The structural decrease in the supply of milk and meat creates overcapacity in the dairy and meat sector. Slaughterhouses and dairy processors are hit harder than processors and traders later in the chain. They are more flexible and can adjust more easily.
‘Shrinkage livestock costs the Netherlands € 1.5 billion and 13,300 jobs’ annually
According to sector analyst Jelmer Schreurs of ABN AMRO, the contraction of the livestock, which is now going on due to the termination and exhibition schemes, the dairy and meat sector. For the remaining farmers it is favorable that there are fewer farmers, they see their income rising.
But companies that purchase the farmer, such as dairy processors such as FrieslandCampina and Arla and slaughterhouses such as Vion, are more often confronted with higher costs that can only be calculated to the consumer to a limited extent. And because the volumes are falling, there is a threat of overcapacity at slaughterhouses and milk processors if they do not focus on other sources of supply.
Suppliers
According to the bank, companies can respond to this and prepare by entering into a closer relationship with suppliers, getting supply from abroad and focusing on added value instead of volume. A shrinking herd also offers companies opportunities to make it more sustainable. “Fewer animals, higher added value and the possibility to combine animal and vegetable protein in products.”
Dutch herd shrinks further, especially fewer pigs
Research commissioned by ABN AMRO shows that especially highly educated and younger consumers can be poked for so -called ‘hybrid’ products that contain, for example, 60 percent meat and 40 percent vegetable ingredients. There are all these types of citizens, and recently even made hybrid milk: animal milk mixed with vegetable.
The sector analyst thinks that although these products are only offered to a limited extent, they can offer a solution for slaughterhouses and dairy processors to accommodate the decreasing offer. “Moreover, these products have a lower CO2 footprint, which has become more important for retailers in particular.”