News Pig analysis 2019
'Vion is the traffic cop in the meat chain'
In a period in which the pig cycle is making itself felt, Vion is continuing to work on the organization of demand- and concept-driven chains. According to Ronald Lotgerink, CEO of Vion, the new 'Building Balanced Chains' offers pig farms the opportunity to limit price risks and align production with market requirements.
Lotgerink has been at the helm of Vion for a little over six months now, and in the first months after his transfer from Zwanenberg Food Group, he has encountered no surprises. "I don't regret my switch. Zwanenberg is a great company, but at Vion you are the spider in the web of the Dutch meat chain. From the pig or cow to the consumer."
In May, Vion's Dutch fattening pig price is almost at the highest point of the last 2 years: €1,80 per kilo slaughtered weight. It is a reason for national media to write that pork will be 'pepper expensive' in the second quarter of 2019. Lotgerink doesn't mind, but thinks it's good that she is picking up on the boom in the market. According to him, this makes consumers aware of the fact that the meat market is undergoing strong movements. "This also shows that we do not operate as an island in the Netherlands. A balance must be struck in this discussion and we intend to play a role (much more than now) in the social debate in the coming period."
The impact of African swine fever on the global pig market is clearly felt due to the size of the Chinese market. "The world market determines the pig price. I therefore do not expect any changes in the short term. I am not making any statements about the long term." Lotgerink also points to the role of the United States and South America. Despite the import duties, the United States can export pork to China more cheaply than the European Union. "The question is what the Chinese consumer will do when pork becomes more expensive in the store."
strong chain
The CEO is also a strong advocate for setting up strong chains that are less dependent on increases or decreases in the price. "Only in this way can you properly organize the price-quality ratio for the entire chain." It is not the supply that should be leading, but the demand. "This is the next step and should also offer pig farmers more price certainty. About 90% of the supply of pigs to Vion in the Netherlands now falls under the labels Good Farming Star, Good Farming Balance or Organic," says Lotgerink. "The additional costs are reimbursed, so that the pig farmer has certainty. Vion has a role as a traffic policeman in this."
Vion wants to expand this role as a traffic agent by setting up a demand-driven chain. In it, a group of pig farmers is linked to a group of buyers. They can then organize the chain as efficiently as possible in mutual coordination, in order to get the meat products with the specifications of the supermarket concept on the shelves. Vion has renamed this initiative 'Building Balanced Chains'.
Optimal value
Lotgerink sees room in the Netherlands for 6 to 7 chains, with Vion focusing on optimum value for the meat. "The rest remains free market: about 30% of the supply." The CEO is aware that not every pig farmer will feel at home in these chains. "Not every party in the retail sector is convinced of participating in a chain," Lotgerink admits frankly. "You have less freedom, but you do get a good price and financial security. Every entrepreneur has to make his own choice."
Digitization is also essential for the proper functioning of the meat chain. In doing so, suppliers and customers must share all useful information with each other. Retailers can make their wishes known much more concretely via the digital highway, while pig farmers can pass on product information directly. "Vion is the navigation system in this process," explains Lotgerink. He cites Shanghai as an example, where consumers can view all available data by scanning the QR code on the packaging. He also sees that in the Dutch market. "This is part of today's transparency that customers expect."
Lotgerink sees intensifying digitization as a blueprint for the Dutch agri and food sector. "If we are able to link all data together and organize the information flows, then we can market the Netherlands as a recognizable quality brand."
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This article is an abbreviated part of the pig analysis of 2019. The subscribers of Boerenbusiness Pigs & Feed Pro recently received it. Would you also like to receive this magazine? Click here to become a subscriber and receive the magazine.
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Eric the Thrush
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