Global Dairy: All change at FrieslandCampina

GLOBAL DAIRY NETHERLANDS

All change at FrieslandCampina

Cows in the Netherlands, home of FrieslandCampina.

Words by: Sjoerd Hofstee

FrieslandCampina, one of Europe’s largest dairy co-ops, has been struggling to make a profit for three years in a row. But in recent months it has been less about the company and more about the co-operative. The chairman resigned three months after taking office, to be replaced by a veteran.

The results at FrieslandCampina have been disappointing for several years now. This year, too, the management is again struggling to turn a profit. However, members need not worry about the company’s financial stability, the chief executive and chief finance officer recently emphasised in a specially scheduled webinar.

Only the return on invested capital is much lower than hoped; an inheritance from around 2015. Then, large expensive factories were built that are now not being used properly due to less milk supply (see table).

The disappointing results naturally cause irritation among dairy farmers. But there is clearly more going on. Last year, the Members’ Council approved the board’s proposal to overhaul the co-operative’s entire financing system. In short: all milk supplied must be matched by €8 ($NZ13) per 100kg of milk.

FrieslandCampina had not arranged this in such a way in recent years because many former members left their capital (partly) in the co-op. Now these are slowly but surely disappearing, many (young) farmers are obliged to invest more money in their coop in order to be able to supply milk.

Another delicate issue is the requirement of the dairy company for farmers to produce more sustainably and to meet the demands of customers such as Unilever, Nestlé and Danone. Many member dairy farmers are extremely annoyed by the increasing regulatory pressure and interference from their own dairy cooperative.

Last December, a critical dairy farmer and member joined the central board. He resigned again after eight months. Subsequent debate saw co-operative chairman Erwin Wunnekink also leave, just three months after taking up this position.

Behind the scenes, on top of the irritation about the mediocre results and interference, a major battle was going on about how the co-op and company should be managed.

One camp wants to look over the shoulder of the management and help make decisions. Other (main) board members stated that this way of managing absolutely cannot and should not be done. The board must control the management, but certainly not dictate how they should do their work from day to day.

This internal struggle shows how emotions and contradictions can arise if the financial results are disappointing over a long time. But it also exposes an important question for large dairy cooperatives worldwide such as Arla, DMK and Fonterra to consider again and again: who has which responsibility within the company and the co-op and how do you, as directors and member dairy farmers, get along when things don’t go well for a while? FrieslandCampina has set an example of what not to do.

And now Sybren Attema, who from FrieslandFoods helped set up the merger with Campina to form FrieslandCampina in 2008 as chairman at the time, can once again hold sway.

Attema is younger than Joe Biden, who became president of the United States at almost 80 years old, but is also retired and no longer an active dairy farmer. However, the relationships between members, members’ council and central management have deteriorated to such an extent, an old-timer has stepped in to restore peace. It’s not a situation to be jealous of.

The disappointing results naturally cause irritation among dairy farmers. But there is clearly more going on.

RESULTS VS. FORECAST BY FRIESLANDCAMPINA

Target 1st half year 2021

Net debt total (in million €) 1,165 Net debt / EBITDA <2,5 1.7 Interest ratio covering >3,5 7.5 Solvability >35% 39.20% Return on invested capital >10% 3.30% • Sjoerd Hofstee is a dairy journalist at Persbureau Langs de melkweg, Netherlands.

Pasture & Forage News

Rust never sleeps, so here are some tips to manage it this summer

The tiny fungal spores that can cause rust in your pasture over coming weeks may be a force of nature, but there are some things you can do now to discourage them from turning paddocks orange instead of green.

Although it will attack any ryegrass, rust really loves a good build up of dead and dying leaves in the base of a pasture. When you combine that with warm, humid weather, conditions are perfect for spores to multiply and spread. The resulting infection won’t harm cows, but they don’t like eating rusty grass, so the key is to be vigilant about maintaining correct postgrazing residuals. That limits one opportunity for spores to take hold in the first place. (Rust spores are a distant cousin to facial eczema spores, so good grazing management can help alleviate the risk of high FE spore counts as well.) Along with trashy build-up, rust also likes pastures which are under stress, especially in the next two months of hotter, drier weather. Again it will seek out older or unhealthy leaves first, before spreading to the rest of the plant. Nitrogen can help. You may have noticed that you never see rust in a urine or dung patch. That’s because rust does not like N. If your pastures do get infected, graze with dry stock to clean up as much rusty growth as possible. Apply 2030 units N/ha – moisture permitting – and the regrowth should be rust free. Increased rust tolerance is a key part of our ryegrass breeding programme. Highly palatable tetraploids like 4front have the added advantage of making it easier to achieve target residuals even if the pre-grazing cover is higher. That said, if conditions are ideal and disease pressure is high, all ryegrasses will get some rust.

Get back in clover

There’s no missing white clover at this time of the year - unless, that is, clover is missing from your pastures.

And that’s a lot more common than it used to be. In fact, today, not many paddocks are thought to contain the 30% clover recommended for optimal pasture and animal performance. Fortunately, it’s not gone for good, and now is the perfect time to start planning to restore it. All you have to do is take a good look and check how much clover is growing in each paddock. Make a note of any with minimal to nil clover, and use the time between now and early autumn to first find out what’s caused this situation, then resolve the issue(s). Soil and herbage tests can be very helpful. In a few months’ time, you’ll be all set to oversow Kotoku clover into pastures which need a topup. Use 4-6 kg/ha AGRICOTE Oversow seed, ideally no more than three days before grazing, or a day or two after. Clover needs sunlight to germinate, so don’t let oversown pastures get too long afterwards.