These are turbulent times for the Dutch animal feed industry. Shrinking livestock, trade wars and grumbling within the industry association. At the same time, there is also the task of significantly reducing the sector's CO2 emissions. As director of industry association Nevedi, Henk Flipsen has to keep many balls in the air. 'It would be good for us, but also for ForFarmers, if it remained directly involved with Nevedi and reviewed the decision to terminate, just like Agrifirm. I really hope that in Lochem...
When we start the conversation in a restaurant in the middle of the country and ask ourselves whether Flipsen still enjoys his work in all this hustle and bustle, the answer is quickly found. He immediately enthusiastically discusses what needs to be done in the sector and the challenges this entails. Although a direct answer to the question is not forthcoming, everything shows that he is working on his role with enough energy and optimism. He also indicates that he has not given up hope that after the unrest of the past year, where ForFarmers and Agrifirm communicated to want to cancel the membership, that Nevedi still manages to close ranks: "It would be good for us, but also for ForFarmers, if they remain directly involved with Nevedi and the decision to cancel, just like Agrifirm, will revise."
Let's start with current events; the worldwide rising tensions around the trade war are also affecting the animal feed industry. Import duties on soy, corn, but also additives, for example, are threatening or have already been announced. What is the impact?
"Of course there is an impact, but perhaps even greater than the direct impact of tariffs is the uncertainty that the entire market situation entails. Suppose you work as a buyer at a feed company, what decisions do you make? Do you quickly buy product now before tariffs threaten, or do you wait? Do you break a relationship with a reliable supplier to exchange him for a supplier elsewhere? These are just a few issues that play a role. Things can also change in terms of insurance, because the chance that freight may not ultimately arrive at its destination increases. The core of the story: the uncertainty and risks have increased and these are causing risk premiums in the chain. This of course increases the cost price."
Where do the tariffs on feed additives from China come from?
"The European Union launched an anti-dumping investigation last year and possible legislation against this is currently being assessed. This showed that China is offering products on a large scale at low prices. As a result, we have become dependent on China for certain additives. In order to stimulate European producers to produce more products, Brussels is trying to reduce cheap foreign competition. For us as Nevedi, we are making the problems that this entails in the short term clear in The Hague and Brussels. This could easily lead to price increases in raw materials within Europe. I must point out that the interests differ per European country. For example, in France there are producers of certain additives. You can see for yourself that France therefore has a different position in the discussion than, for example, buyers in Europe who produce compound feed. With this discussion, you quickly end up in market positions and relationships. That is an area in which collectives such as Nevedi or Fefac find it difficult to choose a position."
The pressure on the Dutch sector is considerable. Animal numbers are shrinking and with them feed production. How has Dutch compound feed production developed in the past year?
"For years, we have of course feared the impending shrinkage of the sector. However, up to and including 2023, it was still somewhat less than expected on an annual basis in absolute terms. We did see a slight annual decline, but no extreme declines. In 2024, the decline does seem to have accelerated. I still have a complete picture of the exact figures, but according to our preliminary figures, Dutch compound feed production has fallen by 3% to 5%. At the end of the year, the impact of various termination schemes did increase and in 2025 the decline in feed production will probably be greater."
Development of Dutch compound feed production (x 1.000 tons) of Nevedi members |
|
2024 (provisional figure) |
10.720 |
2023 |
11.116 |
2022 |
11.526 |
2021 |
11.523 |
2020 |
11.750 |
2019 |
11.917 |
How do Nevedi members anticipate this?
"Everyone is working on it. How it is dealt with varies. Companies with multiple factories try to see: which locations drop below an occupancy rate of, say, 80-90%? Then it becomes interesting to see whether volumes can be redistributed among other factories. Smaller players can also decide to focus on a niche, such as pet food or other specialist feed. There is also increasing collaboration among each other to optimise the production apparatus. For example, completely separate production lines are required for processing poultry and pig feed with animal protein. This also increases the need for more specialisation and collaboration."
2024 was a hectic year for Nevedi. ForFarmers and Agrifirm intended to terminate the membership. Agrifirm eventually backed down. The main reason was the course Nevedi is choosing and the costs involved. What is your view on this development?
"At some point, ForFarmers announced that it wanted to terminate its membership. This led to Agrifirm also questioning its membership. Based on this, we looked at what Nevedi's spearheads are and which activities and roles we might have to drop. The aim of this was to create a more cost-efficient organisation. We have therefore scaled down some activities that we consider to be too far removed from our core business. Think of our financial contribution to the Animal Neglect Desk, after we had previously scaled back our input on labour and good employers."
"Another example is our participation in the Round Table for Responsible Soy. We have drawn up a new multi-year plan that provides insight into our focus areas and the budget that goes with them. Agrifirm has subsequently indicated that it will withdraw its cancellation of membership and will therefore remain a member. ForFarmers has not yet officially responded to this plan. We will have a members' meeting at the beginning of April. We still hope that ForFarmers will also review its decision."
The core of the criticism of these parties is also that they are already taking up the interests surrounding part of, for example, the sustainability agenda on their own initiative?
"Of course I understand that line of thought, but in my opinion the story is more nuanced. An example is calculations for the carbon footprint. First of all, Nevedi has played a major role in the framework used to determine the CO2 footprint of feed over the past 15 years. Drawing up uniform calculation rules is a crucial part in the first instance in order to be able to comply with all kinds of sustainability reports, for example with regard to the Corporate Sustainability Reporting Director. How each party then uses this is up to the members themselves. We discuss many of these frameworks and preconditions every day in Brussels and The Hague, this is important for every party in the sector."
Henk Flipsen
What are some concrete examples of this?
"It may be good to mention that we as a lobby organisation are noticing that a different political wind is blowing, both in The Hague and Brussels. In my opinion, this also has to do with the Draghi report from last year in which the former chairman of the European Central Bank indicated that the competitive position is under pressure. After years of focusing mainly on sustainability goals, we see that European civil servants are now paying much more attention to the business climate. It is a bit of a cliché, but in my view it is now important for the sector as a whole to make our voices heard. Think, for example, of the aforementioned levies that the European Union now wants to impose on feed additives from China. Together with European partners, we outline the impact. But also the mandatory sustainability reports, frameworks around the use of certain raw materials, the use of residue standards for pesticides. Clear communication via clear lines ensures that there is also ample input from practice in policy formation and policy implementation."
You express the hope that ForFarmers will also remain affiliated. How likely is that?
"You will really have to ask about that in Lochem itself. As indicated: we have drawn up an adjusted plan with focal points for the coming years. Agrifirm has said of this: this offers us sufficient perspective for a good organization of Nevedi's activities. We have not yet received an official response from ForFarmers. At the moment, people from ForFarmers are also still involved in all kinds of projects and groups and we have the feeling that they also see the value of our work. With that, I really hope that they will also remain involved."
However, ForFarmers spoke last year of a well-considered and irreversible decision, to what extent will Nevedi lose power if it leaves permanently?
"I can honestly say that the announced departure of Agrifirm and ForFarmers caused quite a shock. It was more than a ripple in the water. The costs of Nevedi membership are divided proportionally according to production size. So the bigger the company, the more you contribute. However, the departure of a member does not mean the end of Nevedi. We would still represent a significant part of Dutch feed production. At the same time, every member you miss is one too many."
Are there more critical members at the moment?
"As far as I know, not at the moment. The lines are short, and the members have approved the new strategy and focus. So we can get started with a broad mandate."