It wants to retain and enhance its position, it said, as the leading feed company in Europe, while helping to reduce the carbon footprint of the production of feed and animal protein. It will expand the business by means of acquisitions in both existing and new, growing markets, potentially outside of Europe.
“We are looking for greater consolidation in mature markets, acquiring new [assets], while [in parallel] expanding into new regions, also through M&A,” said CEO, Yoram Knoop, in a call with journalists yesterday.
He outlined how the goal is to be operational in seven countries by 2025 and to have a “more balanced” portfolio between developing and mature markets. ForFarmers, currently, has a presence in five markets - the Netherlands, Germany, Belgium, Poland and the UK.
Challenged ‘home’ markets
In those coming five years, ForFarmers said it will focus on further strengthening its market position in the countries in which it now operates, by delivering innovative feed concepts that help farmers improve their returns on-farm in a sustainable way. To this end, digitalization of business processes will be further enhanced, both on-farm and internally in the company.
With the exception of Poland, the agricultural sector in the company's 'home' markets is experiencing increasing pressure, with a growing focus on sustainability parameters, particularly in the Netherlands, where farmers are faced with ever more extensive environmental measures to reduce phosphate and ammonia emissions from animal farming.
“A key element over the past year has been the nitrogen debate in the Netherlands… the government has been struggling to find a way through this. We are collaborating with our supply chain partners on [appropriate] measures, on ways of innovating and strengthening our environmental approach. I believe there is a way the sector can overcome this, but it requires time,” said the CEO.
All factors considered, including protein demands and sustainability drivers, ForFarmers sees varying developments in the markets it operates in, species by species.
“In the Netherlands, given the nitrogen emissions discussion, we anticipate a small reduction in the dairy sector over the next five years. We expect a more significant reduction in the swine herd,” said Knoop.
He spoke about the Dutch government’s voluntary buy-out scheme for swine farmers to restructure the sector and make nitrogen gains in relation to that.
“Initially, the expectation was that 10% of the animals would disappear due to this buy-out program but, yesterday [September 14], we learnt that fewer than expected farmers have signed up for this arrangement. So the reduction will take place but it will be more moderate than anticipated.”
Knoop referenced the self-sufficiency level of the UK market for animal protein, at only 60%. “So 40% of the meat is actually coming from the continent and we now feel that, with Brexit coming up, UK farmers will be enticed and motivated to, over time, increase investment to drive that self-sufficiency to higher levels, giving us growth opportunities.”
Another market that ForFarmers remains positive about, in terms of long-term growth, is Poland.
“In ruminants, and swine, but, especially in poultry, we believe Poland is the place to be and the country will continue to serve an ever-larger part of the European and global market for poultry protein,” said the CEO.
So while markets in Northwestern Europe are challenged, they are still very large, he said. “The strategy that ForFarmers has chosen is to strengthen our position there, not to move away from it, and to continue to invest in the capabilities that are needed to be successful in those markets.
By being customer centric at the lowest possible cost, the feed manufacturer believes it will make the difference in its home markets. The key to this is its Total Feed approach, which is aimed at helping farmers to achieve an optimal return on-farm, particularly in times of increasing environmental measures, said the CEO.
“There are a number of white spot areas, where we don’t have the market share that we believe we deserve or can get, which we will focus on in terms of strengthening our position," he added.
Operational excellence is also critical, he said.
“We believe that the investments we have made over the past few years in strengthening our supply chain will now really start to pay off; already last year we were able to take a significant part of our costs out, and we believe that opportunity will remain in place,” said the CEO.
The company is also looking to go the next level in terms of innovation. It outlined how it is committing significant efforts and resources to programs that support the use co-products from the food industry in animal feed or projects that boost FCR, among others.
“We will take a limited number of calculated bets to see if we can achieve some breakthroughs," remarked Knoop.