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Colruyt Group launches Agripartners: an evolution rather than a revolution
2
October
2020
The establishment of the operating company Agripartners clearly caused some commotion after the news was released via VILT. We’d like to make a few things clear.
Agripartners was set up to enable Colruyt Group to continue to invest in the acquisition of agricultural land and farms. That's right. This does not mean, however, that we are preparing to attack the (real estate) market.
Farmers are completely free to enter into a potential collaboration with us and continue to work on an independent basis. The idea is not for us to start ‘farming’; we want to launch this story together with independent, local, Belgian farmers, with respect for everyone’s expertise. They will not become employees of Colruyt Group and continue to be independent entrepreneurs. It’s not about a land lease in the pure sense of the word: in this specific case we will conclude cooperation agreements with farmers, in which clear and fully transparent agreements are made that are also supported by the farmers.
Everyone in this collaboration should feel good about it
Colruyt Group has a number of levers, it can lower certain thresholds and offer a sales channel, while making land available for farmers to work on, if they don’t necessarily wish to purchase additional land themselves. However, we want to emphasise that the craftsmanship, the expertise and input of Belgian farmers is indispensable. For the farmers who want to work with us, we have a guaranteed purchase of products at an agreed price and quality, and by a known buyer.
But why would it be necessary to enter into such cooperation in our country? As a Belgian player, we want to offer and consolidate Belgian local products to the greatest possible extent. Agricultural products are already largely being sourced in Belgium, through various channels such as auctions, wholesalers, directly from producers. This is no more than an additional channel to further invest in Belgian produce, by assuring, guaranteeing and stimulating the availability of our local offer. And, at the same time, limit imports whenever we can. This initiative also fits into the principle of increasing the transparency within the chain and shortening the contact between producer and consumer. The cooperation with the farmer remains crucial: it is not our intention to become farmers ourselves.
Is Colruyt going to sell its own fruit and vegetables at the lowest price? No. The idea is to first of all look at conventional farming. In the long term we do not exclude the possibility that we will also use this land for more innovative crops, in the context of further sustainability. Organic is not an objective in itself, but we don’t rule it out either. As usual, the sales prices will follow the prices on the market, according to the supply and demand mechanism. That is precisely why we want to focus on demand-oriented cultivation, just like we are doing with other agricultural initiatives. As a retailer, we know what our customers want, and this enables us to respond much better to their demand. Our purchase prices to the farmer are independent of the sales price to the consumer; if we launch promotions or lower our prices, we pay it out of our own margins.
Yes, we are indeed stepping out of our traditional retailer role, but even that’s not new for Colruyt Group. Our own Fine Food production departments have been processing meat, bottling wine and grinding coffee for decades. We would also like to emphasise that in the future, we will also continue to invest in the existing ways of purchasing, such as vegetables through the Belgian auctions or beef from cattle farmers' producer organisations. Diversification and risk-spreading in the purchase of agricultural products are indispensable for a retailer, crises such as COVID-19 highlight this even more.
This is not a first in farming for us. In recent years, Colruyt Group has started up various cooperation projects in the agricultural sector. For example, the direct collaboration with the organic farmer of Het Zilverleen, with potato growers, setting up a new Belgian organic pig chain and direct collaboration with three producer organisations of cattle farmers.
In full transparency and through cooperation with local farmers, innovation and further sustainability can be pursued right from the start of the chain. We are convinced that there are farmers who want to work with us constructively, aiming to set up a transparent collaboration, based on good agreements. We have not set any concrete numbers or targets in this respect. We see this as an evolution, not a revolution. We want to work with regional clusters (because in logistic terms, this also works best). A certain scale is needed for reasons of efficiency, but we have absolutely no intention of entering the market aggressively.
We strongly believe in these kinds of new, innovative forms of collaboration within the chain. We work together in a transparent way, on the basis of clear agreements that work for everyone.
Putting the ideas and strengths of all parties together allows us to build a common project.
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About Colruyt Group
Colruyt Group operates in the food and non-food distribution sector in Belgium, France and Luxembourg, with more than 600 own stores and about 580 affiliated stores. In Belgium, this includes Colruyt, OKay, Bio-Planet, Cru, Dreamland, Dreambaby, Fiets! and the affiliated stores Spar and Spar Compact. In France, in addition to Colruyt stores, there are also affiliated Coccinelle, Coccimarket and Panier Sympa stores. The group is the majority shareholder of the chain that comprises ZEB, ZEB For Stars, The Fashion Store and PointCarré. Solucious delivers foodservice and retail products to professional customers in Belgium (hospitals, SMEs, the hospitality sector, etc.). The other activities comprise the sale of fuel in Belgium (DATS 24), print and document management solutions (Symeta and Joos Hybrid) and the production of green energy (Eoly). The group employs over 30.000 employees and recorded a EUR 9,5 billion revenue in 2019/20. Colruyt is listed on Euronext Brussels (COLR) under ISIN code BE0974256852.