The corona virus lockdown across Europe has had a major impact on the foodservice industry, which supplies goods to canteens, restaurants and cafes. The lockdown caused a slump in sales of beef and veal, while sales of hides have also almost come to a halt.
As a result, settlement prices on owner deliveries of cattle declined somewhat, to the regret of Finn Klostermann, CEO of Danish Crown Beef. Until the crisis set in, most things were developing favourably.
“During the first five months of the half-year period, everything went by the book, and there was every indication that beef and veal prices had bottomed out. Unfortunately, the corona virus crisis has changed all that, but on the other hand we have demonstrated our ability to adapt very quickly, as a result of which our settlement prices to the farmers have fallen by much less than in the rest of Europe.”
Scan-Hide and Teterow turnaround
Our results in 2018/2019 were marked by low prices for hides and an imbalanced market in Germany, where especially the Teterow abattoir in Mecklenburg-Vorpommern failed to make the expected contribution. However, a dedicated effort by Scan-Hide and the ending of pig slaughtering at Teterow meant business quickly picked up.
“Closing down the pig slaughtering operations at our abattoir in eastern Germany at the end of 2019 was the right decision. Operations have improved dramatically thanks to a dedicated effort, and we have launched a number of projects which provide the basis for further growth,” said Finn Klostermann.
After several members left the cooperative last year and organisational changes, Scan-Hide has once again been able to consolidate its supply of raw materials and improve its operations. The new management team has set a clear course, which had begun to yield results when the corona virus crisis put all progress on hold. As most of Scan-Hide’s customers are located in Italy, sales of hides have been virtually non-existent since northern Italy was locked down at the end of February.
Strong operations in Denmark
The Danish part of the business experienced strong performance in the first half-year, and this was highlighted when the corona virus crisis set in.
“All our employees have made a truly remarkable effort during the crisis. Within a few hours, we doubled our minced beef production capacity and largely met the retail sectors demand. This agility is a major strength, and one we must hold on to when we have left the crisis behind us, because this is the way forward to once again lifting settlement prices for our owners’ supplies,” said Finn Klostermann.
Our owners fully appreciating the difficult situation we are in has also been important. By sending fewer animals for slaughtering, they have contributed to maintaining the supply of Danish beef and veal at a level where almost everything has been sold despite the lack of sales to the foodservice sector.
Consequently, Finn Klostermann also looks forward to continuing the initiatives that may contribute to lifting settlement prices for cattle once the crisis is over. These initiatives include climate certification of calves, which is progressing well, and the Danish animal welfare label, which is intended to highlight the good initiatives in the supermarket fridge.
“Calf producers are well under way to obtaining a climate certificate. Initial figures indicate that production under the auspices of Danish Veal is in the absolute world elite. At the same time, we support the Danish government’s animal welfare label, best known as the so-called ‘Heart Label’. The initiatives are currently being rolled out to Danish consumers. Beef from Friland farmers is already on sale in the supermarkets with two hearts, and Danish Veal expects to have the same in a few months’ time, said Finn Klostermann.
The average settlement price for cattle was DKK 19.91/kg in the first half of the 2019/20 financial year. This is 1% less than in the same period last year.