Freshness and quality are the strengths of the Dutch poultry industry
The Dutch poultry industry is the international leader. With entrepreneurship, quality and logistics, businesses have been able to maintain their strong position in eggs and poultry meat. But the sector must remain alert.
If you eat an egg or a piece of chicken in Northwestern Europe, chances are high that it's from the Netherlands. The Netherlands is the world's largest exporter of eggs for consumption and egg products, and the third largest exporter of chicken meat. Of the 10 billion eggs that Dutch chickens lay annually, 6.5 billion go abroad and 50% of the meat and the hatching eggs also ends up being exported. A large proportion of sales is made up of fresh produce and takes place in Northwestern Europe. ‘When it comes to quality, cost price and logistics, the Netherlands makes the difference’, says Ruud Huirne, Director of Food & Agri Netherlands at Rabobank.
Nearly 2,000 poultry businesses
The sector isn't big. Of the 67,000 farms in the Netherlands, nearly 2,000 are active in poultry. A limited number of them are involved in breeding parent stock, the 'genetic raw material' which ends up going to the 900 businesses that farm laying hens (which produce eggs for consumption), 650 broiler chicken farms and nearly 200 businesses that produce hatching eggs which will end up becoming either broiler chickens or laying hens.
Rabobank has been a fixture for hundred years
Rabobank has long been a fixture in the poultry sector, which developed over the last hundred years on the sandy areas in the southern, central and eastern parts of the Netherlands, where other types of agriculture were barely possible. The majority of Dutch poultry farms are still based there today. Local Rabobanks have 1.1 billion euros in outstanding long-term loans to poultry farmers.
Businesses are responsible for their own profits
The fact that the Dutch poultry industry is made up of many independent businesses goes some way towards explaining its strong international position. These businesses are specialised and responsible for their own profits. This driven approach distinguishes the Netherlands from other countries, where poultry farming is often done by conglomerates rather than independent businesses. The expertise and the large-scale nature of the businesses ensure that the cost price in the Netherlands remains competitive. There is also the added benefit of the relatively cheap supply of grain and other livestock feeds via the Port of Rotterdam.
Well-coordinated logistics for fresh produce
The chain approach and efficient, streamlined logistics are typical of the Netherlands. Independent poultry businesses operate in close coordination with their suppliers and customers. ‘It's all fresh produce and the margins are tight, so the logistics have to be well-coordinated’, explains Jeroen van den Hurk, who works for Rabobank as Sector Manager Food & Agri in the Netherlands.
Persistently low egg prices
While the poultry sector is essentially healthy, there are some concerns. From a financial and economic perspective, producers of chicken meat can look back on a number of relatively successful years. However, businesses which produce eggs for human consumption have had a rough time of it during the past two years. The markets have become saturated as a result of massive investments in more animal-friendly chicken farming, enforced by European legislation. Van den Hurk: ‘In egg production there are more businesses with continuity issues right now.’
The sector's strength turns out to be its weakness
The second half of 2014 was difficult for the entire poultry industry. First, there was the Russian boycott on the import of products from the EU, and in November, the outbreak of avian flu at a number of poultry farms in the Netherlands. This led to restrictions in the supply and delivery of eggs and animals, and in the export market. ‘In that kind of situation, the Dutch sector's international position and logistical strength turn out to also be its weakness, because this costs the sector a lot of money’, says Van den Hurk.
"Investments in free-range farming, for example, are not only important for certain segments in the market, but also to ensure the continuing support of the public."
Hygiene standards are paramount
Preventing the introduction of diseases is the number-one priority for the Dutch poultry industry. Although research has shown that large-scale poultry farming can perfectly well go hand in hand with healthy chickens, once migratory birds or mice have brought disease onto a farm, it can spread very rapidly. For this reason, the strictest hygiene protocols are of paramount importance. Where this issue is concerned Rabobank monitors businesses very closely because their ability to prevent the introduction of disease is directly linked to their earning capacity.
The sector is doing a good job of responding to trends
However, all things considered, Rabobank sees a bright future for the poultry industry. Ruud Huirne: ‘The Dutch poultry industry is doing a good job of responding to changing trends in the market. And investments in free-range farming, for example, are not only important for certain segments in the market, but also to ensure the continuing support of the public. This is where the industry's strength in innovation comes in. On the international playing field, the Netherlands has to keep being better than the rest. And it's managing to do just that.’