Interview Bart Jansen
'What is a normal potato crop these days?'
The 100-year-old Avebe can call itself Royal since last week. The award of the designation, a conclusion of a year of festivities around the anniversary, comes for Royal Avebe in the middle of the starch campaign of 2019. The 4 factories are running at full speed to process the starch potatoes of the member growers in the Netherlands and Germany.
The starch potato harvest is in the final phase, but the yields are lower than average. And that after the extremely dry year of 2018. Avebe will announce a performance price of €18 per tonne for that year today (Monday 96,63 November). This includes Avebe's net result of €5,2 million, a decrease of €2,5 million compared to the previous financial year.
Bert Jansen, CEO of Avebe, about developments within and outside the cooperative company.
Avebe celebrated its 11th anniversary last week, on 100 November. Celebrated another party?
"As Avebe, we have already appropriately commemorated this unique anniversary last year, for example with a festival this summer. And last Thursday a symposium with all our relations. On the day itself we kept it modest with cake."
Does such an anniversary still have an impact on the cooperative and its members?
"Certainly, in my opinion it has brought the members and employees of our organization even closer together. Collaboration is very important to us, especially in view of our history. Just under 15 years ago, the members and employees were diametrically opposed to each other with the strikes. That feeling is no longer alive. Our strategy 'Binding and Building' contributes to this. Avebe is a company that creates added value from a potato, instead of just the cost price, we focus as much as possible on creating of value. That gives the company culture a boost."
How vital is Avebe as a 100-year-old?
"Very. In the past, of course, there have been high points, but also a number of lows. The choice to focus entirely on potato starch has worked out well for Avebe. And the decoupling from agricultural subsidies has been very important. It has been much better since then, because we can better match production to demand with the ABC system, which has resulted in much better performance prices: 10 years ago we were at €48 per tonne, last year we were at €96,63, although we are already playing at that Last performance price, of course, other factors play a role."
The performance price of €96,63 per tonne is a record for Avebe, but was achieved in an extremely dry growing year. How do you rate this price?
"We got everything out of it. In the end, the field yield was 25 percent lower, which led to underutilization in the factories. With good use of the opportunities in the market and cost savings, we still have a good result The net result of €5,2 million will be paid out in full to the members. However, the 13% increase in the performance price compared to last year only compensates for half of the lagging field revenue. That is the reality. would rather have achieved this result under normal circumstances."
How do members view the performance price in that regard?
"Overall, I also feel that Avebe has done everything it can. Despite the drought, some of the members achieved a good result, partly because they were able to irrigate. For members who were unable to do this, the result is a lot darker. A loud laugh."
Shouldn't you have compensated this last group?
"We have agreed within the cooperative that the same rules apply to everyone and that no one is made an exception. That creates clarity and members appreciate that. We are not going to change the rules in the meantime."
What are the yield forecasts for harvest 2019?
"Well, that summer again. This year too many of our members suffered from drought in the crop. It was characteristic that this varied very much. Between the regions, but also within the regions themselves. Especially in the east of the The drought played a role in the land. Many of our German members in the KPW area, south-east of Hamburg, can irrigate and therefore have less yield loss. All in all, we estimate a 15% lower yield than with a normal harvest. you wonder what a normal harvest is these days."
What does this mean for Avebe's campaign?
"That we are understaffed again in the factories. For example, the factory in Ter Apelkanaal will stop processing in February. Gasselternijveen, where Solanic is made, will continue to run as long as possible. Of course we try to produce as much potato protein as possible. What this means for the The potato starch market is unclear. I know that Denmark has had a relatively good harvest, but reports from other European countries are mixed."
In that regard, what are your expectations for the 2019 harvest performance price?
"Based on the current information, I cannot yet make a concrete statement about this. Our strategy is aimed at structurally achieving a performance price of €95 per tonne in 2023."
Can the cultivation of starch potatoes in the Northern Netherlands be made more resilient to extreme weather events such as drought?
"The cultivation of potatoes is of course primarily the responsibility of the growers. From Avebe we support them, for example, through our cultivation registration Optimeel, where we also invite our members in groups to share practical knowledge with each other. Our breeding company Averis is also very important in this regard. For example, focus on more robust varieties that also perform well under difficult conditions and are, for example, more resistant to diseases such as Phytophthora."
