How feed companies deal with shrinking livestock

Compound feed sales in the Netherlands have been showing a declining trend for several years, according to figures from the trade association Nevedi. Since 2018, sales have fallen by 5% to 11,5 million tons in 2021. The contraction is fastest in pig feed, a logical consequence of the restructuring measures in that sector. The sale of poultry feed is the most stable. Pig feed is still the largest sales category within compound feed, but the difference with cattle feed is still very limited. The roles will likely be reversed soon.   

The shrinkage of recent years may be a feed test of what awaits the Dutch compound feed sector. After all, on the basis of the government's nitrogen plans presented, the livestock population is in danger of shrinking by another 2030% until 30. Such clear-cutting will also hit the feed sector hard. It is therefore not surprising that animal feed companies are helping out en masse in public-friendly farmers' protests. Their business is also at stake.

Top three good for 60% market share
It is not possible to say exactly how the market share ratios are. Some companies publish the figures to a few decimal places. The books of private companies often remain closed and only the annual report filed with the Chamber of Commerce offers solace. Nevertheless, the balance can be drawn on the basis of the available information. Starting with the traditional top three with an estimated market share of over 60%.  

Fluctuating sales figures Agrifirm
Agrifirm sold 5,24 million tons of feed last year, spread over the seven countries where the cooperative is active. The bulk of this is sold domestically, but details are not disclosed. Feed sales have been up and down in recent years, but have not actually grown since 2018 (despite various takeovers). If we go further back in time, there is a significant contraction. As a cooperative, Agrifirm says it is at the service of its members. According to CEO Dick Hordijk, maintaining sales figures is never a goal in itself. "We do not necessarily consider sales purchases in the Netherlands to be meaningful and is therefore not our first thought," he said Hordijk about this in March† Abroad, however, Agrifirm is not standing still on this point. Acquisitions have recently been made in Belgium and the US.

Home market remains important for De Heus
De Heus has achieved impressive growth outside of Europe in recent years. The company is also not standing still in its own country. At the beginning of this year, Feijen Diervoeders from Dalfsen in Overijssel was incorporated, good for 85.000 tons of (mainly) cattle feed. Last year, De Heus took off with Coppens, which fished in 400.000 tons of animal feed. About one third of the turnover still comes from the Netherlands. This underlines the importance of De Heus' home market. With €1,38 billion in the Netherlands, De Heus is slightly smaller in turnover than ForFarmers in the Netherlands/Belgium cluster put together. This makes De Heus appear to be the market leader, although this cannot be proven with sales figures. It should be noted that De Heus also serves livestock farmers abroad from the Dutch factories.

ForFarmers compensates for shrinkage with acquisitions
The listed ForFarmers is struggling to maintain sales volumes. In 2021, the marketed feed volume in the Netherlands/Belgium cluster recorded a limited decrease of 0,3% to 5,068 million tons. However, the contraction was absorbed with the acquisition of De Hoop Mengvoeders, which was completed at the beginning of 2021. Acquisitions were also made in various countries in previous years, but that did not prevent feed sales across the countries from falling below 10 million tons. Two years ago, ForFarmers announced its intention to enter growth markets outside Europe in order to absorb the contraction in Europe. Due to disappointing results, those plans were shelved again. Later this year, ForFarmers will provide an update on how the new (acquisition) strategy will take shape. It is expected that the focus will again be on the existing home markets will lie down, including the Netherlands.

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Mid-sized companies
The top three are followed by a number of companies with a 'limited' market share of approximately 5%, both private and cooperative. This list includes: ABZ De Collaboration, AgruniekRijnvallei, FranssenGerrits, Gebroeders Fuite and Voergroep Zuid.

ABZ and De Collaboration merge
At the end of last year, ABZ Diervoeding and De Samen decided to join forces to anticipate the decline in the livestock population. As a result of the merger, the annual production capacity grew to 700.000 tons of compound feed. About 150.000 tons of this was brought in by De Collaboration, the rest came from ABZ Diervoeding. In recent years, the merged company has shown steady growth to a turnover of €287 million in 2021. Both companies already worked together, but decided to merge. "It would be unwise if we wait until the moment when this choice has to be made out of cramp," said ABZ director Marcel Roordink at the end of last year. about the merger. 

AgruniekRhine valley in demand
Total feed sales increased by 0,9% last year. Compound feed grew strongly, but at the expense of individual raw materials. Turnover was up 13% to €322 million. Compound feed sales continued to grow strongly in the first half of this year, with volume growth of almost 10%. The cooperative itself also finds this increase remarkable. Production is now at the max and is therefore partly placed with Vitelia. With the rapid increase in sales this year, it can only be concluded that AgruniekRijnvallei is popular with livestock farmers.  

Fuite brothers invest with Cargill 
Gebroeders Fuite is not a company that often appears in the news, but it did attract attention last year. Raw materials group Cargill and Fuite are joining forces and will jointly build a new feed factory in Hasselt (Overijssel), which should be ready in 2023. A remarkable step for the somewhat headstrong company. "The collaboration with Cargill offers us opportunities in today's challenging market", the company explained the collaboration, referring to the decline in livestock. Nothing is known about sales figures. The most recent annual report dates from 2019. In that year, the profit rose to almost €10 million. from a turnover of almost €370 million, with the dividend withdrawn that year was €1 million.

FranssenGerrits on takeover path
Family business FranssenGerrits is mainly active in the south of the Netherlands. The company does not see itself as a takeover prey, but as a hunter. Last March Theeuwes compound feeds enlisted. In their own words, to create more clout. With a turnover of €198 million in 2020, FransenGerrits is the smallest of the medium-sized parties. The profit that year amounted to €4,5 million. The dividend for shareholders doubled compared to 2019 to €7,78 million. Sales figures are unknown. 

Feeding group South leaves shrinkage behind
Feed group South had a difficult time in 2019 due to the decline in pig farming in the south of the Netherlands. This affected the sales figures considerably. In 2020, the result showed recovery. Sales also grew in 2021, by 2,2% to 685.000 tons (excluding loose raw materials). The financial results are not yet known. Sales of compound feed to the poultry sector increased by 17% last year, compensating for the contraction in pig farming. 

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German newcomer on the market
Based on the available figures, it can be concluded that the large and medium-sized compound feed companies have so far managed to limit the contraction reasonably well, or compensate for this with acquisitions. The common denominator of the large and medium-sized feed companies is that they consider themselves to be the 'stayers' and therefore not a takeover prey. Companies that will be bought up in the coming years are probably in the lower layer. The coming years will be challenging. The stayers have to take into account further shrinkage of the livestock due to the nitrogen policy. Dutch feed companies must also take into account entrants from Germany. Companies such as Ems Vechte, Rothkoetter and Vilomix (to a lesser extent) find the Dutch feed market only somewhat interesting. The advance of the former is particularly striking.

Raiffeisen EmsVechte conquers 140.000 tons
Since 2015, the German cooperative Raiffeisen Ems-Vechte has captured an impressive market share of 140.000 tons of feed in our country. Especially in the east of the Netherlands and on the Veluwe, the company has received many livestock farmers as customers in recent years. The four factories are mostly located in the border regions and the cultural differences are not so great. "We are strong in the region, Holland is part of that", Zo said director Albert Weersmann late last year. On the basis of the rapid advance, additional market share appears to be possible. This means an extra privateer on the coast for Dutch feed companies.