1.6.1.1

Market conditions in the agricultural sector in Europe remained challenged in this financial year, with continued low prices in almost all agricultural sectors. Milk prices did however increase at the end of the year, but remain below 2015 levels. In the swine sector, prices rose as a consequence of increased demand from China, but this did not lead to a structural improvement in the sector. The swine sector faced falling numbers of animals in the first half of 2016, but has subsequently shown some recovery. The poultry sector presented a mixed bag. Layers farmers saw a slight improvement to the market, while increased attention for welfare concepts (fewer animals on the same surface area) made things difficult for broiler chicken farmers. The agricultural sector in the United Kingdom was also affected by, in addition to the aforementioned market circumstances, the uncertainty ensuing from Brexit and the associated decrease in value of the Pound sterling against the euro. Because the British swine sector can only provide for around 60% of the local demand, and the 40% of imports have become more costly as a result of the devaluation of the Pound sterling, it looks as though growth can be expected in the mid- to long-term. 

ForFarmers has pursued efforts in all countries, through cooperation with customers, staff, partners and suppliers, to improve returns on farm. The positioning of ‘For the Future of Farming’, which was launched in the summer, underlines the Company’s sustainable ambitions and the confidence it has in the agricultural sector.

Given the continued difficult market conditions for the agricultural sector, the Supervisory Board is satisfied with ForFarmers’ results for 2016. The Company has again, in this financial year, demonstrated that good progress has been made with the Horizon 2020 strategy.

Horizon 2020

In the period under review, the Supervisory Board regularly discussed with the Executive Committee the details of the Horizon 2020 strategy and the shift from volume to added-value considerations. The implementation of the strategy is on schedule. The Supervisory Board supports the initiatives that ForFarmers develops with and for its customers in the area of efficient, sustainable and profitable business operation under the name ‘For the Future of Farming’.

As part of the meetings on the Horizon 2020 strategy, attention was also paid to ForFarmers’ internal risk management and control systems. These systems were further developed and discussed by the Executive Board over the period under review. The findings, recommendations, and measures that came out of the assessment were discussed, among other things, with the Supervisory Board. The Supervisory Board was involved in the recruitment of the internal auditor and ascertained that this role is filled since 1 January 2017.

The sustainability strategy was further implemented in 2016 as an integral part of ForFarmers’ business. In the period under review attention was focused on the use of scarce raw materials. Within this, CO₂ emissions have been identified as one of the key parameters. Furthermore, reporting has been done according to the Global Reporting Initiative (GRI G4 - Core).

Listing on Euronext Amsterdam

The General Meeting of Shareholders granted approval on 15 April 2016 for the listing of ForFarmers on Euronext Amsterdam. The Supervisory Board is delighted with the smooth transition of the trading platform to listing on Euronext on 24 May 2016. Through this listing, trading in shares is made easier and more accessible. Attention was paid to this aspect with due pride but without losing sight of the day-to-day operations on farm. As part of the listing, a protective structure against hostile takeovers was established, and the Stichting Continuïteit ForFarmers (ForFarmers Continuity Foundation) was created.

Governance

With the listing on Euronext, the governance structure was also brought closer into line with the Dutch Corporate Governance Code. In this process it was taken into account that certain deviations and qualifications seem justified for ForFarmers, partly given its history. These deviations and qualifications are substantiated and explained by ForFarmers. The Supervisory Board acknowledges the importance of good Corporate Governance and the transparency that goes hand-in-hand with this. The Supervisory Board will continue to work towards striking a good balance between the interests of all stakeholders, including customers, staff, suppliers and shareholders of ForFarmers. The Supervisory Board therefore finds it equally important that ForFarmers continues to communicate with all stakeholders constructively and consistently.

Composition of the Supervisory Board

The General Meeting of Shareholders of 15 April 2016 reappointed Cees van Rijn as member of the Supervisory Board for a period of four years. As a result, the composition of the Supervisory Board remained unchanged over the period under review. In the next general meeting of shareholders, Henk Mulder’s term of office as member of the Supervisory Board comes to an end. The Supervisory Board wishes to wholeheartedly thank Henk Mulder for his contribution over the last few years in which ForFarmers has grown considerably and become more professional.

As stated in the profile, the Supervisory Board strives to achieve an equal distribution between men and women, age, expertise, experience and background. Partly because of this, the Supervisory Board has, over the past few years, considered its composition for the future and has taken this into account in the nominations due at the shareholders meeting of 26 April 2017.

The employees have again, through their commitment and excellent teamwork, both with each other and third parties, greatly contributed to the results achieved. This effort and good atmosphere will help in the next phase to come for ForFarmers under Horizon 2020. On behalf of the Supervisory Board, I would therefore like to give special thanks to the Executive Committee and staff for their input.

Lochem, 13 March 2017

Jan Eggink

Chairman of the ForFarmers Supervisory Board