Strategy Horizon 2020

The mission ‘For the Future of Farming’ represents ForFarmers’ commitment to farmers and other partners in the value chain: ForFarmers works side by side with its customers to secure their long-term success and that of the sector as a whole. ForFarmers wants to be the trendsetting feed company. It does so by offering Total Feed solutions on farm, so that farmers can produce high-quality meat, milk and eggs. ForFarmers’ cost-effective and sustainable feed solutions support farmers in the optimisation of their business in terms of profitability, feed safety and work efficiency. This makes ForFarmers an essential link in the food chain.

In order to realise this ambition, the strategic direction of ForFarmers over the coming years has been set out in the Horizon 2020 strategy. The main pillars of Horizon 2020 are:

  1. Focus on attractive segments
  2. Total Feed approach with partners
  3. Acquisitions
  4. One ForFarmers: professionalization and leveraging economies of scale

Strong starting position

Apart from a healthy financial basis and good market positions, ForFarmers has a number of strong starting points which it can further build upon. Over the years, ForFarmers has built up a strong and trusted relationship with its customers. This access to the farm gate is of great value. ForFarmers has been able to achieve this position by, inter alia, employing the knowledge, experience and innovative power

that ForFarmers has in-house. From the specialists who visit on farm, the marketing managers who translate market demand into products and concepts, the nutritionists and the ForFarmers Nutrition Innovation Centre (NIC), they all work daily on improving products in order to enable customers to obtain better returns through greater efficiency on the farm and healthier livestock. Animal growth, feed efficiency, animal health and increasing focus on sustainability of the ForFarmers products and livestock farming are central to this.

Sustainability: integral part of business operations

Considering its position in the value chain, the feed industry has an important role in solving sustainability issues in the production process of meat, eggs and dairy products. With a growing world population and increasing prosperity, demand for animal protein grows. At the same time, in the more prosperous countries, more attention is focused on the environment and the wellbeing of humans and animals in the manufacture of these products. Sustainability is therefore an integral and natural element of the business operations of ForFarmers. This involves making the best possible use of scarce raw materials, impact on the environment, attention to people and society and promoting animal welfare. ForFarmers aims to be the leader in sustainability in the feed industry, particularly in the use of raw materials, production, logistics and efficient and more animal-friendly feed concepts. ForFarmers further fine-tuned its sustainability strategy in 2016 and provides an in-depth report on this subject in the chapter on Sustainability and innovation.

The four pillars of Horizon 2020

1. Focus on attractive segments

ForFarmers gears its nutritional advice and the product and services portfolio to the business requirements and specific on farm objectives of its customers. For instance, large agricultural businesses with many staff members or companies that apply highly sophisticated technologies have different needs in the area of products and advice than small-scale companies or companies that focus on a niche market. To serve these different groups of customers in the most efficient possible manner, customer segmentation is an important component of the market approach. This customer segmentation is implemented in all countries and the process is on schedule. A good customer relationship management system is indispensable for this market and customer approach and this is why SAP-CRM has been selected for further optimisation. This system was implemented in the United Kingdom in 2016. At the beginning of 2017, the rollout of SAP-CRM to the other countries has started. Furthermore, ForFarmers has set up specie-specific marketing organisations. Three specialist teams, focusing on the ruminants, swine and poultry sectors, deliver marketing strategies and implementation plans for each country, with the appropriate approach for each segment. The marketing organisations work closely with the Nutrition Innovation Centre and the advisors and specialists who visit our customers’ farms. Continuous development of this approach is ensured, inter alia, by specie-specific Academies (ruminants, swine, and poultry).

2. Total Feed approach with partners

A crucial element of Horizon 2020 is the Total Feed approach. To meet the demand of livestock farmers in the best way possible, ForFarmers offers integrated solutions consisting of (feed) products, advice and tools to establish the business objectives of customers and to monitor their results. Through this approach, ForFarmers can harmonise its products and advice throughout the entire production cycle on farm. In this way customers are offered a total solution, in line with their feeding system and their business circumstances. This results in a better return and a reduced workload. In this approach, the quality of the team of specialists that visit farms is essential. ForFarmers invests in this through intensive and (international) training programmes, such as the Academies already mentioned.

The strategic international partnership with Nutreco is also important. Within this partnership, knowledge in the area of micro-ingredients is shared and important economies of scale are realised through the combined purchase of these products. Also in the area of research, forces are joined with Nutreco, with the production of a

new piglet feed concept as the first tangible result. This was developed in close cooperation with Trouw Nutrition, a subsidiary of Nutreco, and launched in October 2015 under the name VIDA. Health, feed intake and growth are the main pillars of VIDA. A large and ever-growing number of swine farmers have successfully applied this concept in 2016. To continue building on this concept and cooperation into 2016, a joint programme has been started for sows, which is expected to be introduced in all ForFarmers countries in 2017.  

