Dispatches from EuroTier 2016

ForFarmers: 'High level of correlation between market share and profitability'

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ForFarmers reported the pressure on the Dutch dairy sector to meet phosphate emission levels could see a significant reduction in herd sizes next year, but such a development is expected to have a limited impact on the company’s dairy feed volumes overall.

Milk production in the Netherlands, post quota abolition, has been extremely high, with Dutch dairy farmers coming in above set phosphate limits, unlike the pig and poultry industries in that country.

The Dutch government had secured a derogation for phosphate production from the EU Commission in the lead up to the end of the quotas at 30% higher than the EU average, but Dutch dairy producers still surpassed the limits by somewhere between 4% and 8%.  

New Dutch legislation on phosphate quotas based on the herd size of a farmer in July 2015 was due in January 2017 but the EU Commission said the regulation was incompatible with EU law so the Dutch government has gone back to the drawing board.

And ForFarmers CEO, Yoram Knoop, told us the company has come up with nutritional strategies to help dairy producers reduce phosphate production but he stressed efforts to reign in such emissions will have to involve all stakeholders, in order to fully succeed.

Expansion

Last year the Dutch feed manufacturer delivered 9.1m tons of feed to over 25,000 farmers. In terms of that volume, the Netherlands represents 45%, the UK 34% and the cluster Germany and Belgium takes up 21% of that tonnage.

The feed group, said the CEO, is intending to strengthen its position in Belgium and Germany and is also exploring a move into new markets within the wider European region.

“Every year, we make steps on the acquisition front. Our balance sheet is very healthy, ForFarmers has no debts; very few listed companies can say that,” said Knoop.

And he said as the company operates in a low margin business, a focus on efficiency is critical.  

“There is a high level of correlation between market share and profitability,” said the CEO.

A dominant position in a region, he continued, allows more streamlined operations in that a feed producer can build a large dedicated swine or sow or piglet feed plant relying on unique raw materials that is located close to the customer base to limit transport time and allow higher quality output with a lower cost of production.

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