Royal Friesland Campina N.V.

Founded in 2008 by merger of Friesland Foods and Campina, but roots of the cooperation going back to 1879. Received royal status in 2009 (Leeuwarder Courant, 2009). Active in diary. Became big through mergers and acquisitions. FrieslandCampina has branch offices in 38 countries and employs 23,877 people. Their products find their way to more than 100 countries. (FrieslandCampina, 2021) The headquarters is in Amersfoort, Netherlands. With 17000 members they are one of the largest diary cooperatives worldwide. (FrieslandCampina, 2021, p. 30) The annual revenu of FrieslandCampina was 11,1 billion euro’s in 2020, of which 79 million was profit. The company result was 268 million, or 2,4% of the net revenu (FrieslandCampina, 2021, p. 8).

About FrieslandCampina

Quick Facts

• Type: Cooperation (members own the business)
• Industry: Dairy
• Location: Amersfoort
• Year of origin: 2008
• Emission: 17,4 mton CO2 eq.
• net income

11297 million (2019 revenu), 11140 million (2020 revenu) 432 million (2019 operating profit), 268 million (2020 operating profit) 278 million (2019 profit), 79 million (2020 profit) (FrieslandCampina, 2021)

• Key people

Hein Schumacher (CEO), since 01-01-2018 Hans Janssen (CFO) Geraldine Fraser (CPO) Roel van Neerbos (President)

• Subsidiairies

61 daughter companies, four joint ventures

Relevance

FrieslandCampina is the world 7th largest diary company and therefore undoubtedly a key player in its industry (Rabobank, 2020) It is the only Dutch player in the list of the largest twenty diary companies in the world, as composed by Rabobank. The balance sheet value of FrieslandCampina was 8716 million in 2020 (FrieslandCampina, 2021, p. 96).

Company Structure

FrieslandCampina is 100% owned by Zuivelcoöperatie FrieslandCampina U.A., with 16,995 members, of which 11,100 dairy farmers in the Netherlands, Belgium and Germany (FrieslandCampina, 2020). They are one of the world’s largest dairy cooperatives. (FrieslandCampina, 2021) FrieslandCampina employs a two-tier structure, containing an executive board and a council of commissioners (FrieslandCampina, 2021, p. 75).

FrieslandCampina is divided into four business groups, all with their own specific focus and expertise. FrieslandCampina Consumer Diary supplies consumers and professionals directly with all kinds of diary. FrieslandCampina Specialised Nutrition supplies specific groups of consumers, like young children or professional sporters. FrieslandCampina Ingredients supplies ingredients as innovative partner in healthy or functional foodsolutions. FrieslandCampina Dairy Essentials produces and sells cheeses, butter and milk powder for professional and industrial clients (FrieslandCampina, 2021, p. 4).

FrieslandCampina has 61 daughter companies and four joint ventures (FrieslandCampina, 2021, p. 171). For every specific brand and branche they seem to have a separate subsidiary.

FrieslandCampina’s chief executive officer (CEO) since 2018 is Hein Schumacher, the chief financial officer (CFO) is Hans Janssen, The chief people officer (CPO) is Geraldine Fraser and the president is Roel van Neerbos (FrieslandCampina, 2021). Before 2020, the executive board existed of two members (CEO Hein Schumacher and Jaska de Bakker, who’s no longer working for FrieslandCampina). Together they earned 1,4 million euro’s (FrieslandCampina, 2021, p. 143). The supervisory board exists of the full board of the Zuivelcoöperatie FrieslandCampina U.A. as well as four external members. Their names are Sybren Attema, Sandra Addink-Berendsen, Heiko Schipper, Angelique Huijben-Pijnenburg, Hans Stöcker, Angelien Kemna, René Hooft Graafland, Elze Jellema, Hans Hettinga, Cor Hoogeveen, Wout Dekker and Nils den Besten (FrieslandCampina, 2021). The external accountant of FrieslandCampina is PricewaterhouseCoopers (FrieslandCampina, 2021, p. 193).

Paris Agreement to today

Current Policy

FrieslandCampina strived to grow its company in a climate-neutral way. This long-term climate-neutral growth objective has been realised according tot heir own rapportations: greenhouse gas emissions in the period 2010-2020 decreased from 13,108 kt to 13,039 kt, while production volume increased by 13.6 percent (FrieslandCampina, 2021, p. 23). FrieslandCampina has developed a tool to measure emissions per member farm, which can help reduce these emissions. Since 2019, for all member farms emissions are being calculated seperately (FrieslandCampina, 2021). This data has not yet been publicly shared and therefore comparisons on farm level cannot be made.

FrieslandCampina has sustainability targets, but there are no targets on emission numbers besides the long-term targets which are set out in law. One of the sustainability targets is maximizing income for member farmers, which coincides with the interest of the company owners, which are the member farmers. Other targets are making processes circular and feeding a growing world population. In other words, increase output and reduce production costs (FrieslandCampina, 2021).

Emissions

In 2020, FrieslandCampina’s greenhouse gas emissions during production and transport were 720 kton CO2-eq. The greenhouse gas emissions on member diary farms counted up to 12319 kton CO2-eq. (FrieslandCampina, 2021). These numbers exclude the purchase of CO2 emission rights of 1.198 kton (2019), 1.154 kton (2020) (FrieslandCampina, 2021, p. 8). In 2019, total emissions were 11,96 mton CO2-eq (FrieslandCampina, 2021). In an investigation commissioned by Milieudefensie, Houkema Advies Duurzaam Voedsel concluded FrieslandCampina emitted 17,4 mton CO2-eq. in 2019. Due to lack of insight into the calculations of FrieslandCampina, an explanation of the difference is not given (Houkema Advies Duurzaam Voedsel, 2021).

