Danish Crown has a two-years-old plan B for ASF in Germany
A scenario in which Germany was supposed to be hit by the ASF virus was put on the paper since 2018, announced Danish Crown chairman, Erik Bredholt. Both the Danish Crown's Board of Representatives and the owners who participated in the district meetings were already two years ago presented with the main features of the plan that has now been taken out of the drawer after it is clear that Germany has been afflicted with African swine fever.
"We are following the situation in Germany very closely, and we are well helped by the plan and the analyzes that were drawn up two years ago when Belgium was hit by African swine fever. We know quite exactly what we need to keep an eye on both in Germany and here at home so that we can make the necessary decisions when required," says Erik Bredholt, Chairman of Danish Crown.
One of the important management tools for trying to avoid a temporary capacity deficit is to follow the forecasts for the number of pigs Danish Crown must slaughter. There are many indications that the company's slaughterhouses in Denmark may become busy after Germany has been hit by African swine fever. The difference between the Danish and German settlement for pigs for slaughter is so great that it is more attractive now than it has been a long time to fatten pigs in Denmark.
"We really want to slaughter more pigs than we have done in recent years, but our most important task is to service and help our owners in the best possible way," explained Erik Bredholt. Two weeks ago, it was announced that the growth supplement was to be phased out. Following the outbreak of swine fever in Germany, the supplement will be suspended as early as 1 October.
"It has been a difficult decision. We have previously signalled that we would like more pigs for slaughter, but in the current uncertain situation, with the risk of a temporary capacity deficit, we have chosen to suspend the growth supplement," added Erik Bredholt.
If the number of pigs for slaughter is to increase considerably, then Danish Crown may find itself in a situation where a differentiated settlement may be introduced temporarily for the members. In that case, it will probably be done in such a way that each member receives a quota of A-kilos based on the past year's deliveries, which are settled as before, while additional delivered kilos (B-kilos) are to be settled at the price they can bring home in the market.
A differentiated settlement mechanism for A and B productions will aim to seek to protect the settlement for the current A-kilos and burden the extraordinary B-kilos with costs that may result from the current market situation and the outbreak of African swine fever.
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