Milcobel wants to compete for the podium places again

CEO Nils van Dam talks about the improvement plan that has been implemented, the outflow of member dairy farmers and the arrival of A-ware in Belgium. "We want our members to be proud of Milcobel again."

In October you described yourself as 'a patient who has just left intensive care'. What is the situation now?
"I recently said to our members at the digital meeting: 'When the night is darkest, then dawn is near.' Intuitively, that is the case. The improvement plan was rolled out last year, marking the start of a turnaround. The first signals are hopeful. For example, we saved €2 million more last year than intended. Our financial situation is much better due to savings than it was about 9 months ago. , but we are certainly not there yet. The intention is to save €20 million this year, increasing to €50 million in 2025. Another hopeful signal is that we can increase our milk price for January by €1,44 per 100 kilos ."

Speaking of the milk price, do your members have a point that Milcobel's milk price is far too low?
"Clearly yes. That is visible in all statistics and comparisons. We understand the disappointments, which unfortunately led to 173 departing members last year (including 12 Dutch dairy farmers). The low milk price is due to a number of structural reasons, such as our product mix and a number of internal efficiencies that were too low, which unfortunately meant that we were unable to write green figures in 2020. We are now quickly turning the situation around. Our main goal is for our milk price to be competitive again quickly."

Do you think those who stay can still have the patience?
"That is difficult to say. We offer perspective with the increase in the milk price for January, but we are clearly not there yet. We are doing everything we can to achieve a better result as quickly as possible."

How? In other words, what are the key points of the improvement plan?
"The plan includes several points. An important part is to better align milk supply with production capacity and sales. The milk volume, our production equipment and commercial activities must fit together like the gears of a watch. That has been the case in recent years not the case. We had too much milk that had to be processed into poorly profitable basic dairy products. The fact that we will have a lower milk supply in the coming year (due to departing members) does not necessarily have to turn out badly. By the way, less milk is not the goal, because We mainly want to focus on products with added value. This includes mozzarella, cheese and high-quality milk powder (powder+). And based on these added value products, we want to process more milk. We have grown by 4% in the past year and That growth rate is also the target for this year."

When do you expect concrete results?
"The improvement plan requires a cultural change internally. That cannot happen overnight. Our organization has traditionally been strongly hierarchical, but that does not contribute to creating a winning mentality in all levels of the company. That has to change. I expect that we still need a few more years to reap the full benefits of the improvement plan. To put it in sports terms: we want to compete for podium places in the market again. This year there may be an additional prize again. The improvement plan is successful when the pride is back among our members and our staff. As dairy farmers say, we are in a good place at Milcobel."

In that respect, the corona crisis is probably very inopportune.
"The sales markets are cautious due to corona. We have traditionally been strongly oriented towards the catering and food service industry with our mozzarella, which indeed makes it extra complex due to the lockdowns. This means that sales of mozzarella are under pressure. It is still difficult to estimate how the markets will move in the coming months, but the vaccines do offer prospects for the second half of 2021."

It looks like A-ware will be looking for suppliers in Belgium. Do you expect an outflow of member dairy farmers as a result?
"Let me start by saying that A-ware is a wonderful dairy company, particularly strong in the cheese markets. However, we were surprised when it was announced in December that A-ware had purchased the milk powder towers from FrieslandCampina in Aalter. In our opinion, these are outdated towers. where only bulk milk powder can be produced. That usually does not provide the best valorization, but the management of A-ware may have a well-considered plan in Belgium."

Are you afraid that your members will switch to A-ware?
"We hear that A-ware is looking for milk in Belgium, but so far we are not aware of any members who want to switch. There is little point in looking at other processors. All we can do is offer our members perspective. by paying the best possible milk price. And we do our best to achieve that. We are the largest Belgian dairy cooperative and we want to keep it that way."