Interview Martin Grift
'I don't want to talk about shrinking livestock'
In a shrinking feed market, AgruniekRijnvallei (AR) managed to grow last year and the first quarter of this year. Boerenbusiness talked to outgoing general manager Martin Grift, who will pass the baton to Arjen van Nuland in September after 17 years.
Martin Grift joined Rijnvallei (which later became AgruniekRijnvallei) in 2002 and has been director of the company since 2004. After the company was already able to record significant sales growth in 2020, this line was continued in the first quarter of 2021. "The cooperative stands for openness and transparency, which gives confidence."
These are your last months as director of AgruniekRijnvallei. How do you look back on your time at AR?
"A dynamic time, it flies by. A lot has happened in agriculture. As AR we are active in both the livestock and the vegetable sector - fruit growing, contract work and arable farming - and we are of course taking a lot with us. There is huge amount in all sectors a lot has happened in the field of the environment, sustainability and demand-driven chains. is evident from this development."
Where 20 years ago it may have seemed like an eternal race for efficiency and scale, AR now also strongly focuses on added value in shorter recognizable chains. Do you think there are still future prospects for large-scale companies?
"That will be increasingly difficult. I am not saying that there is no prospect for these companies, but the competition is fierce, certainly due to environmental requirements and associated cost-increasing measures. If you then want to compete with companies in countries where the cost price is lower, that it is very challenging. Our home market is Northwest Europe, where most of the product is also sold. It is more interesting for most companies to focus on that. However, you cannot generalize. Even companies that produce on a large scale, without much added value, sometimes have very good sales channels. Selecting the right sales channel for your company as an entrepreneur is crucial. An uncertain factor - especially for intensive and large-scale companies - is that we do not know where we stand as a sector in terms of legislation and regulations. that there is a long-term vision from politics: this is where we want to go and that requires the following in which direction they can go and what investments they need to make. In the agricultural sector, we often talk about major long-term investments. That makes clarity even more necessary."
Of course, the big companies take care of the tonnages that keep the factory full…
"That is true and we are very happy with every buyer. Still, this is a difficult market for us too. Of course we also respond to this with specific feed series, but as AR we focused increasingly more on demand-driven chains and try to to play a facilitating role. As AR, we really only have one goal: continuity. We have to supply those things to members and customers, with which they can keep their business profitable."
AR manages to grow in a market with fewer and fewer livestock farmers and a shrinking compound feed production. A great result. Why do livestock farmers choose AR?
"The growth is of course due to a positive customer balance. We know what is going on at the companies of the entrepreneurs we supply with feed. In addition, we have the knowledge and skills to apply the feeds in the right way. Of course everything in the right way. We may also have a relatively large field service, but we think it is important to have a good sense of what a customer wants and needs. No company and entrepreneur are the same. It is not just about knowledge and skills and the right value for money, but also to know your relationship."
Is the fact that you are a cooperative for livestock farmers important in the choice they make about who can supply the feed?
"Perhaps it is not necessarily about the cooperative itself, but it is about openness and transparency that a cooperative stands for. I think you have to have a certain trust in those you do business with. You don't want to feel that you are you have to count your fingers. Openness is very much in my personality, but also in the culture of AR. Employees in, for example, the factories also know how it performs and what is going on in the part in which they work every day. Our managers, including the directors, people regularly discuss this. That also creates awareness and involvement. You can feel this in every layer of the company. Consciously or unconsciously, people like that there is openness, this gives confidence."
We are now almost 4 months into the new year and feed sales also grew in the first quarter. Was this the case in all sectors?
"Yes, we see growth in all sectors. Compound feed sales are increasing slightly faster than single raw materials. Due to the rapid increase in raw material prices, single feeds were relatively expensive this spring. That is why some customers have purchased more compound feed. All in all, we have 2 % more sold. However, compound feed sales are almost 4% higher than in the same period last year. We had a good purchasing position in the autumn, which means that we can now offer a relatively competitive compound feed price measured against the current daily prices."
How do you expect feed sales to develop in the rest of the year? Is further growth possible?
"We will of course remain modest, but we hope so. We are extremely proud of the growth that has been achieved in recent times, but we will have to do our best every day to be able to maintain that."
Fiscal year 2020 had 8 days more than fiscal year 2019, aren't the growth figures a bit flattered?
"The year 2020 indeed had 53 weeks. That is one week more than the 2019 financial year. You have to adjust for this by 2% in terms of volume. In 2019, however, we produced 10.000 tons of organic feed for De Valk Wekerom because they have not yet opened the factory in Meppel. were ready for production. This has disappeared in the course of 2020, so that we can eliminate about 2% production. So we have 2% growth due to an extra week and 2% contraction due to the loss of temporary production for De Valk. the figures as they appear in the annual report are a realistic representation."
The trade receivables item grew by more than €1,1 million, what exactly is that?
"We are talking about normal payment transactions here. We have to take increased feed prices into account. It is therefore logical that there will be slightly more money 'loose' at the end of 2020, simply because the outstanding invoices at that time were higher on average due to more expensive feed. In addition, we deducted a relatively large provision from this item in 2019. As a result, the trade debtors item was slightly lower. Overall, the debtor situation has even improved and there are fewer arrears. Also in pig farming, where prices were significantly lower end 2020, the balance of payments was fine."
Some of your larger competitors regularly repeat that growth is necessary in this business to achieve economies of scale and to pool knowledge. Do you think AR has sufficient mass or do you still consider growth necessary in this context?
"Both are true. You need to be of sufficient size to keep your factories full and to be able to achieve your efficiency goals. Our strategy is therefore also based on collaboration, for example as we do with the production of organic feed with De Valk Wekerom. if you don't, you both need a location for organic feeds that you can't use to the fullest."
In addition to collaborations, are there also possibilities for mergers or acquisitions?
"We always say: we don't rule things out. However, creating a larger joint venture should always aim to make it better for the company and customers than before. Growth is not an end in itself, but a means to achieve a certain level of efficiency and quality. However, it is also very dependent on developments in livestock farming. In a strongly shrinking livestock sector, the need to explore a merger or acquisition option may be greater. I would like to add: I don't really want to talk about a decline in the livestock population. We have to take steps in the field of environmental impact, but there is a better way than reducing the number of animals. Through collaboration and the application of technology and innovation, What we are very good at in the Netherlands, we can also achieve a more sustainable agricultural sector."
Steve Wissink
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