Interview Ronald Lotgerink
Vion aspires to meat chains for members only
After the Good Farming Balance program was introduced 2 years ago, Vion wants to take a new step in the course of 2019. With the strategic initiative 'Building Balanced Chains' (BBC), the meat company wants to work towards demand- and concept-driven chains, while digitization also takes a leap forward. "It concerns chains for members only, with a good price for the participating livestock farmers," says CEO Ronald Lotgerink in an interview with Boerenbusiness.
lotgerink has been CEO of Vion for more than 6 months, after working for years as a CEO at Zwanenberg Food Group. Yet he did not need a long time to familiarize himself with the meat company, because the 4 years before that he had already been a supervisory director at Vion. "I did not encounter any surprises in the first months. I also do not regret the switch, because it is an exciting job. You are the spider in the web of the Dutch meat chain on this post."
Investing
The brand new director therefore not only wants to take steps in the restructuring of the meat group, but he also wants to invest more in the production locations. On the one hand, this is necessary to reduce costs and, on the other, to meet the most current wishes of Vion's customers. For example, in addition to the production location and the head office in Boxtel, the foundation of the new location is being dug hard for further integration of the fresh produce activities. €35 million has been set aside for this.
Vion also aspires to reorganize the meat chain. It is not the supply that should be leading, but the demand. This is the next step; after the introduction of Good Farming Balance (2017), which should offer pig farmers more price certainty. "About 90% of the supply now falls under Good Farming Star, Good Farming Balance or Organic", says Lotgerink proudly. In Germany, the project started last year and 50 pig farms are now participating. "The additional costs for participating in Good Farming Balance are reimbursed, the pig farmer has security. Vion has a role as a traffic policeman in this."
Optimal value
It is an incentive for Vion to work on demand-driven chains, in which (in short) groups of livestock farmers are linked to groups of buyers. The participants can then organize a specific chain, in mutual coordination, as efficiently as possible for optimum value of the product. In short: when a pig farmer takes into account the specifications of a supermarket concept in his business operations, this yields benefits for both parties. "Vion can be the traffic cop in this process, with our broad international network on both the supply side and the retail side. It is up to us to develop the value."
Vion has named the initiative 'Building Balanced Chains', with a focus on the European market. Lotgerink sees room for 6 to 7 chains, whereby the supply of the livestock farmers is linked to the specific demand of supermarket chains. "The rest remains free market. Here there is room for about 30% of the supply." In the European market, the company is aiming much more at the value of the meat, while the volume will remain leading for the time being in the growing Asian market.
The CEO thinks that both the agricultural entrepreneur and the supermarket chain are prepared to connect with each other in that specific chain. "It is true that as an entrepreneur within a chain you have less freedom, but you do get added value and certainty in return. That is a consideration that every livestock farmer has to make for himself, although not every entrepreneur will feel at home in this."
Guiding role
Not every party in the retail sector is immediately convinced of participating in a chain, Lotgerink admits frankly. "Retailers, such as supermarkets, are looking for a distinctive product, where price is one of the distinguishing factors, for example. It is up to us to play a guiding role in this as traffic police."
Far-reaching digitization in the meat chain is of great importance in this respect, Lotgerink emphasizes. He is convinced that sharing information (via blockchain) is decisive for better value. "At the end of the chain, the consumer must be able to see where the meat comes from, for example by scanning a QR code on the meat packaging. This story is part of the contemporary transparency that customers expect. We must invest in that and if sector to develop further."
Eric the Thrush
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