The strategic partnership of the forage department of ForFarmers with Agrifirm, focused on the purchase of fertilisers, seeds and pesticides for the Dutch market, has led to an improved position on the purchasing side. The first deliveries have already taken place, which allows ForFarmers to now also offer these products as part of its Total Feed solution. Since the acquisition of the feed & forage business of Countrywide Farmers, in May 2015, ForFarmers has also acquired a position in the field of forage in the United Kingdom. A European strategy is now being formulated in order to further strengthen ForFarmers’ position in this sector.

To make it easier for customers, the decision was made to create a one-stop-shop where they can go for all Total Feed products and applications. This means that the ForFarmers Customer Service in the Netherlands and the commercial teams of ForFarmers DML (single feeds and co-products) will work as one team. This leads to better service to customers and in addition ensures more efficiency internally. This project was initiated in the Netherlands under the name Total Feed Support. The total implementation, as regards systems and processes, is expected to take two years. The other clusters are also working on preparing and incorporating this concept so that in future, customers will also have a one-stop-shop in the United Kingdom, Germany, and Belgium.

3. Acquisitions

The focus on attractive segments, strategic partnerships and the Total Feed Business are the pillars of like-for-like growth for ForFarmers. ForFarmers aims to achieve a number 1 or number 2 position in all regions where it is active, both through organic (like-for-like) growth but also through acquisitions. This allows economies of scale to be used to their best advantage. Economies of scale translate into higher efficiency and better products and advice.

As regards acquisitions, ForFarmers focuses on the four core countries and on new regions within or bordering Europe (Europe+). In the case of takeovers in the existing core countries, operational efficiency can be obtained when the acquired companies are located in the same region. If acquisitions occur in new regions, the quality of the management therefore, alongside the market position and reputation of the company are especially carefully scrutinised. To get an insight into potential acquisition candidates and to ensure an effective and efficient takeover process, ForFarmers has a team for Mergers and Acquisitions, which works closely on this subject with the Executive Committee members and the managers of the clusters. ForFarmers places a lot of importance on quickly integrating the acquired companies into the organisation in order to be able to realise operational efficiency potential as quickly as possible.

As a result of this, the acquisitions of HST Feeds Ltd. (2014), Wheyfeed Ltd. (2014), and Countrywide Farmers (Feed & Forage, (2015) are now fully integrated into ForFarmers United Kingdom. In October 2016, the Dutch company Vleuten-SteijnVoeders was taken over. Its integration started immediately after the acquisition.

4. One ForFarmers: professionalisation and leveraging economies of scale

The rollout of One ForFarmers was further continued. This approach is focused on exchanging and making the best use of internal knowledge, further professionalising the organisation, an unambiguous way of working and optimal use of economies of scale. The One ForFarmers approach is made possible through the introduction of the matrix organisation, where central departments service and support the country organisations. The effects of this are noticeable throughout all layers of the organisations. The main results are:

  • Alongside the ongoing implementation of the Horizon 2020 strategy, the new positioning ‘For the Future of Farming’ was launched in 2016 to more powerfully extend the ForFarmers mission and underpin the commitment to customers: a better return, healthier livestock, and greater efficiency on farm.
  • The ‘One’ CRM system has, as already mentioned, been implemented in the United Kingdom. This system is to be rolled out in the other countries from the beginning of 2017.
  • A start has been made on further extending the Group department Formulation and Purchasing (combined in 2015), with the Supply Chain activities, which will result in an optimal concentration of knowledge and experience. The purchasing organisation has also been adapted, as a result of which, from 1 January 2017, management will be organised across all countries by commodity category specialists in order to most effectively leverage economies of scale via a one ForFarmers approach.
  • Company-wide, the Health & Safety standards for staff have been fine-tuned. More checks and more training courses have been conducted in 2016. In addition, more has been invested in the factories and in know-how for employees. The positive outcome of this is that this has already led to an increase in the number of near-miss notifications which are used to prevent real accidents occurring. The number of LTIs (Lost Time Incidents) has slightly increased, due to, amongst others, increasing awareness and better reporting. In 2017 there will be continued focus and attention on safety at work both at ForFarmers locations and on farm. This is expected to lead to a decrease in the number of LTIs within the foreseeable future.
  • The construction of a new production facility in Exeter (United Kingdom) to replace two smaller production locations is progressing well. The factory, with a production capacity of 300,000 tonnes (doubling the current tonnage), will be delivered half-way through 2017. It will comply with very high standards in the area of feed safety, staff wellbeing and energy consumption. The project involves a total investment of £10 million. 

  • The construction of a central office has begun in Bury St. Edmunds in the United Kingdom, which will lead to the consolidation of a number of regional locations in 2017. This requires an investment of £4 million. The delivery of the new office is set to take place in the second quarter of 2017. Several support departments will be relocated in the new office, which will lead to a more efficient way of working.

