Boxtel, 21 December 2022 – By building demand-driven supply chains, Vion offers safe, healthy and tasty food. In doing so, the company connects all parties in the supply chain (from farm to fork) and balances supply and demand. This is Vion’s Building Balance Chains strategy. The next step in the Good Farming Balance concept is further differentiation between market segments with a focus on sustainability.
The Good Farming Balance supply chain concept responds to the specific demand in international sales markets. Since its introduction in 2017, it has proven itself and about 75% of Vion’s suppliers take part in this demand-driven concept. With the associated price index guarantee (PIG) system, Vion guarantees a competitive price to its suppliers. Vion’s strategy focuses on the further segmentation of its meat sales markets and building differentiated supply chains with a focus on animal welfare, flavour, quality and sustainability, such as the Robusto sub-chain. This is the next step in the Good Farming Balance concept.
Price index guarantee system for continuity
Vion safeguards the continuity of the Good Farming Balance concept. On the one hand, by bringing more stability to the PIG system. On the other hand, by ensuring that the PIG system fits within the highly volatile market conditions of recent years. These pose economic challenges for pig farmers and Vion. The greatly changed markets with their own dynamics have a major impact on the international price listings included in the basket of the PIG system. As a result, the quotations are no longer always representative of the markets related to Vion’s sales markets.
For this reason, with effect from January 2023, Vion is reinstating the PIG system in the same form as the system was activated in January 2022 with a revised basket of quotations. A new element is that the PIG system has a maximum additional payment of 1.5 ct/kg. This maximum additional payment is above average, looking at annual additional payments since the introduction of the PIG system (including the exceptionally high provisional additional payment of around 2.7 ct/kg that will be paid to suppliers in the fifth week of 2023 for the year 2022).
Differentiation with a focus on sustainability
The next step in the further development of Good Farming Balance is to differentiate between market segments and build demand-driven sub-chains with a focus on sustainability. Working with its suppliers, Vion has the ambition to reduce the CO2 footprint of the entire pork supply chain by 2030. Vion has and is working within the Good Farming Balance concept on a number of sub-chains in which sustainability has become a component, such as Robusto.
To encourage pig farmers to commit to making the pork supply chain more sustainable, Vion will work with a sustainability incentive linked to performance in terms of CO2 reduction on the farm. In this way, Vion links continuity of the concept – including the PIG system – with sustainability. Pig farmers who join a sub-chain can thus earn an additional amount per pig, linked to sustainability targets yet to be worked out. For the exact details, Vion is working with a focus group including Good Farming Balance pig farmers. This will be further developed and introduced in the first quarter of 2023 after which pig farmers can join. In this way, everyone in the chain contributes to making the pork supply chain even more sustainable.