'Manure processing creates a ceiling for pricing'

"The manure market needs large-scale manure processing installations to limit the risk of excessive prices on the free market." This is the opinion of Willem Berkhof, who recently took over 75% of the shares of the Greenferm installation to be built in Apeldoorn.

The aim of Greenferm is to be able to process 350.000 tons of manure in a yet to be built installation at the Ecofactorij business park in Apeldoorn. The permits were finalized in mid-2016, but no further construction steps were taken. Berkhof, who has been involved with Greenferm since 2016, increasingly heard disappointment from farmers about the progress.

"It turned out that the financing was not forthcoming. That is not due to the technical story. That is completely correct. But the business case included being able to put away the thick fraction for free. Logically, the bank and other financiers did not agree. We have recalculated and adjusted that. This also means that the tariff must be adjusted. In concrete terms, this means that the tariff will be increased with a surcharge of €1 per kilo of phosphate."

A lot of attention 
Berkhof has held meetings with livestock farmers who have already registered and those who have shown interest in recent weeks. The previous tenderers have priority. In the event of an agreement, their contract is converted into an agreement under the new conditions. Despite the fact that this means an increase in costs, Berkhof states that the majority will continue to participate. "Only people who registered earlier and who really live at a great distance now drop out. It is logical, too, because it is now becoming too expensive for them."

Higher price 
Berkhof admits that the price for manure processing at Greenferm can often be slightly higher than the price for manure disposal on the common free market. "Manure processing is all about acceptance in the market. Because livestock farmers have part of their manure processed, the supply of manure on the usual sales market decreases. This results in a price drop, which offers a structural advantage for the livestock farmers. In addition, sufficient manure processing ensures in a region ensures that a price ceiling is created in the market."

According to Berkhof, efforts on extra manure processing, especially in the east of the Netherlands, are desperately needed. This is because there is literally very little large-scale manure processing off the ground. "We now drive all manure to the traditional customers and existing processing installations in the South. That does not make it all profitable. That is not a healthy situation."

Without wanting to say it so harshly, Berkhof is also referring to the dependence on a few large parties in the manure processing that currently prevails. This can also affect pricing.

Save storage costs 
Berkhof mentions the storage of manure for many livestock farmers as another advantage of a large-scale installation. "If you can bring fertilizer to us every month in the winter, then you reduce the costs of storage elsewhere. And more importantly: if installations are finally operational in the east of the Netherlands with the arrival of Greenferm and other initiatives in the east of the Netherlands, much less will be stored externally. It is inevitable that this pushes the price down in the winter, which also translates into lower prices in the spring."  

Construction to start in January
The Greenferm installation should receive the first fertilizer in the middle of next year. Berkhof expects construction to start in January now that he has almost completed the financing and most contracts have been converted. Previously, 310.000 tons have already been registered. It has been calculated that even if not every tenderer signs the new contract, but up to at least 250.000 tons remain, construction can start and the installation pays off.

Berkhof is confident that the last part will also be signed up quickly. "Many customers are waiting for the settlement of the existing contractors to be able to sign their part afterwards." The total technical capacity of the installation will be 450.000 tons.

75% of the shares are now owned by Berkhof. The remaining 25% will remain in the hands of Byma Holding, a shareholder who has been involved from the start. The other three shareholders have sold their shares to Berkhof.

Risky investment?
Berkhof's step to stand for a large part of the investment will be described as risky by many involved in this market. However, Berkhof himself says that he believes that it is necessary for the central and eastern Netherlands for the installation to be completed and that he has therefore stepped in. "There is sufficient enthusiasm and such support that it can succeed."

This also serves a second interest: "It helps our transport branch to have more continuity. Supply and demand in the fertilizer distribution are becoming more and more erratic. We will soon be able to regulate that better ourselves."  

© 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.