Ems-Vechte: 'Compound feed alone makes you vulnerable'

In just a few years, newcomer Raiffeisen Ems-Vechte has conquered a market share of 140.000 tons of compound feed per year in our country. In addition to a compound feed producer, this German cooperative is also a bank and arable farming supplier. Viewed through a Dutch lens, a unique combination.

It is therefore high time for a conversation with director Albert Weersmann about the rapid growth in the Dutch market, the shrinking animal numbers in Northwestern Europe, opportunities for pig farmers and the bright future for the flexible family business. "Farmers have gold in their hands with soil and manure."

Newcomer in the Netherlands
In the Dutch compound feed market, which is dominated by established names, Ems-Vechte is a newcomer and is therefore sometimes viewed with suspicion. Especially in the east of the Netherlands and on the Veluwe, the company has received many livestock farmers as customers in recent years. The move to the Dutch market was quite spontaneous, says Weersmann. "In 2015, we were approached by an unknown Dutch pig farmer in Overijssel who wanted to buy feed from us. The prices in pig farming were bad at the time, so that was a risk for us. We entered into talks with this entrepreneur and came to business. This tasted like more. Our employees went to language lessons, then we actively entered the Dutch market," says the German, who has a good command of our language.

The core of our Dutch activities goes back decades and is based on the foundation of Euro Grenzland in 1990 with the Welkoop store in Coevorden by the then managers Ben Duitshof and later Hein van de Worp. The latter was a former poultry specialist of the cooperative and one of the co-initiators of the merger of the two cooperatives Raiffeisen Grenzland and Emsland-Mitte into the current Raiffeisenbank Ems-Vechte. A total of about five hundred employees work there, four hundred of whom are in the agricultural domain. The rest do banking. Weersmann is one of the four directors. 

The four Ems-Vechte factories are mostly located in the border regions and the cultural differences are not that great. "We are strong in the region, Holland is part of that." While the Dutch compound feed market as a whole is shrinking, Ems-Vechte has managed to grow by 10% to 20% in recent years. Divided over pigs, poultry and cattle, they now sell 140.000 tons of compound feed in the Netherlands every year. What explains this commercial success? Weersmann is quite simple about this: "We are strong in the region, have good Dutch representatives in our service and supply high-quality feed for a competitive price." Dutch livestock farmers can also become members of the cooperative. A share is worth $1.500. From €150 livestock farmers can buy in, the rest can be acquired through profit sharing.

Crisis on the feed market
Continuity in the feed composition is important. At Ems-Vechte no compromises are made in rations when the price of a raw material skyrockets. Continuity is important for good technical results, says Weersmann, who grew up on a mixed farm not far from the Dutch border. "We also supply compositions that do fluctuate, but that's what the price is for." Speaking of raw materials, Weersmann is very concerned about the extreme price increases of grains and the poor availability. "If the feed becomes €100 per ton more expensive in a short period of time, then you can speak of a serious crisis. Fortunately, milk prices are rising and poultry meat prices are quite high, but yields are under heavy pressure in pig farming." He foresees major problems in the short term. He expects companies with low equity capital to run into problems. "Every fattening pig now has to add €10 to €20, it could just be that 20% of pig farmers in Germany collapse."

'Pig price through the roof next year'
There is a lot of perspective for companies that can survive the crisis. "Mark my words, pig prices will be through the roof in a year's time. The slaughter figures are already much lower and with the shrinkage that is yet to come, there will be a major shortage of pigs. Especially because the German retail sector is massive. the 5D strategy Weersmann expects that the Dutch pig farming sector will benefit from the German shortages. The coming months will be exciting for pig farmers, however. Although Ems-Vechte is also a bank in addition to compound feed production, pig farmers are now not blindly pre-financed.

Nevertheless, this combination of banking and compound feed does provide farmers with advantages. "In recent years, we have provided more than €100 million in loans in the Dutch agricultural sector. For this purpose, we work closely with Grafschafter Volksbank from Nordhorn. "Here and there we also finance goods, animals and feed." Where Rabobank focuses on everything we still have local offices. I dare say that this makes us more flexible. Moreover, we are prepared to take risks when agricultural entrepreneurs come up with good plans."

Contraction in German compound feed market
The price crisis on the pig market, in combination with stricter environmental legislation, is putting pressure on animal numbers in Northwestern Europe. Weersmann is aware that this poses major challenges for compound feed companies and outlines a bleak future: "The German compound feed market amounts to 24 million tons, almost half of this is sold in Lower Saxony. I expect a contraction of 10% to 20%. shrinkage is an important reason why Ems-Vechte recently announced to work closely with VR Bank. This cooperative also combines banking with compound feed production. The collaboration is a prelude to a merger. "The great thing about merging is that the farmers' money then remains in the cooperative, just like ABZ Diervoeding and De Samen resolutions are. When private compound feed companies are bought up, farmers' money disappears from the sector."

Opportunities for family business
Weersmann is not gloomy about the future. "In the new German government, 'Die Grünen' will shape agricultural policy, so do the math." This party is also seen as the GroenLinks of Germany. In addition, consumers increasingly want higher welfare requirements. "However, this is not a threat, but an opportunity. Especially for the small-scale family business." Large companies are not equipped to use outdoor grazing or outdoor areas. Small companies are more flexible and take over production, Weersmann predicts. Fewer animals will be kept on the same square meters. "When prices increase, this is not a problem for livestock farmers. It is a threat for compound feed companies. At Ems-Vechte we have spread our activities widely; only compound feed makes you vulnerable. We are also active there in biogas and arable farming, which makes our cooperative strong." Moreover, according to Weersmann, Ems-Vechte is intertwined with large agricultural parties. "What many do not know is that we own 6% of the shares of Agravis. This provides synergy benefits when purchasing raw materials."

Livestock farmers should also spread their activities widely, in Weersmann's opinion. Farmers are increasingly becoming energy producers, he expects. There are opportunities in renewable energy from sun, wind and biogas for Europe to become less dependent on Russia and Saudi Arabia. There is great political will in this area. "Farmers have gold in their hands with soil and manure. And don't forget the rise of carbon farming. At the moment you pay €1 in allowances for the compensation of 2 tonne of CO25 emissions. Those prices go to €50 to €60. in two years and then increase to €100 to €200." In ten years' time, the food market will have completely changed. Food is getting more value, Weersmann expects. "Plantmeat will definitely come, we should not close our eyes to that. The trick is to keep up with the times as a farmer (cooperative).  

Wouter Job

Wouter Baan is editor-in-chief of Boerenbusiness. He also focuses on dairy, pig and meat markets. He also follows (business) developments within agribusiness and interviews CEOs and policymakers.

w.baan@boerenbusiness. Nl

© DCA Market Intelligence. This market information is subject to copyright. It is not permitted to reproduce, distribute, disseminate or make the content available to third parties for compensation, in any form, without the express written permission of DCA Market Intelligence.