volumes contract

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Dutch animal feed sector experiences consolidation as prices soar and volumes contract

In recent months the Dutch animal feed sector has witnessed deals including ABZ De Samenwerking’s purchase of Bosgoed Diervoeders, De Heus’ acquisition of Feijen Diervoeders, and Fransen Gerrits’ investment in Theeuwes Mengvoeders, among others. The pace of these announcements suggests that compound feed companies in the Netherlands are continuing to seek tie-ups in order to increase their resiliency in a market constrained by high raw material prices and other challenges.

At VIV Europe in Utrecht from May 31-June 2, Feedinfo was able to discuss the trend in more detail with Dutch feed compounders and Netherlands-based animal nutrition firms. All were in agreement that despite the Dutch feed sector being already highly consolidated, there is still scope for the trend to continue.

Additionally, what may look like a Dutch trend today will likely repeat itself in neighbouring north-western European countries.

Firstly, it is understood that the decline seen in Dutch livestock numbers and in the number of farms will continue. As a result, demand for compound feed is declining too.

“The margins are thin, and we see that reflected in the financial statements of the compound feed producers,” said Richard

Maatman, Managing Director Europe, Central-Asia & Middle East for Trouw Nutrition. “Our industry isn’t unlike any others; when there is overcapacity, there is a need for consolidation.”

Bert van Bremen, the owner of Culemborg-based feed ingredient supplier EFS-Holland, added: “There are significantly less Dutch feed players than when EFS-Holland started operating nearly 30 years ago … Our customers [feed mills] are losing volumes due to the decrease in animal numbers. We estimate that approximately 14 million tonnes of feed were produced in the Netherlands in 2020. This year, it could be more like 11 million tonnes.”

“The number of farmers will drop. As a company, you have to get bigger in a context of market consolidation. We want to be bigger to be more relevant for our customers. We want to be part of the party in the years to come. We want to be part of the overall discussions with the large slaughterhouses and dairy companies. You also need to be a certain size in order to truly innovate in data and logistics,” said Huub Fransen, owner of Fransen Gerrits who completed the acquisition of Theeuwes Mengvoeders, a feed producer based in Ulicoten, North Brabant. After acquiring Theeuwes Mengvoeders, the company now has a footprint of five factories (four in south Netherlands, one in Belgium).

Pieter Wolleswinkel, COO and Head of ForFarmers Netherlands, pointed out that, historically-speaking, consolidation often takes place in periods of crisis.

“More recently, the drop in livestock numbers and in broiler prices have been conducive to consolidation in the Dutch feed sector,” he said. “We still see room for consolidation in the Netherlands in the coming 3-5 years.” “In times of stress, the only thing to do is enter partnerships and acquisitions. In cases where the small feed companies in the Netherlands aren’t necessarily cooperating, the big feed powerhouses like De Heus come in. We also see private equity coming in too, investing in feed additive companies and feed compounders,” also said Tim Lemeer, Vice President of Animal Nutrition at Barentz.

Photo: AgriBriefing OPERATIONAL FLEXIBILITY

In periods of stress, it is also critical to be as flexible as possible with operational footprint.

“It will be important for feed compounders to intensify their collaborations to optimise costs,” said Wolleswinkel. “At ForFarmers, we aim to have the right footprint, be at the

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best cost position and have operational flexibility if the markets go down. Our decision to close our feed mill in Ingelmunster, Belgium and transfer volumes to a refurbished feed mill in Izegem at the end of 2022 are in line with our operational efficiency plans and 2025 strategy. This decision was also based on the expectation that pig numbers in Belgium are dropping.”

“For Trouw Nutrition, at European level, we have the right capacity right now with 13 production sites, and we can add extra capacity at these same plants if need be. There may also be a market shift in demand from western to eastern Europe, but we will use our current facilities for that shift if it happens,” added Maatman.

“The feed market will become smaller in the Netherlands in the coming years, and everybody is preparing for the future,” also highlighted Henk Botter, Commercial Director at Denkavit, whose company recently integrated Nutrifeed, an animal nutrition business acquired from FrieslandCampina last summer. According to Botter, the integration itself went “very well”.

“Denkavit is benefitting from the fact that it now has access to the raw materials coming out of the FrieslandCampina factories, especially in the times when raw material supply is tight,” he commented.

NOT JUST THE NETHERLANDS Botter and the other Dutch company executives think the consolidation trend not only applies to the Netherlands, but to the whole of Europe, north-western European countries especially. Fransen said: “We see fewer and bigger farmers especially in the Netherlands, but other countries like Belgium and “The feed market will become smaller in Germany will follow.” His comments were echoed the Netherlands in the coming years, and by Maatman: “Consolidation everybody is preparing for the future...” may be more noticeable in the Netherlands right now, but you HENK BOTTER, DENKAVIT can expect a similar trend in Germany, France, the UK and other countries.” Wolleswinkel added: “We foresee that the consolidation drive will continue in all northwestern European countries in which we are present.” Lemeer went on to explain: “People are looking for opportunities mostly in reliable markets like animal nutrition. This is also true in markets such as Germany, the UK, even Spain, which may be a bit behind the Netherlands in this regard. These are resilient countries and where the big feed markets are located as well.” By Simon Duke, editor-in-chief

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