Result areas Horizon 2020

ForFarmers is able to actively strengthen its position in the feed chain by implementing the Horizon 2020 strategy: closer cooperation with customers and strategic partners in the supply industries leads to a bigger share of the total (feed) portfolio used by customers. This translates into specific results for ForFarmers’ customers, the farmers, and in a higher added value for ForFarmers.

Staff: personal development

The implementation of Horizon 2020 means that the opportunities and scope for development increase for ForFarmers’ employees. ForFarmers invests in the professional and personal development of employees. The milestones in this financial year were:

  • In 2016, the third group of senior managers started the Masterclass Senior Management.
  • In 2016, a third group has also begun with the ForFarmers Potential Programme.
  • After a successful trial in Germany, the Management Foundation Programme started in all countries in 2016.
  • The Logistics Academy has begun in all countries. This programme is designed for drivers and planners and covers working safely and efficiently in accordance with legislation and regulations, reducing fuel use and dealing with customers.
  • In 2016, specie-specific Academies started in line with the One ForFarmers approach. These are modular training programmes for ruminant, swine and poultry specialists aimed at enhancing professional knowledge and sales skills. The Ruminants Academy started in the Netherlands and the United Kingdom. Germany and Belgium are planned to start this in 2017. The Swine Academy has started in all countries with one group. The Poultry Academy is on the agenda for all countries in 2017.
  • In addition, the Sales Academy, which is among other things focused on aptly identifying the customer’s requirements and adequately matching the appropriate solution, was successfully completed by almost all advisors in the Netherlands, Germany and Belgium in 2016. In the United Kingdom, the first group began in December.
  • After the successful launch in 2015 of the Company-wide employee participation plan, this plan was again offered to staff in 2016. In 2016, over 15% of staff participated in the employee participation plan. Including the participants from 2015, now around 22% of staff is shareholders of ForFarmers.
  • In addition, in 2016, staff meetings were held in the Netherlands, Germany, Belgium and the United Kingdom, each attended by a significant number of employees and during which the realisation of the strategy and mission of ForFarmers, and other current themes, was discussed with all participants. Other examples of meetings where information is exchanged are the New Year meetings and the ruminant days.
  • In 2016, ForFarmers conducted its first employee engagement survey. Around 88% of ForFarmers staff filled in the survey, and 77% was satisfied.

More information on the HR policy and the developments in that area can be found in the chapter on Human Resources.

Customers: Total solutions for animal nutrition

The Total Feed approach, total solutions for animal nutrition, is bolstered by the unambiguous manner in which the quality of the specialists who visit farms is continuously being improved across the board. This can be attributed to such aspects as the Academy training courses, the efforts of the Nutrition Innovation Centre and the continued and unceasing focus on optimising the formulation of feed. Close cooperation with strategic partners also play an important role in this. This means that customers have a wide assortment of innovative solutions at their disposal that they can use according to their business objective. ForFarmers offers products and concepts for this, varying from a 'basic product' to highly advanced and integrated feed solutions.

In addition, the marketing strategies of the different species prepared this year centre on the sustainable optimisation of customers’ returns and healthier livestock, regardless of the feeding system at the relevant farm.

Examples of total (feed) solutions are:

  • Feed2Milk is the name for the dairy cattle feed approach of ForFarmers based on the combined knowledge of several countries. Based on the effectiveness of feed as well as the animal's need for nutrients, an optimal ration is mixed.

  • Milk€fficient is a programme that allows dairy farmers to see, at a glance, the effect of various measures on feed profit.
  • With AgroMineraalPlus, a programme developed by ForFarmers in conjunction with AgroVision, customers can set up and control their fertilisation plan required by law and they can steer on maximum feed profit.
  • The key figure ‘true phosphor’, which helps dairy farmers develop a better control mechanism to improve phosphate efficiency. This subject is currently of particular importance in the Netherlands. The Milkpower product is specifically targeted to increase the output of milk without increasing the levels of phosphate.
  • Ferm4Farm is a feed concept for swine which, by using fermented raw materials, provides for a reduction of the annual feed costs, better gut health and a reduction in the use of antibiotics.
  • VitaFocus is a feed approach for, amongst others, layers that have not been de-beaked to obtain the best yields with healthy animals.
  • The Forza pre start feed approach has been introduced in all countries to effect a better start young chickens.
  • ForFarmers was chosen in 2016 by the Dutch trade journal V-focus as the company providing the best advice to farmers.

Best in industry profits

In 2016, the underlying EBITDA increased by 3.5% to €93.6 million. At constant currencies, the improvement in underlying EBITDA increased by 7.2% (€6.5 million). The ratio of the underlying EBITDA/Gross profit improved from 21.3% in 2015 to 23.0% in 2016. The profit per share rose from €0.479 in 2015 to €0.502 in 2016 (+4.8 %). The dividend proposal over 2016 is €0.24218 per ordinary share (2015: €0.23299). This amounts to a dividend yield of 3.6% when taking the share price of €6.65 as at 31 December 2016.