'If Agrifirm now takes the piss'

For Dick Hordijk, 2023 was not his easiest year as CEO of Agrifirm, although the question is whether this has happened at all in the past eight years of service. The cooperative had to take a loss of €3,6 million. The volatile commodity markets pose an enormous challenge, as do the headwinds in China and Belgium.

The Dutch home market, with its shrinking animal numbers, is also causing some headaches, although money is still being earned here to pay out a modest dividend to the members. Hordijk is clear: "We now have to take action, but I assume that the red figures are an incident."

The negative result The bottom line is probably difficult to explain to the members, or do they also understand that the markets are simply challenging?
"The figures were already shared with the members council on Tuesday and indeed, that was a tough meeting. But with respect and also constructive. The common goal is to improve Agrifirm's results and we will succeed. Farmers know that good and bad years alternate. You could describe 2023 as a particularly challenging year, with a perfect storm. The feed raw materials and fertilizer market are extremely volatile. After extreme price increases in 2022, we had to continuously write down our inventories last year. In addition, personnel costs have increased considerably due to inflation. We also had to reserve a substantial amount for the restructuring. However, it is good to distinguish things. The volume decline in the Dutch home market is in line with the market, which means that our market shares are stable. We are having a hard time in China and Belgium. In Belgium, which is a kind of precursor market to the Netherlands, animal numbers are under considerable pressure. This leads to fierce competition. And in China we continue to suffer from the consequences of swine fever, with all its consequences." 

Is it still possible to find a fund for a member benefit, albeit a limited one?
"We pay out a dividend of €7,3 million. This money comes from our Dutch activities, including our Welkoop stores, which in themselves are operating profitably."

The cause is mainly sought externally. To what extent do things go wrong internally?
"We certainly look in the mirror and have therefore started a restructuring. We can and must sometimes be sharper. We anticipate this by organizing ourselves differently and more efficiently. For example, last year we closed our compound feed factory in Zwolle. Despite our strong "We have to make things worse in the balance sheet, that's simple. The first €10 million has already been saved, I can assure you."

Yet never before have there been so many people on the payroll, while sales volumes continue to decline.
"I would like to qualify that figure. The growth in FTEs is mainly at Welkoop, where we have taken over stores. The number of employees in our feed and plant division is decreasing, as we intend. We are not going to impose a hard reduction number here. , because that then takes on a life of its own. Moreover, there is also outflow through natural attrition. We also save on our processes."

Agrifirm wants more focus on core markets, so you initially think of the Dutch home market. What do you actually mean by focus?
"The Netherlands is and remains our most important market, because this is also where our members are located. We focus on Poland, Belgium, Brazil, Spain and China. In the past we also focused on a number of markets around this, but we are scaling that up. This is also reflected in our figures. Our premixes and concentrates sales fell sharply last year. You should actually loosen this. In contrast to premixes, the concentrate market is characterized by low margins. This market also fluctuates up and down and is therefore not without risk. With the sale of co-products, we are increasingly consciously letting business go. If there is no prospect of a decent margin, we don't do it. More is not always better."

Is an exit from some foreign markets also an option, given the challenges you outline in China and Belgium?
"We want to stay in China, but become less dependent on the pig sector. That is why we are diversifying into cattle feed. There are also opportunities there, as dairy farming is growing rapidly. In Belgium, the market is in full swing. We are currently working on our four-year plan , which runs from 2025 to 2028, to shape this market. Let me put it this way: we are taking a broad approach and are not ruling anything out in advance. Both a merger and departure are real options, but continuing the Belgian business too, of course. In any case, we should not be afraid to make radical choices in advance."

You speak of new paths and opportunities. That sounds almost mysterious for a decent farmers' cooperative. What can we think about?
"It's good that you asked this question, because we are not going to completely change course or anything. However, we will focus more on specialties. Our patented Greenwave technology makes it possible to make rumen-resistant proteins for cattle feed in a responsible, climate-friendly way. This contributes to lower nitrogen and CO2 emissions in dairy farming and to the health of cows. We also announced this week that we have established a platform together with DSM-Firmenich for reducing the CO2 footprint in poultry farming. This is how we distinguish ourselves in the market. It is also good for the existence of the agricultural sector in our country. Due to the poorer results, we are looking at our projects more critically. We will only invest if it has a chance of success within five years. Not investing is not an option, because then you build up a knowledge gap."

Finally, is the greatly improved cash flow a starting point for financially better times?
"Without a doubt. In 2022, money was draining rapidly from the organization, but now that is the other way around. Agrifirm is basically a very healthy company without long-term debts. That helps us to recover more quickly. I assume that the loss will be in 2023 was an incident and that we will write black marks again this year, as the members can expect from us."

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

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