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De Heus Asia's business model

Driven by an entrepreneurial spirit

 
 

 

To Gabor Fluit, Business Group Director Asia of De Heus, the agricultural industry is a meaningful industry that provides food to the growing world population. It is a simple notion, that nonetheless drives Fluit and his company to "create new things".

 

by Ngai Meng CHAN

                                                         

 

Bound by rules and the strong hierarchical structure in the banking sector, the entrepreneurial bug in Fluit had wanted to break free to create new things. The opportunity occurred when Fluit came into contact with global top-15 feed supplier De Heus, and was very much attracted to some features of the business.

 

"For one, De Heus is involved in a meaningful industry that provides food to the growing world population. I find an element of pride in contributing to and playing an active role in the further development and the professionalisation of the agricultural sector," Fluit comments.

 

De Heus aims to be a major player in the Asian feed and livestock supply chain, and to use Vietnam as a bridge to strengthen its position in the region. "Having the responsibility and opportunity of creating such things was really appealing to me," adds Fluit.

 

Joining De Heus' Asian operations meant that Fluit had to relocate from his hometown in the Netherlands to the Far East in Vietnam.

 

"If you look at it, moving from the Netherlands to Vietnam was indeed a big step. But at the same time, I was already familiar with the Vietnamese language and culture since I am married to a Vietnamese woman. Vietnam is a fast developing country and I know that I would face many challenges here, and opportunities as well, both personally and professionally," he quips. So perhaps for Fluit, the decision to join De Heus was inevitably bound by fate.

 

The De Heus model

 

As described by Fluit, De Heus is a strongly entrepreneurial organisation that operates horizontally so that it can move forward quickly to respond to new opportunities.

 

The direction of the company is very clear, as pointed out by Fluit. "Because we are not part of a large integrated company, our sole objective is to provide farmers with the best quality feed, nutritional and farm management knowledge." The deepening of nutritional knowledge is supported by the company's research facilities worldwide and local application R&D centres, such as its new Aqua Research and Development centre which is undergoing construction in Vinh Long city in Vietnam.

 

In so doing, the company has helped farmers to increase their productivity and scale up their farms, and thus support them in realising the highest possible conversion of feed into animal protein to optimise business results.

 

It is widely known that during the past few years, prices of feed grain have been fluctuating substantially. Fluit admits that while there is unfortunately not much that either they or the farmers can do about fluctuating prices, what they could all do is to continuously improve the quality and traceability of the end product, and reduce the cost of production.

 

The company's advisors from all over the world continue to visit and stay in close contact with its customers. "The feedback we receive from the field provides us with a flow of constant new insights and knowledge that is transferred to our knowledge centres. By gathering this global knowledge and experience and making it available to our specialists all over the world, we are able to translate this knowledge into tailored solutions for every customer," Fluit elaborates. The De Heus Feed Academy plays an important role in that knowledge transfer which the company says would mean better service to farmers every other day.

 

De Heus, as an entrepreneurial private company, treats its farmers and other partners of the supply chain as entrepreneurs in their own regard. Each partner has to focus on its own strengths, as De Heus has learnt from experience that this approach will lead to continuous improvement of both quality and cost price.

 

"The cooperatives in the Netherlands are also step by step changing their business models, but I believe that different models can exist next to each other, and we will focus on further building on our chosen strategy – De Heus as the preferred partner of the independent farmer," shares Fluit.

 

Exporting to more than 50 countries

 

Since it was founded in 1911, De Heus has grown into one of the largest players in the Dutch compound feed industry. Today, the company exports to more than 50 countries and has operating companies on many continents. In Europe, De Heus also operates in Poland, the Czech Republic, Spain, Portugal, Serbia and Russia.

 

Far from acknowledging that the Western European feed industry is in its sunset days, as some critics might put it, Fluit finds "tremendous value" there, "even if growth is limited".

 

"Our whole organisation profits from the knowledge and experiences from our European business units, and we apply this knowledge to further develop our operations in developing countries like Vietnam," stresses Fluit.

 

The company has factories in Vietnam from which it exports to several countries in the region. To countries such as Cambodia, Myanmar, the Philippines and Bangladesh, De Heus supplies only very specific products, Fluit admits, as the company cannot compete on price with local companies in these markets on more standard products. Exporting to these countries therefore brings the additional advantage for De Heus to prepare itself for possible future feed mill investments in these countries.

 

Fluit shares some developments. "This autumn we will open our first production facility in Myanmar. In China we have a joint venture company with a successful Chinese company, Wellhope. On the African continent we're active in South Africa, Ethiopia and Egypt. We also operate in South America from Brazil.

 

We expect growing demand of the services and products we can supply in the major markets we are active in, especially in the developing economies of Asia, South America and Africa."

 

Fluit notes that within Southeast Asia, one of the key similarities is that there is still a huge market of small-scale backyard farmers. At the same time, in countries like Thailand, the Philippines, Indonesia, Malaysia and Vietnam, large professional farms are being developed.

 

"I do expect this situation to continue for some more years, but the share of the larger and more professional farms will of course increase. Because of the characteristics of the market, most farms are still being supplied with feed in bags instead of in bulk. Small farmers pay a lot of attention to the physical characteristics of the feed (smell, colour), instead of only looking at growth rate, FCR and quality of the end product. This leads to an adjusted way of feed formulation and the choice of certain raw materials," shares Fluit.

 

The Vietnamese opportunity

 

Looking at the demography of Vietnam, it of course helps a lot to make the investment decision knowing you are active in a country with more than 90 million people, Fluit remarks. "A substantial part of this population is young, hard-working, eager to learn and eager to develop. That fits very well with our focus and strategy here."

 

In a recent study by the Boston Consulting Group, the middle and affluent class in Vietnam will double in size between 2014 and 2020. This is increasing demand for meat and other animal proteins and, as a result, Fluit sees a lot of potential in the Vietnamese feed market.

 

Moreover, there is a growing trend of Vietnamese consumers expressing concern over food safety issues, especially health risks associated with chemical hazards and growth promoter residues.

 

"As you know, among the European countries, the Netherlands uses antibiotics least frequently, so we already have a lot of experience in the production of high quality and AGP-free feeds. In 2015, we also partnered with The Fresh Studio Innovations Asia on Safepork project with the ultimate aim to provide safe and traceable pork meat to Vietnamese consumers produced in a sustainable way," Fluit highlights.

 

He gives us some final advice. "If you want to be successful, you have to adapt your products and services to the needs of the local market. We have spent a lot of energy and money in local research, in the fields of pig, poultry, cattle and aqua. In our Aqua R&D centre project, we closely work with the Can Tho University and the Wageningen University of the Netherlands. We are also setting up a demonstration and R&D pig farm and an R&D poultry farm, by working together with Nong Lam University and the universities of Can Tho and Hue. We plan to expand this cooperation with more universities and other educational institutions in both Vietnam and in the region in the coming years.

 

We also always want to be a first mover. We made bulk feed solutions to reach out to medium and large sized independent farmers and have built a strong four-party cooperation among the day-old chicks supplier (our Bel Ga joint venture), the farmer, the slaughterhouse, and, De Heus in the broiler chain. That is an example of how we want to develop ourselves further, by coordinating close-chain cooperation, so that all partners have a fair share of the pie and be able to provide a high quality end product for the consumer."

 

And one thing is for sure - just like how De Heus is here to stay in the land of opportunities which Vietnam provides, Fluit has very much called it his second home. 
 
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