start to the year."