ForFarmers focuses on organic sector with feed mill tie-up

By Aerin Einstein-Curtis contact

- Last updated on GMT

©GettyImages/ AndreyPopov
©GettyImages/ AndreyPopov
ForFarmers is expanding its production capabilities in organic feed with the acquisition of a new feed company and production facilities.

The feed company announced Tuesday [October 2] that it was purchasing Van Gorp Biologische Voeders B.V. (Van Gorp Bio) through its subsidiary company Reudink.

The effort is part of ForFarmers ongoing interest in expanding its position in the organic sector, it reported.

ForFarmers the Netherlands’ subsidiary Reudink is already a "larger player"​ in the organic space in the Netherlands, said Caroline Vogelzang, director of investor relations and corporate communications at ForFarmers. However, the market is of interest because of its continued growth.

“In the overall ForFarmers strategy we state that we want to be able to expand because we want to leverage the scale … in the agricultural sector in which margins are not huge,” ​she told FeedNavigator. “You need to leverage your scale, and your knowledge and your internal expertise to the benefit of your customers.”

The company is looking to grow both autonomously and through continued acquisitions, she said. “It’s not specifically that we would look only at organic, but we also want to grow in organic because the organic food industry typically in Western Europe ... is growing,”​ she added.

“There’s an increasing demand for organic food, and, therefore, if there’s a growing demand for organic food there is also a growing demand for organic feed,” ​Vogelzang said.

“It’s still a small, niche market, but it’s growing,” ​she added. “We came in contact with this company and there was a click.”

However, Van Gorp Bio will retain its conventional feed and equine feed businesses, she said, adding “they decided to sell the biological feed activities to us.”

Market expansion and acquisition details

Through the deal, Reudink will gain Van Gorp Bio’s 12 employees, customer portfolio and a specialized feed mill, ForFarmers said. Van Gorp Bio has been producing its organic feed in a facility in Schalkwijk.

Van Gorp Bio was known for its work with feed solutions for organic livestock producers, the company said. In 2017, it sold 67,000 tons of feed and saw a turnover of about €31m (about $35.69m) and earnings before tax, depreciation and amortization (EBITDA) of €1.2m (about $1.38m).

Reudink already had an organic feed mill, said Vogelzang. And, the company has had “significant” ​volume growth year-on-year.

The new facility is expected to produce feed for multiple production species, however, products for poultry and egg production have been a large part of the volume thus far, she added.

ForFarmers made an initial payment Tuesday based on a “multiple over EBITDA”​ and a final payout is set to be made in the next three years if predetermined objectives are reached, the company said. Eventually, Van Gorp Bio is planned to become an integrated part of Reudink.

Ongoing expansion efforts

The acquisition of the new organic company comes during a period of expansion for ForFarmers. In July, ForFarmers purchased the feed activities of Maatman.

The Dutch company worked primarily in the poultry sector but had ties to the ruminant sector in Germany and the Netherlands.

That acquisition followed a deal announced in June when ForFarmers purchased the Belgian feed company Voeders Algoet for about €14m ($16.1m).

The acquisition fits “in our way of looking at the way of how we’d like to grow the company by means of acquisition because this acquisition is about 20km further down the road from where we are already operational and where we have our own facilities,”​ added Vogelzang. “That gives you the opportunity to optimize your planning and your production.”

The company also acquired a 60% stake in the feed company Tasomix, which is active in Poland.

“ForFarmers announced in February that it was going to buy 60% of a feed company in Poland,” ​said Vogelzang. “It’s stepping into our fifth country of operation, and we closed this transaction in July. 

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