Less than six months ago, Danish Crown introduced five initiatives designed to ensure higher pig supplies for slaughter in the 2025/26 financial year. The strategy has succeeded, and the company now expects to slaughter up to 9.4 million pigs annually. Consequently, the Danish Crown Board of Directors has decided that existing and new suppliers must receive approval from Danish Crown Owner Services before they can expect to deliver additional pigs.
“It has been fantastic to experience the interest in helping to reverse the trend for Danish Crown. Many farmers were naturally somewhat skeptical, but since we raised our settlement price for pigs to a competitive level in early May, momentum has really picked up. We are now so close to full capacity utilization that we need to manage agreements on additional pigs very strictly,” says Niels Ulrich Duedahl.
In practice, Danish Crown is now activating the so-called “stability mechanism” in an upward direction. This means that suppliers can no longer increase their committed annual volume of pigs without prior approval from Danish Crown Owner Services.
“In our industry, we always focus on securing the best possible utilization of slaughterhouse capacity. We are now able to do so for a large part of the upcoming financial year, and therefore we asked the Board to give us the necessary tools to manage the inflow of additional pigs,” explains Niels Ulrich Duedahl.
One million additional pigs in three months
Over the past three months, Danish Crown’s suppliers have committed to deliver more than one million additional pigs compared to the company's expectations earlier this summer. These agreements involve existing and new suppliers and vary widely – from just a few thousand additional pigs from current suppliers to new suppliers committing six-figure volumes.
“We have explored every opportunity to secure agreements on additional pigs, and our consultants have been extremely busy, meeting with farmers at all hours. I must admit that for a while it felt like we were dealing with the classic ketchup bottle effect – nothing at first, then everything at once. Once the first agreements were signed, things really accelerated over the past two months,” says Søren Tinggaard, Director of Danish Crown Owner Services.
Younger farmers will still get benefits
The significant increase in supply means that from September 1, it will no longer be possible to enter into agreements on growth premiums or the delivery of heavy pigs. Opportunities for contribution margin guarantees and subsidies for barn rental will also be limited to young, newly established cooperative members. Conversely, agreements on contracting pig deliveries and establishment bonuses for new suppliers will remain available, but all agreements will now be conditional of a sufficient capacity.
“We have chosen to maintain the initiatives that support new and younger farmers, as we expect a wave of generational change in the coming decade. We want to support those who are interested in becoming suppliers to Danish Crown. We are also keeping the option of contract pig deliveries, even though it is not immediately relevant, as it could open doors to supply pigs from those who do not wish to become cooperative members,” says Søren Tinggaard.
Closer cooperation with supppliers
The stability mechanism will be locked upward effective today at 9:00 a.m., meaning that Danish Crown has now activated it in both directions. Cooperative members must therefore provide 12 months’ notice if they wish to increase or decrease their annual delivery.
“I see this step as the first move toward a model where we work much more closely with our suppliers to ensure an optimal utilization of our slaughter capacity and thereby secure consistently competitive settlement prices for their pigs. We are currently discussing how best to achieve this, and it is extremely encouraging that these discussions will happen on the back of a strong interest in delivering to Danish Crown,” concludes Niels Ulrich Duedahl.
In total, Danish Crown has the capacity to slaughter 9.4 million pigs annually.