'We can't compete with the vertical integration model' - Raisioagro calls time on poultry and pig feed production

By Jane Byrne contact

- Last updated on GMT

'We can't compete with the vertical integration model' - Raisioagro calls time on poultry and pig feed production

Related tags: Fish feed

Raisioagro, the feed and grain division of Finnish food group Raisio, is to cease production of poultry and pig feed due to a “lack of competitiveness” in the market there.

The decision was taken this week, and will result in the loss of 43 jobs, said the company.

Negotiations regarding the termination of the feed operations had been underway since April.

“We will continue pig and poultry feed production until September,”​ said Jarmo Puputti, managing director, Raisioagro.

Sales volume for its pig and poultry products has decreased significantly and profitability had been weakened due to years of intense price competition, said the agricultural arm of Raisio.

Puputti told us that due to production overcapacity along with the business model that has developed in poultry and pig feed manufacture in Finland, profit margins of the stand-alone grain-orientated feed producers are being squeezed.

“Vertical integration of poultry and pig production in this country in recent years has made it extremely difficult for independent operations like Raisioagro to compete.

The sector is dominated by large slaughter-houses who control the supply chain from farm to retailers and we can’t undercut them on price,”​ said the MD.

Focus on cattle and fish feed

The company, he said, has therefore decided to focus on its ‘core competencies’ of cattle and fish feeds.

“It is a very different story in the dairy and fish feed segments in Finland. There is little vertical integration, and we are confident that, through our innovative approaches, we can expand our footprint,”​ said Puputti.

Its Benemilk Feed product has 10% market share in Finland.  “We are carrying out farm-level research and, based on the evidence gathered around dairy productivity gains using the feed product such as increased yields and improved fat and protein content of the milk, we can grow that share exponentially over the next few years,”​ said the head of Raisioagro.

The company, he said, has its eyes trained on Russia and other markets in terms of the growth strategy for the dairy feed.

Raisioagro’s market share in cattle feeds is almost 40%, according to Raisio’s interim report from March.

Sustainable fish feed

Puputti said the company is “clearly”​ the market leader in fish feed in Finland – it has a market share of more than 50%. 

The managing director attributes this to an increased emphasis on innovation at the R&D level.

Together with the Finnish Game and Fisheries Research Institute and fish farmers, he said Raisioagro has been involved in long-term development work to reduce the environmental impacts of rainbow trout feeds and to ensure the sustainable development of the sector.

In January this year, Benemilk Ltd, a joint venture of Raisio and US company, Intellectual Ventures, filed a US patent application for a fish feed invention developed by the R&D team at Raisioagro in a bid to commercialize the invention in the US and beyond.

Fish oil has traditionally been used in fish feed, but this product uses the more ecological and affordable rapeseed oil, helping to reduce the pressure on wild fish stocks, said Raisioagro.

 

 

Related topics: Manufacturers, Swine, Europe

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