DENMARK - Danish Crown is making an ambitious promise to owners in order to encourage producers to slaughter pigs in Denmark. Between now and 2021, the company will be raising the settlement price paid to owners by DKK 0.60 per kg.
At a meeting of the Board of Representatives, Danish Crown’s management presented a new strategy which includes an extremely ambitious objective.
The settlement price paid to Danish pig producers is to be raised by a further DKK 0.60 compared to an EU index for settlement prices which Danish Crown has exceeded by more than DKK 0.20 in the past year.
"The new strategy is to enable Danish Crown to increase future earnings – for the sake of the company’s owners. Therefore we want a stronger, more profitable and focused company which, between now and 2021, will be able to pay settlement prices that are an additional DKK 0.60 per kg above the EU index," says Erik Bredholt, Chairman of Danish Crown’s Board of Directors.
In future, Danish Crown’s settlement price will be benchmarked at all times against a basket of pig prices from the other four large pig producing and pig exporting countries in Europe. The German pig price will have a weighting of 44 per cent, while the pig prices in Spain, France and the Netherlands will account for 28, 17 and 14 per cent.
"In the past, we have almost exclusively compared our prices with the prices paid in Germany, but looking at a single country does not, I feel, paint the right picture, neither for our owners nor the Danish Crown management. Due to the impact of one-off events, the German pig price is at times a poor yardstick," says Erik Bredholt.
In the past financial year, the EU index was DKK 0.10 below the German pig price, whereas in FY 2014/2015, the EU index exceeded the German price by DKK 0.12 per kg.
"One of the biggest challenges facing Danish Crown is the decline in the supply of slaughter animals in Denmark, where supplies are dropping by 2-3 per cent a year. The diminishing supply of slaughter animals is basically a cost for the company. If we can guarantee a settlement price for pigs which makes it attractive for our cooperative owners to produce pigs in Denmark, I am convinced that we will see an increase in the supply of slaughter pigs and thus job creation at the slaughterhouses," says Erik Bredholt.
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