FEED Business Worldwide - July 2012
Big Dutchman: being present where opportunities are to provide solutions
by Geraldine EE
"Our approach is that we must be flexible and nimble enough to address opportunities everywhere all the time. We have an aggressive approach towards being present where opportunities are," says Clovis Rayzel, president of Big Dutchman Inc, USA.
Headquartered in Vechta, Germany, this poultry and swine production equipment company, is by far the largest company in its business. Globally, commercial eggs are the largest portion of Big Dutchman's business, followed by poultry and swine. Recently, the company also started its biogas and fish divisions in Europe. It plans to eventually expand these divisions to Asia, the United States and other parts of the world.
Committed to R&D to stay ahead
Big Dutchman believes that it needs to have a broad product line in order to bring solutions to its customers. As such, it allocates a substantial portion of its earnings to R&D year in and year out. Rayzel explains, "That commitment is there simply because we believe that is what is going to keep us on the top position in the long run."
Through product development teams, Big Dutchman conducts product development activities in all of its business areas in Germany, the United States, Brazil, Malaysia, China and in several other units. A given product may be assigned to any one of those teams around the world. Once the product reaches a commercial or near-commercial stage, it is then made available to all companies in the Big Dutchman Group."
Currently, Big Dutchman is further improving its BigFarmNet computer system to offer a complete package and to better connect different units to a central monitoring center, regardless of their actual location. Big Dutchman believes that synchronising livestock rearing data creates value-added performance results. It will be even more valued in the future, especially with regards to traceability, which is an important emerging agribusiness issue. On this approach, Rayzel comments, "We are trying to think of what our customers will value in five to ten years down the road, so it increases the chances that we will be ready for them when they get there."
"The concept is that if we can offer a full package, from A to Z, that is a better solution for the customers. More and more in the future, customers are not going to have the time or resources to try to understand and integrate the many pieces from everywhere. So if we can offer a comprehensive package, we believe that is of value to the customers out there," he adds.
Foray into renewable energy
With the demand for greener energy farms here to stay, Big Dutchman also seeks to provide green solutions for its customers in the most comprehensive form, cost-effective form reasonably possible.
Towards this end, Big Dutchman recently founded BD AgroRenewables GmbH & Co. KG. This strengthens its position in the renewable energies industry, and leverages the experience it gained through its affiliation to Krieg & Fischer Ingenieure GmbH, a specialist in biogas plants.
To illustrate the value of offering green energy solutions, Rayzel says, "We (can) go to our customers and say, 'Mr customer, we can offer you all the equipment you need to produce your hogs or your chicken and we also have a good solution on what to do with manure and you can transform that into energy' and that is of a lot of value and we believe that it will be even more valued in the future."
One technology for converting manure into energy which Big Dutchman is developing is gasification. This process in itself is not new, but the approach used is revolutionary. With the use of modern computers and sensors, some of them made by Big Dutchman itself, the company found a way to control the pyrolysis process to a degree never seen before. By doing so, it can successfully harvest energy to reach molecules of various gases at the highest levels of efficiency. These gases are captured and used to run electrical generators.
At the end of the process, ashes and minerals produced also have applications as nutrients and fertilisers. Rayzel says, "We have invested a lot in this promising technology, which we anticipate will reach the market soon."
The changing face of the industry
At the same time, there are other forces at play which are constantly reinventing the industry.
"Biosecurity is really a factor that is changing how the overall design of farms is made and it is for sure changing the way we look at them," says Rayzel. One example is the implication of concerns over air filtration, as it can capture pathogens that could otherwise get into the livestock housings and cause disease outbreaks.
For some years, Big Dutchman has been working on products to filter air that is getting out of the facilities, so as to eliminate particles and odours. Today, its customers are demanding solutions to meet the biosecurity need of filtering out pathogens that can enter livestock housings, particularly sow pens. With the increasing demand, Big Dutchman is putting a lot of effort in this area. It has opened up a whole frontier of research in the air filtration segment, because as a solution-providing company, it needs to be there.
To Rayzel and the Big Dutchman team, air filtration represents "a very exciting area that is going to be attracting the attention of a lot of people in years to come." In general, producers need to be prepared that the greater the concentration of animals and people in the region, the more likely they will have to implement exhaust air treatment.
Some other regulatory changes have made also positively impacted Big Dutchman's business. The need to comply with new poultry housing requirements saw the introduction of a new product and allowed the business to grow in the United States. Similarly, new EU regulations on group housing of sows brought about an overall greater demand for its equipment.
However, Rayzel explains that in the US, "we are not facing, at least not right now, a government-down type of approach; on the contrary, it is really the market and the producers-up type of approach."
On this matter, Rayzel expects that increasingly, animal welfare will be given importance. He says, "I think that in a lot of markets, the market is going to define itself, perhaps even before the law becomes a discussion." For example, Argentina or Brazil have to become more sensitive to the animal welfare laws of the countries which import their livestock products. This forces them to pay more attention to livestock housing conditions, and upgrade existing facilities. Rayzel adds, "I would say that is really a fact in pretty much in every market around the world, in different degrees, but it is a sure thing."
