It is three years since the Dutch co-operative feed business ForFarmers acquired BOCM Pauls, the UK’s largest domestic multispecies feed manufacturer. Since then, the Dutch company has integrated the UK arm into the overall business – most visibly through a rebrand under the parent group’s colours from last October.
ATN visited ForFarmers’ headquarters at Lochem in the Netherlands – site of the largest feed mill in Europe, with 95% of its feed materials delivered by barge – where ForFarmers’ director of strategy and organisation Stijn Steendijk outlined the group’s vision and future plans.
ForFarmers manufactures and distributes compound feeds; blends; moist feeds and co-products; straight feeds and ingredients. In addition, it supplies agricultural inputs, mainly those aimed at the livestock farmer such as fertilisers, seeds and mixtures, plant protection products, forage additives and specialty products.
While 95% of its business comes from cattle, pigs and poultry, the company also services the equine and game markets, and is also active in the growing Anaerobic Digestion sector, leveraging its expertise in maintaining rumen stability to the AD digester market. It aims to meet its strapline boast of the Total Feed Business by providing an overall animal nutrition package covering forages, concentrate feeds and supplements backed up with the latest technical and business advice.
ForFarmers can trace its roots back to the late 19th century, but it was 100 years later in the first decade of the 21st century that it started to grow, both organically and by buying volume. But 2012 was the transformational year - the co-operative closed its acquisitions of BOCM Pauls in the UK and Hendrix in Northern Europe, effectively tripling the size of the business within one month.
Today the company is the number one animal feed manufacturer in Europe, with a 2014 turnover of €2.3 billion generated through the sale of almost 9 million tonnes of feed products. It accounted for some 5.8% of FEFAC’s estimated 154.3m tonnes of EU-28 feed production in 2014. The business has 42 production facilities, 25,000 customers and a single R&D centre in the Netherlands.
ForFarmers by country market - 2014
|% company revenue||38||32||22||7|
|Tonnage (million tonnes)||3.94||2.88||2.1||8.92|
The business moved from being a relatively local feed operator to EU market leader in short period of time, explains Mr Steendijk. It is now looking to change its ownership structure – currently equity is held within a closed platform, with ownership roughly held 30% by traders and 70% by co-operative members. Instead, the board is proposing a public stock market listing for 2016, subject to shareholders approving the plan. Mr Steendijk says the move is not purely to raise capital funding, as to widen its ownership and provide a more transparent market for exchange. He doesn’t expect it to change the company’s longer term, sustainable approach to business while generating sufficient funds for growth, rather than maximising short term returns for shareholders.
The company also has a new strategic vision following the recent appointment of Yoram Knoop as chief executive, the first change at the top for two decades. It is: To be the leading livestock nutrition company by supplying total feed solutions, on farm, which enable farmers to produce high quality meat, milk and eggs. Our economic and sustainable solutions support farmers to optimize their business in terms of profitability, feed safety and ease of working. This makes us an essential link in the food chain.
The vision will be achieved through three strategic aims: ambition, sustainability and partnership. This envisages the company having the ambition to always look for the next level of business growth, while remaining measurably sustainable – both internally within the business and by helping customers become more sustainable in helping meet society’s wider need to produce more food from less resource and protecting the environment. Producing more animal protein from healthy, high welfare livestock while reducing energy use and the company’s carbon footprint is a core value, says Mr Steendijk.
Thirdly, the company believes in partnerships – it seeks to achieve mutual goals through collaborations, thereby avoiding duplication of resources and obtaining better value from its investment where possible. For example, Mr Steendijk cites ForFarmers’ R&D alliances with Agrifirm and Nutreco at the NIC research centre in Holland.
At the operational level, achieving the vision means focusing on the right segments in a changing market. Mr Steendijk says ForFarmers wants to work with those skilled farmers who are adapting to new ideas and technologies – in a capital intensive industry, its future lies in supporting those farmers who are investing time and resources to stay in the industry. It can provide nutrition advice and benchmarking, informed with R&D findings but adapted to an individual farm’s circumstances.
Secondly, the total feed business concept means the company will continue to move from just supplying compound feeds. It is already handling a sizeable volume of other feed materials and grass and forage crop inputs, but sees growth potential in some market segments such as young animal diets. Again, it can meet some of these goals through partnerships with other companies – Mr Steendijk says there are no plans to invest capital in building capacity where it already exists – for example in seed production. “Our expertise is advising and applying solutions, not trying to replicate supply chains,” he stresses.
The ‘One ForFarmers’ strategy to unite legacy and acquired businesses under a single culture is well underway, through a program of identifying centres of excellence and integrating them across the whole business.
Meanwhile, the group is focussed on further growth through acquisition. With tight cost control, a €300m credit facility and little debt, it is able to act on the right opportunities to grow, either by bolting-on scale to existing operations or expanding into new country markets.
ForFarmers seeks to takethe market leading or second position in each country market where it operates. It has achieved this in the Netherlands and UK, but can improve the ranking in Germany and Belgium of the four countries where it currently has a presence. As well as gaining economies of scale, and the critical mass to have an effective production footprint, acquisitions also are a means to bringing more of the right quality people into the business to help it meet customer objectives. In turn, this allows the company to give better employment conditions, and career prospects which are important to attract and retain staff.
The company is still looking to grow in the UK, says Mr Steendijk. It has invested significantly in the business since 2012 through upgrading existing facilities and through four acquisitions - Dairy Direct, HST Feeds, Wheyfeed and, last December, the former Countrywide feed and forage business. The business now has 12 compound mills, 6 blend plants and the Dry Moist and Liquid (DML) division handling over 1m tonnes of co-products, straights and microingredients each year.
ForFarmers regards the UK as a key European market, with opportunity for further growth. Mr Steendijk describes the UK as a cornerstone of the ForFarmers group. It is also an exporter of talent to the group – as well as Ian Gardiner on the ForFarmers board as chief operating officer for the UK region, Steven Reade is director of purchasing, formulation and pricing while Chris Wrigglesworth has become Group head of IT.
In conclusion, the value chain strategy looks to broaden ForFarmers’ operational scope from just selling feed products to becoming the total feed business, says Mr Steendijk. This will be achieved through a closer relationship with both suppliers and customers in aiming for a “greater share of the livestock stomach” even if this means promoting forages – but grown using ForFarmers inputs.
Compound feeds are becoming a smaller part of the overall mix as sales of other products increase, while the growing DML co-products operation helps the business meet its sustainability and environmental objectives. The end game is to become a preferred business partner for farm customers, not just a feed supplier, states Mr Steendijk.