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German pig farmers join Vion’s demand-driven supply chain concept

16 November 2018, at 12:00am

German pig farmers react positively on Vion’s new demand-driven supply chain concept Good Farming Balance.

After Bavarian farmers already showed a lot of interest in recent weeks in a cooperation with Vion, the first North-German farmers signed their supply contracts with Vion at trade fair "EuroTier 2018" this week. With the new supply chain concept Good Farming Balance, Vion responds to the global challenges and shows how pig farmers and producers can optimise added value.

The international market for pork is growing and developing. Although the production for export markets is not the main goal, global markets play a substantial role in achieving the optimal economic valorisation of pork. For an optimal valorisation, sales to worldwide markets is of great importance. Demand from various countries and customers is becoming increasingly specialised. Furthermore, there is a desire for long-term agreements. Vion wants to make full use of current market opportunities, especially demand in specific segments.

Demand-driven supply chains

The once traditional market for carcasses has been transformed into the trading of many separate parts and specialised products. A pig is cut into many separate parts, which can then be sold in international markets, for example, trotters and heads in China, spare ribs in Canada, bacon in England, and also loins in Japan and bellies in Korea.

"We aim to deliver suitable products to all markets across the world," says Frans Stortelder, COO Pork of Vion Food Group. "Together with the pig farmers, Vion makes sure that, for instance, both the robust hams for Italy, and the more delicate loins for Japan, can be produced – and this in the quantities which the markets require."

Good Farming Balance

With the supply chain concept Good Farming Balance, Vion responds to the global challenges and the associated specific demands of the international markets.

Mr Stortelder says: "The more markets we supply, the greater the differentiation and also the greater the need for differentiated types of pigs."

In North Germany, in order to ensure sufficient diversity, Vion works with five delivery modules. Moreover, the company makes agreements regarding the quantity to be delivered in order to guarantee continuity.

Advantages for the farmer

The aim of Good Farming Balance is to improve financial returns for both the farmer and for Vion. The concept is based on three key components:

  1. First of all, on a larger diversity of pig types. Good Farming Balance offers the farmer the possibility to supply his entire pig capacity in one to two deliveries without reducing the basic price.

  2. Secondly is the yield. In North Germany, Good Farming Balance is driven by the guidelines of the Association Prices of the farmers’ associations (VEZG). This basis forms a six-week gliding price. Other elements allowing the farmer to improve his yield are space utilisation per square metre and stable load, the health of the animals and optimised feed conversion.

  3. The third focus is on continuity. This is the most important element in realising an optimal contribution margin, while at the same time for Vion it is one of the basic conditions for a reliable planning towards the farmer and a reliable supply of its products to the international customers.

High-quality sales

For German farmers who are used to working with weekly prices, this model may be perceived as unusual, but it is interesting. Mr Stortelder is confident and says: "The quickest and safest way to improve the financial return in the pork industry consists of implementing demand-driven supply chains.

"This way, we obtain high-quality products at better prices; while at the same time optimising the entire production chain. Continuity and good planning are the basic conditions for successful pork production. Vion’s Good Farming Balance is positive, both for the farmers and for Vion.”