Growers are concerned about the growing potato sluggish problem. Many companies use a 1-to-2 rotation. This expansion means a higher cost price and perhaps also lower campaign revenues for Avebe. How do you view that?
"Starch potato cultivation is an important economic pillar for many arable farms in the Northern Netherlands. Sometimes cultivation covers up to half of a company's acreage. Close crop rotation entails risks in soil-borne diseases and pests. At Avebe we work together with members to reduce the environmental impact and increase the yield of cultivation.Our breeding company Averis plays an important role in this with new varieties with resistance to, for example, soil diseases and pests.The further introduction of our cultivation program Optimeel is also part of this "It is important. Of course we promote that growers can learn from each other. This should lead to sustainable cultivation with an eye for the environment, income and cultivation volume. We are well aware of the urgency to come up with good solutions."
What is your vision on Avebe's raw material supply in the coming years? How can Avebe convince members to continue growing starch potatoes?
"The most important thing is of course a good performance price. As mentioned, we are taking steps to achieve €95 per ton on a structural basis. We also see that the cultivation costs are increasing every year, which is why we are also working hard to structurally improve the payment. It remains a matter of course. Our strategy is based on three pillars: innovative nutrition, sustainable cultivation and improving the sustainability of our production in the factories."
Don't you feel the pressure of alternative crops such as onions, flower bulbs or ware potatoes for chips or flakes?
"That's not too bad. It goes without saying that growers are looking for the best implementation of their cultivation plan. For example, we have seen that the cultivation of onions has increased in recent years, but I don't think that is a threat. Avebe is performing better and the In recent years, starch potato cultivation has increasingly become a stable factor in their business for our members, a security in the wallet. I am more concerned about another matter."
Such as?
"About solar parks on agricultural land. It's almost impossible to compete with that. Lots of subsidies and you don't have to do anything about it as a grower. The impact seems small, but quite a few plots with solar panels have already been filled. We argue that no good farmland is sacrificed for it."
How do you rate Emsland Group's competition? The Germans are expanding the processing capacity and are also looking specifically at Dutch growers to accommodate the extra hectares. Can Avebe counter this attack?
"Emsland is a valued competitor. The company operates just across the border and, like Avebe, has growers in Germany and the Netherlands. It is up to our members to choose which partner suits them best. With our performance, we expect them to stay with Avebe It is indeed true that there are also members who also supply to Emsland, after all, they are independent entrepreneurs, but I would rather have seen them completely at Avebe."
all our potatoes
the protein
The starch industry in many countries (France, Denmark, Poland) is being pulled out of the doldrums financially. Does this result in unfair competition?
"After the decoupling in 2012, several Member States took measures to protect their own industries, which does not contribute to a level playing field. I think support is now being phased out in several countries. I am more concerned about the CO2 taxes."
How so?
"It is likely that a CO2 tax will come into effect. The impact of this could be significant, especially if the European Member States introduce the taxes in different ways. This would lead to distortions of competition. A level playing field in this regard is crucial. This year we invested a large part of our investment budget (€45 million, ed.) in a technique for converting all the fruit water from the potatoes into process water during processing. Makes a smaller CO2 footprint. Good for sustainability, but also to prepare us for the CO2 taxes."
How is the production of the potato protein Solanic going? Has there been further investment in this?
“The market for vegetable protein is growing rapidly. We will therefore continue to produce our potato protein for as long as possible. It also fits in well with our sustainability vision. We convert something from feed to food. The protein market will continue to expand in the coming years, just look at the growth in meat substitutes. All our competitors have now also thrown themselves into it, although I am not very concerned. We have the best protein. We started the development in 2007 and the process is not easy. But I would have preferred to get Solanic out of all our potatoes now, the market is doing so well.”
Are you going to expand production?
“There are plans, I can't say more about them now. But by way of illustration: Avebe has the potential to produce 30 to 35 million kilos of protein annually. We have 4 factories, but so far the protein production takes place at 1 location. There are still so many possibilities.”
Eric the Thrush
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