Riding on the trend, Big Dutchman's products such as its electronic sow feeding system - CallMatic was able to plug into this need, as it allows producers to migrate to the emerging animal welfare paradigm.
Producers need to consider, however, that while certain animal welfare measures benefit animal production, it is a proven fact that some are nothing more than pure perception. For instance, when increasing space allowed for a given animal, increment to a certain point may improve production; but beyond that point, the increase in space does not impact production. Rayzel urges that, "You have to make the decision based on all the factors."
Regardless, Big Dutchman does not take an active position with regards to where the industry needs to go. Rayzel explains the stance, "It is not our job to try to define what is happening in the marketplace, but to provide solutions to our customers once they decide where they want to go."
Global presence, local solutions
Despite not trying to define what is happening in the industry, Big Dutchman itself exerts a huge influence within the global agribusiness world.
In 2000, Big Dutchman entered the Brazilian market through the acquisition of Brazilian pig and poultry equipment producer - Avimec, forming Big Dutchman Brasil Ltda. Big Dutchman saw the opportunity in Brazil, as a very large agriculture producer, which together with the US, accounts for nearly 80% of global broiler exports. Rayzel states, "We entered the market because we have to be prepared to address the individual needs of those customers."
Despite Latin American challenges such as the lack of transport infrastructure, Rayzel is optimistic about the state of development in South America. He states, "Latin American countries are coming out of poverty, gaining buying power at a very fast speed...In terms of everything, communications and all, all those things improved, creating an environment for us to do business."
In the 12 to 13 years of activities in Brazil, changes have been very fast. Brazil keeps updating its technology all the time to be competitive and maintain its share of export markets. In August 2011, Big Dutchman built an entirely new facility in the city of Araraquara, in the state of Sao Paulo, Brazil, renewing its commitment in the market. The brand new facility featured a large warehouse, factory, offices, a training centre and showroom.
Along with its investment in Malaysia, new units in China, Russia and other countries, Big Dutchman "keeps investing not only in product development, but overall in structure, to make sure that we are better, as well-positioned as possible for growth and to bring solutions to our customers," according to Rayzel.
In Asia, Big Dutchman expanded to Thailand, Vietnam and China, using its original Malaysia office as a regional springboard. Rayzel believes that expansion in Asia will continue strongly. He says, "Today for sure, the Asia market is as sophisticated as, and as much deserving of our attention and technology as any other market, or perhaps even more so than others."
With regards to returns and profit growth, fast growing but immature emerging markets always offer the greatest potential gains. In that sense, Rayzel believes that for the next few years, Asia and Latin America will have the biggest expansion.
However, Rayzel also believes that the differences between the less developed countries and fully developed countries is narrowing. Faster communication and today's instantaneous transportation enables knowledge and technology to transfer rapidly. With the transfer of leading techniques comes the power to make optimal business decisions. On average, producers in South America may be less developed than their EU counterparts, but a top emerging market producer of hogs or poultry may be just as sophisticated as those in Europe.
Unfortunately, not all producers in Latin America or Asia will have access to capital, which is the main hurdle in the adoption of technology. Rayzel believes that "as long as capital is not a roadblock for them, they will bring the technology in, and be as advanced as the individual producers in the US or Japan or some other industrialised countries."
With global presence comes the need to address local needs. Rayzel states, "We are a global company and we have the concept that we must bring solutions as they are needed in each territory, so we have a substantial degree of market customisation." For instance, a product may be developed in one country and customised in another to better serve its domestic market. For this same reason, the BigFarmNet computer system was made available to its customers around the world after it was translated and became fully operational in many languages.
Looking into the future by revisiting the basics
Despite setting its eyes on global expansion and continual product development to meet market demands, Big Dutchman does not get giddy with expansion plans, but rather, takes measured steps in growing the company. Rayzel explains, "We believe that acquisitions are much more strongly justified when there is a strategic element." For example, the acquisition of Brazil-based Avimec, was driven by a strategic interest in leveraging Avimec's product line to achieve market penetration, and not purely for growth per se.
In fact, what defines Big Dutchman's position as it celebrates its upcoming 75th anniversary, is the fundamental principles upon which the company was founded.
Rayzel elaborates, "(Our founder) Mr Jack DeWitt used to close conversations and correspondences with the words 'keep selling'. Mr Josef Meerpohl, who later became the owner of the company, and his son Bernd Meerpohl, current chairman of the board, adopted and improved on those words tremendously over the decades. And I think, in a lot of ways, it defines the way Big Dutchman works."
To the Big Dutchman team, 'keep selling' means listening to the customers, and being humble enough to understand that they are never going to know everything. By staying in close contact with its clients, Big Dutchman is constantly reminded that there is always room for improvement, and that the customer is who they need to satisfy and find solutions for.
So long as Big Dutchman's innovative technical expertise remains tuned into global agribusiness's ever-changing needs, this leading edge supplier will not just meet the industry's needs but continually reinvent the way the livestock sector improves its efficiency.
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