'No supply problems for feed and fertilizer'

Yes, feed and fertilizer stocks are tight, but Agrifirm CEO Dick Hordijk does not foresee any supply problems in the short term. Due to the war in Ukraine, market conditions are even more tense than last year. At that time, the cooperative's profits held up reasonably well, as did the €25 million dividend that flows back to the members. According to the CEO, that is not a cigar from its own box. "No one pays back as much as we do, while our prices are competitive."

The results about 2021 will satisfy you. However, the deposited feed volume shrinks again. Isn't this a blemish on the result?
"The feed volume indeed shrank somewhat last year. This was mainly due to the sale of co-products. This circular feed flow is characterized by sharp margins with sometimes also ad hoc orders. Conditions in the pig sector were challenging, due to the low This is the case in the Netherlands, Spain and China. Our accounts receivable did not rise too much. Moreover, the capacity utilization in the factories is still on the up. Our customer base in cattle and poultry was positive last year. In these sectors we see further growth opportunities in the coming years."

Then a dividend of €25 million will certainly help. Or is this a cigar from its own box?
"No, certainly not. Our result is positively influenced by our foreign activities and participations. Our Welkoop stores are also profitable. Our members benefit from this. In concrete terms, the supplementary payment is about €8 to €9 per tonne of feed purchased. Nobody pays as much as we do, while our feed price is competitive. Thanks to our size, we can purchase competitively."

Cash flow dried up last year by €18 million to €38,5 million tons. Moreover, the situation has not gotten any easier with the further rise in raw material prices - due to the war in Ukraine. Does this cause problems?
"The cash flow has indeed decreased, but the situation is not worrying. Due to the sharply increased grain prices, these are challenging times. Feed prices are now also rising sharply. With our limited margin of 2%, we cannot buffer, but we are forced to to pass on the price increases. Agrifirm is a financially healthy company with good solvency. We must of course be careful, but that is always the case."

And then there is also the limited availability of grains, crop protection products and fertilizers…
"That's true, but our stocks are in order. We notice that there is little hoarding among our customers. We do not foresee any supply problems for this season. It is difficult to look further ahead in these times. we get around reasonably well with alternative suppliers. This requires considerable effort from our organization, for example with the certification for Secure Feed. Unfortunately, I cannot give any delivery guarantees."

You are also active in Ukraine. How is the situation there now?
"We have 190 employees there. Fortunately, there have been no fatalities among them so far. However, our employees are fighting along. Their families are being cared for by our Polish and Hungarian employees. Nice to see that this is going on. production has restarted. Employees are allowed to work voluntarily, but the turnout is high. There is a great sense of urgency to maintain the food supply in Ukraine. Our customers are now collecting the premixes themselves. We also receive signals that grain is being sown, but the size is difficult to estimate. All in all, it is a very dire situation. We have stopped our Russian joint venture. The effect of our activities in this region has little impact on Agrifirm's group result."

Coming back to the sharply increased prices for feed and fertilizer. Recently you jumped into the breach for farm income. You hope that chain partners will take their responsibility by distributing the margins fairly. isn't this hoping against better judgment?
"Yes and no. They are indeed slow processes, but I see hopeful trends. The collaboration between Albert Heijn and A-ware in dairy is an example of how it can be done. There are also good initiatives with free-range chicken in the poultry sector. It is challenging to be able to absorb the sharply increased feed price. The retail sector must also take responsibility for this. A responsible food chain requires a fair distribution of margins. We as a cooperative are committed to this."

That helps a meat tax which was opted for yesterday (March 29) by agriculture minister Henk Staghouwer probably not in your opinion?
"The government must also take responsibility for a responsible food chain, but I think a meat tax is irreverently a horse remedy. If a possible meat tax is passed on in the chain, the farmer will probably be the victim of this. It is also a misconception that the agricultural sector The aim is to allow consumers to eat as much meat as possible. Responsible meat consumption does not, however, require a meat tax, but rather awareness and good information. The government has a role in this, just like with social awareness about, for example, road safety."

Finally, is Agrifirm still looking at making acquisitions in the consolidating animal feed sector in our country?
"We are aiming for organic market share growth by distinguishing ourselves with good products and advice. We do not consider sales purchases necessarily worthwhile and are therefore not our first thought. If the opportunities present themselves, we do not rule them out."

Wouter Job

Wouter Baan is Head of Meat & Dairy at BoerenbusinessAt DCA Market Intelligence, he focuses on dairy, pork, and meat markets. He also monitors (business) developments within agribusiness and interviews CEOs and policymakers.

w.baan@boerenbusiness. Nl

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