FrieslandCampina party chafing at many members

On the company's website a photo (see above) of cheerful people in front of the FrieslandCampina building on Stationsplein in Amersfoort. CEO Hein Schumacher gave a number of interviews with a good news message around the anniversary. Unfortunately for him it leaked at the same time out a video, in which he expresses his concerns to members about developments within the company and members who are in danger of resigning.

And worse, 2 days before the big holiday on September 8 threw prominent farmer administrator and commissioner Frans van den Hurk the door closed behind him with a bang. FrieslandCampina issued a short statement about this and immediately removed Van den Hurk's photo from the website. The commissioner himself does not want to provide further explanation, but it is clear that he was tired of playing nice from the top. The echo of his departure still reverberates. Reportedly, there was another crisis meeting about this on Thursday morning, with Van den Hurk still present.

The dairy farmer is not the only one who is leaving. In Twente, a member council member also threw in the towel to switch to DOC Kaas. Van den Hurk will stay for the time being, but a large group of ordinary members are looking for an exit. Voices about this are heard from the Achterhoek, Twente, Brabant, but also from the rest of the country. There is plenty of choice from new customers: A-ware, DOC, Farmel and Vreugdenhil. They all want extra milk. Preferably from selected farmers.

Reasons for wanting to leave
Those who would like to quit and would like to quit give several reasons why they want to leave, such as not really being heard, no confidence in the actual state of the finances, unpredictable behavior when it comes to special milk flows (particularly PlanetProof and Vlog) and being tired. from the constant push towards more sustainability and obligation to pay data. This is undoubtedly not the feeling of all members, but it is of the group that no longer feels comfortable at FrieslandCampina.

To start with the financial concerns: last year it was made clear to members that the so-called 'pure equity' had become too low. That is why a refinancing was necessary, with an additional €800 million having to be put in the hands. This must be done by linking the milk volume supplied by the members to delivery certificates. Members can exchange the bonds they already have, or they can purchase certificates. For growers and young farmers, the latter option is especially important. The members' council agreed to this operation at the beginning of June, even though there was initial resistance.  

According to S&P, profit recovery will not take place until 2022
Many members experience the financial strengthening of the cooperative as a heavy burden, especially because the margins on their own company are already low. There are questions about what will happen to the additional capital for the company. Subsequent payments are not made, because the company continues to achieve mediocre results. The regular milk price is also no longer really leading. Especially in recent months, several competitors have gone above and beyond.

It is unclear whether FrieslandCampina has really identified the leak from a business perspective. Fortunately, the dairy market as a whole is picking up again, but what is the effect of this on the company? Credit rating agency S&P expects profit recovery only in the course of next year and is a bit disappointed with the poor results so far.

Lease obligations
Many members fear that the money will disappear into a bottomless pit. In this context, calls are growing for clarification about the level of lease obligations that the company has entered into in recent years, for which little or nothing can be found in the books.

A mention was a starting point for this discussion in the last half-year report about a new factory in Malaysia, which appears to have been built with a sale and lease-back construction. Something like this had previously been used with the research and innovation center in Wageningen and reportedly also with a large part of the factory equipment. Questions about the latter are not answered.

Special milk flows
What members also do not like is the unpredictable behavior of the company when it comes to special milk flows, such as Vlog and PlanetProof. Organizations such as Rabobank and Natuurmonumenten may appreciate these programs, but many members are afraid to participate in advance, because before they know it they appear to have been kicked out of these streams again. Also in a broader sense, many members do not really like what they consider to be too intensive courtship of their cooperative (and of Rabobank) with all kinds of NGOs. Then they sometimes feel more comfortable with another buyer. Some still have hope that FrieslandCampina itself will come around, but this group is heard less loudly.