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Pork Commentary, November 13, 2017
Jim Long President-CEO Genesus Inc.

 

Europe

For many years, North America has seen an influx of European swine genetic companies. Today Genesus stands as the last North American global swine genetic company. This in itself is mostly irrelevant as producers need to purchase their genetics based on profitability, not on the country they come from.

A couple years ago Genesus embarked on a plan to introduce our genetics to Europe. We had seen the European companies in North America, Latin America and Asia. We knew we could more than compete. So, as my father used to say, “if you want to sell something you better show up”. So, we showed up. Now Genesus has farms in Europe, producing Genesus Genetics in Germany, Spain, Great Britain and France. From these farms we sell our breeding stock. Europe is a large market with 11 million sows, which is almost double the U.S. sow herd, in size. The big difference is, U.S. is a one language market. In Europe – many languages and many different markets. So, we obviously must have Germans selling to Germans, Spanish to Spanish, French to French, English to English.

Last week Genesus took another step in our European venture, we purchased Porc-Ex France which, until recently was a DanAvl franchise (Danbred) with Porc-Ex based in Denmark, formerly one of the major DanAvl global distributors. With the purchase, Genesus has established a logistic and administrative office in Rennes, France, to support France and the rest of Europe.

Genesus recognizes the opportunities in Europe and through our office in France, we can create a strong presence in Europe with local production and proximity to customers.

During the last year Porc-Ex has introduced Genesus genetics to many farms previously using DanAvl (Danbred). With our first results we are seeing and being told from producers now using Genesus;

“It is a fact that Genesus pigs are stronger than Danish pigs, more homogeneous and start to grow earlier. Genesus Duroc offsprings grow very fast, even if they are weaned at 21 days, which is a problem with DanAvl Duroc. The daily gain obtained by French farmers is very good. We have some farmers who reduced their wean to finish mortality rate to 2% instead of 7% when they were using DanAvl genetics. The first Genesus gilts, which are easier to manage, are recently available on the French market” – says Philippe Mallétroit, Director of Genesus in France-

In adversity there is opportunity. Part of Genesus European opportunity is the chaos in the DanAvl (Danbred) system.

Most of the world isn’t aware of the situation that has been ongoing for two years in Denmark. Most people don’t read Danish, so the news isn’t known globally. Its noteworthy as DanAvl (Danbred) has been the largest supplier of swine genetics in Europe. Why has Genesus grown so quickly in Europe? The Genesus Genetics program of Purebred Duroc, Yorkshire, Landrace and the F1 gilts is similar to DanAvl (Danbred); no other Global companies have similar genetic programs. 

Below is a brief overview of DanAvl (Danbred) story:

DanAvl has over the last couple of years, internally been in complete turmoil. Back in December 2015 it was announced DanAvl wanted to restructure and in the future customers should only do business with one (new) company, instead of the several vendors they had been dealing with. This started an internal fight and DanAvl got accused of creating a monopoly. During this, everyone – vendors, multipliers (Danish and international) as well as nucleus farms – all had their agreements cancelled. For 2 years the situation has been totally chaotic and while the case was being investigated by the Danish Competition Bureau, no one knew how this would end.

End of September this year, the Danish Competition Bureau announced its approval to the (many times) revised proposal from DanAvl for a new structure. The new DanAvl got the green light; they now need to figure out how to make this new company work. First step was to renegotiate with all Danish breeders and multiplier – everyone received a new 200-page contract and were given till October 31st (less than a month) to decide if they would join the new DanAvl. November 1st came and DanAvl did not receive full support from the Danish pig producers – 40% of the sows in the Danish breeding and multiplier systems decided to break away from the DanAvl system

In an article in the Danish newspaper ‘Maskinbladet’ November 1st, 2017, Chairman for the Danish Swine Producers, Henrik Mortensen, describes the announcement; “– A sad day for Danish pig producers”.

As the article continues – Henrik Mortensen is sad about the financial consequences such a split will lead to for the Danish pig producers. He says “The split will result in reduced genetic improvement for a period, as well as additional costs in order to keep two or more breeding systems in operation. To this must be added the lost genetic fees, as a consequence of the missing common ground”.

Henrik Mortensen, points out that at the recent Swine Congress, it was stated that the total genetic fees are around $44 mill US. If the pig producers will lose around 15-20 percent of these, it corresponds to $6.5-8.7 mill US

Henrik Mortensen says; “If we ignore the rational losses and let the feelings speak, we are talking about some skilled farmers, breeders and businessmen, who have chosen not to sign a new contract with DanAvl”.

Helena Echberg, from Denmark, working with Genesus as Director of Business Development says; “These are interesting times, it creates opportunity, particularly for the Danish pig producers. Competition is always healthy and with Genesus genetic being based on same breeds as DanAvl and by bringing greater profitability to producers, Genesus is a well suited alternative. With our recent expansion, giving us an even stronger base in Europe, we look forward to servicing new and existing customers throughout Europe”.

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This post was written by Genesus