Danish Crown opens for piglet share ownership
In the autumn, Danish Crown's board of representatives set up a committee to come up with proposals for modernizing the 137-year-old cooperative. The committee is now ready with its first proposal, which will make it possible for producers of piglets to become part-owners and receive residual payment for the piglets that are sold and later slaughtered by Danish Crown.
"This is an offer to piglet producers to ensure their sales, just as a shareholder in Danish Crown has always been guaranteed sales of their slaughter animals. Over the years, we have had a number of piglet producers who have asked if we could make a model where they also became share owners in Danish Crown and got closer to the company. We saw this most recently in the survey we did in the autumn prior to the work in our committee, and it has now led to a concrete model", says Asger Krogsgaard, chairman of Danish Crown.
The model the statute committee has come up with assigns piglets 15 A kilos, which is added to the slaughter scale. The remaining payment for the 15 A-kilo will be paid to the piglet producer, if this is a shareholder in Danish Crown.
The goal is that at least 90% of the pigs must come from piglet share owners, and there will be a transitional arrangement that ensures the pig share owners who cannot find piglets from piglet share owners. The 15 A kilos will also trigger an annual attribution to the individual unit owner's owner account, which since the introduction has been between 5 and 16 øre per kg.
If the piglets are instead sold based on a weight of 7 kilos, they will be entitled to a subsequent payment and credit to the owner's account for 12 A kilos. As a piglet share owner, you commit to delivering a specific number of piglets per year, taking into account biological variation, and for that quantity, there is a right of delivery and an obligation to deliver, just as it is known today from the fattening pigs.
"It is the board's unconditional goal to bring together the unit owners who will ensure stable deliveries for our joint business. Danish Crown is the company for those who want to take responsibility for the Danish value chain and believe in our strategy of going from being a supplier of raw materials to the whole world to being a leading food company in Europe with a focus on processing", says Asger Krogsgaard and continues:
"With the model for a piglet joint ownership, we create the framework for a binding cooperation between the piglet producer, the fattening pig producer and the slaughterhouse - a kind of integrator model - which can help to secure all parties against the drastic fluctuations that occasionally hit the markets.
The new share ownership means that a smaller part of the remaining payment will be redistributed in Danish Crown. For the integrated producer with his own piglets, the share in the residual payment will be unchanged, while a fattening pig producer will pay approx. 15%, which instead accrues to the piglet producer, if this is a shareholder in Danish Crown.
"It is our clear position that this model, with a long-term collaboration, will create increased stability and more value for all owners. For the current unit owners, the value lies in two places. A higher degree of - and preferably full - integration between all links in the value chain will give Danish Crown very precise insight into the number of pigs in the cooperative owners' barns. With that knowledge, it can be optimized to the benefit of all unit owners, and for the pig producers, the model can also provide a higher degree of security for the deliveries of piglets", says Asger Krogsgaard.
The specific models must take into account the variations found in the various trade agreements between piglet producers and fattening pig producers.
Danish Crown's board of representatives must decide on the proposal for joint ownership for piglet producers at a meeting on 8 May. Danish Crown's unit owners will have the opportunity to hear more about the ideas behind piglet unit ownership on April 18 at a virtual briefing.
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