Danish Crown Beef Production Disrupted by Pandemic

The COVID-19 lockdown throughout Europe has significantly affected the foodservice sector, which provides goods to eateries, restaurants, and cafes. The lockdown led to a decrease in beef and veal sales, and the sales of hides have nearly stopped. Consequently, the prices on cattle deliveries by owners have slightly dropped, much to the disappointment of Finn Klostermann, CEO of Danish Crown Beef. Prior to the crisis, most aspects were progressing positively. "In the initial five months of the half-year period, everything was going as planned, and it seemed that beef and veal prices had reached their lowest. Regrettably, the COVID-19 crisis has altered this, but we have shown our capacity to adjust swiftly, resulting in our settlement prices to farmers dropping much less than in the rest of Europe," said Klostermann. Scan-Hide and Teterow's performance in 2018/2019 was characterized by low hide prices and a skewed market in Germany, particularly at the Teterow slaughterhouse in Mecklenburg-Vorpommern. However, a concerted effort by Scan-Hide and the cessation of pig slaughtering at Teterow led to a quick business recovery. "Shutting down pig slaughtering at our eastern German slaughterhouse at the end of 2019 was the correct decision. Operations have significantly improved due to a dedicated effort, and we have initiated several projects that lay the groundwork for further growth," Klostermann stated. After several members exited the cooperative last year and organizational changes were made, Scan-Hide has managed to stabilize its raw material supply and enhance its operations. The new management team has set a clear direction, which was starting to show results when the COVID-19 crisis halted all progress. As most of Scan-Hide's clients are in Italy, hide sales have been virtually non-existent since northern Italy's lockdown in late February. The Danish segment of the business saw strong performance in the first half-year, which was emphasized when the COVID-19 crisis began. "All our staff have made an exceptional effort during the crisis. We doubled our minced beef production capacity within a few hours and largely met the retail sector's demand. This flexibility is a significant strength, and one we must retain post-crisis, as this is the path to once again raising settlement prices for our owners' supplies," Klostermann stated. Our owners' understanding of the challenging situation we are in has also been crucial. By sending fewer animals for slaughter, they have helped maintain the supply of Danish beef and veal at a level where almost everything has been sold despite the absence of sales to the foodservice sector. Therefore, Klostermann is also eager to continue the initiatives that may help raise cattle settlement prices once the crisis is over. These initiatives include climate certification of calves, which is progressing well, and the Danish animal welfare label, intended to showcase the positive initiatives in the supermarket fridge. "Calf producers are making good progress towards obtaining a climate certificate. Preliminary figures suggest that production under Danish Veal is among the world's best. Simultaneously, we support the Danish government's animal welfare label, commonly known as the 'Heart Label'. The initiatives are currently being introduced to Danish consumers. Beef from Friland farmers is already available in supermarkets with two hearts, and Danish Veal expects to have the same in a few months," said Klostermann. The average settlement price for cattle was DKK 19.91/kg in the first half of the 2019/20 financial year, a 1% decrease from the same period last year.