News ForFarmers
'No margin at livestock farmer for higher feed costs'
Prices for feeds are rising and this is an extra challenge for livestock farmers, acknowledges Yoram Knoop, CEO of ForFarmers. "Farmers have to translate the extra costs into their margins, but that space is no longer there." ForFarmers itself is looking for expansion in at least 2025 additional countries until 2, looking not only at the European Union, but worldwide.
Knoop revealed this on Thursday morning (11 March) during the digital presentation of the annual figures for 2020. The listed feed company announced a net profit of €14,7 million there, compared to €18 million in 2019. Turnover and feed sales also fell† By making strong progress on the cost side, ForFamers was able to improve the underlying net profit - the profit attributable to the shareholders - by 10% to €46,3 million.
Calculate prices
Prices on the international grain markets, including wheat and soybeans, have been rising for some time† This means that the costs for purchasing the feed raw materials also increase. Costs that ForFarmers ultimately has to pass on in the price for the animal feed products. This does not always have to be a 1-to-1 calculation, explains Knoop. "We calculate the raw material prices, but of course we also look at what the competition is doing and adjust our policy accordingly. Each country has its own specific method for dealing with this."
Knoop acknowledges that the timing of the higher raw material costs is unfortunate, as the margins of dairy, pig and poultry farms are not exactly rosy during this period. "For farmers, it creates an extra challenge to translate the extra costs into their margins. And that space is no longer there. We expect that this will lead to higher prices for meat, milk and eggs in the coming months. always takes some time for this translation to take place in the chain."
Playing field is worldwide
ForFarmers is now active in 5 countries: the Netherlands, Belgium, Germany, Poland and the United Kingdom. Within 5 years the group wants to be active in 7 countries and also be the market leader there. In this way, Knoop does not ignore their ambition. When asked, the CEO would not say in which market areas the orientation lies. According to him, ForFarmers is completing a strategic study into this. Expanding further in the European Union is a logical option, but Knoop emphasizes that ForFarmers is looking globally. "The playing field has become global."
Knoop expects that, when the corona crisis comes to an end thanks to the vaccinations, the markets will quickly recover. At the moment, for example, the sale of poultry feed in Poland was under heavy pressure, because the sale to the catering industry and food service there has ceased. For this, ForFarmers had to write off some €32 million in goodwill on its Polish company Tasomix. This so-called impairment has considerably depressed the ultimate net profit of the group.
The CEO does expect that - once the lockdowns are eased - the markets will recover quickly. "That can happen very quickly in Poland, for example, while a country like Germany also has to deal with trade barriers due to the presence of ASF (African swine fever, ed.) in that country."
Difficult impact of nitrogen law
In the Netherlands, feed sales are under pressure, partly due to the effects of the stoppage scheme in pig farming. Roughly, ForFarmers estimates that this has reduced pig feed sales by 2,5 to 5%. The company also sees the well-being concepts at the various retailers (such as Albert Heijn or Jumbo) growing strongly. This also has repercussions on ForFarmers, says Dutch director Pieter Wolleswinkel. As a rule, welfare concepts require animals to be given more space, which ultimately results in customers purchasing less feed.
The impact of the nitrogen law, which was approved by the Senate last Tuesday, is difficult for ForFarmers to estimate, says Wolleswinkel. "It is very difficult to oversee at this stage. We embrace that there is a lot of talk about the innovations that are needed and that investments are made in them. That helps to improve support among farmers." Knoopt adds: "The presence of livestock farms may decrease in one region, but there is certainly still room for development in other areas."
ForFarmers, which financially supported the farmers' protests last year, hopes that the cabinet will work on proper consultation with farmers. "Our biggest concern is the support among farmers for these plans. This needs to be improved. Work with them, even after the elections," said Wolleswinkel.
Eric the Thrush
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