Over the past decade (2010-2020), FrieslandCampina’s emissions have decreased from 13,108 kton to 13,039 CO2-eq. Production in this decade has increased by 13,6 percent (FrieslandCampina, 2021, p. 23).

Although products of FrieslandCampina are sold in over 100 countries worlwide (FrieslandCampina, 2021), all of the member diary farms are located in the Netherlands, Belgium and Germany (FrieslandCampina, 2021). In the Netherlands, over 75 percent of all dairy farmers are members of FrieslandCampina (FrieslandCampina, 2021). Nearly 95 percent of all emissions by FrieslandCampina occur in the Netherlands, Belgium and Germany (12319 mton out of 13039 mton CO2-eq.).

Scandals and controversies

Several developments have had influence on the profits of FrieslandCampina in recent years. First of all, the declining birth rate worldwide, but especially in Asia caused the division specialised in infant nutrition to lag behind. Secondly the geopolitical turmoil between Hong Kong and China cut off the gate to the Chinese market for FrieslandCampina. Thirdly, a (pending) court case about overpricing customers in Tailand forced FrieslandCampina to already reserve 57 million to pay in fines or compensation, anticipating the final decision (de Volkskrant, 2021), (NRC, 2021).

The declining profit numbers of FrieslandCampina exaggerated already existing tensions within the company. 2020 was the first year when the memberfarmers didn’t receive a profit share since the merger between Friesland Foods and Campina in 2008. In 2021, this trend is continued. Add to that the reorganisation that cut a thousand jobs and the ‘’golden handsshake’’ of more than a million euro’s former executive Jaska de Bakker received. The feeling among members is that where the farmers take the hit of multiple crises, the board won’t make sacrifices but instead rewards themselves a bit extra. The tension has climaxed into two camps within the company. These camps are representative of the divide within the agricultural sector in the Netherlands as a whole. Most members understand that changes and more sustainability measures are necessary, but a loud minority refuses to acknowledge that they carry any responsibility for societal issues like the nitrogencrisis or climate change. These tensions are the reason for growing numbers of members from either camp to discontinue their membership, giving the board of FrieslandCampina yet another thing to worry about (NRC, 2021), (de Volkskrant, 2021), (Melkvee, 2021).

One of the sustainable targets of FrieslandCampina is to feed the growing world population with better and more affordable food. FrieslandCampina strives to broaden the access to FrieslandCampina’s products for low income groups and countries (FrieslandCampina, 2021). For humanitarian reasons, European exports of milk powder to African countries has for decades only be taxed 5 percent. Since the abolition of milking quota by the European Union in 2005, milk production and exports exploded. In ten years, subsidized European export of milk and milk poweder to African countries tripled to 276892 tonnes. Prices have dropped and the African market is overflown with European milkproducts. These conditions make it impossible for local farmers to get a fair price for their fresh milk, according to a coalition of NGO’s. It is true that local farmers alone will not be able to meet the growing demand for diary from a growing population, but the current developments simply pushes local farmers off the market. A spokesperson of FrieslandCampina denies the allegations and stresses that the quality of the products is the reason that local consumers prefer imported powdered milk over local fresh milk. ‘’It is not true that European powdered milk products have disrupted the local market’’, the spokesperson stated. (FrieslandCampina, 2021), (de Volkskrant, 2020), (SOS faim Belgique, Oxfib-Solidariteit, 2019).

Future Commitments

2050 Plan

By 2050, FrieslandCampina aims to be producing (net) climate-neutral dairy and, by 2030, it intends to reduce the emission of greenhouse gases by more than one-third (compared to 2015) in line with the Paris Climate Agreement and Green Deal climate targets (FrieslandCampina, 2021, p. 7). How these targets will be met in not specified. FrieslandCampina mentions net climate-neutrality, leaving the option open to compensate emissions instead of reducing them. FrieslandCampina takes the emissions of 2015 as basepoint, instead of the 1990 emissions. The 1990 emissions are the basepoint in the climate accord of Paris.

FrieslandCampina claims to have reduced greenhouse gasses emissions with 20% between 1990 and 2020 (FrieslandCampina, 2021). Based on the FrieslandCampina data, below a table with the prognosis of emissions is given. Whether the targets of the climateaccord of Paris are met depends on the progress that’s been made between 1990 and 2015.

Prognosis emission reduction FrieslandCampina based in own targets.

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In 2030 FrieslandCampina would emit 55% of the number emitted in 1990, meaning a 45% reduction of CO2-eq. emissions.

Critical Assesment

FrieslandCampina has set emission reduction targets for 2030 and 2050, as mandated by law. The way in which these targets will be met is not specified. FrieslandCampina wants its production to grow in accordance with the growth of the demand for dairy worldwide (FrieslandCampina, 2021, p. 28). This expected growth is 2 percent per year and is therefore higher than the production growth in the period 2010-2020, which was 13,6 percent (FrieslandCampina, 2021, p. 23). In the period 2010-2020 emissions dropped by less than 1 percent. FrieslandCampina strives to lower emissions from 2015 to 2030 by more than 33 percent (FrieslandCampina, 2021, p. 7).

Conclusion

FrieslandCampina is going through difficult times in terms of profit and member satisfaction. More than 95 percent of the emissions of FrieslandCampina take place in the Netherlands, Belgium and Germany while over 70 percent (bron) of the products is exported. The current business model of FrieslandCampina prevents third world countries from properly developing their own markets. Due to its expansion thrift, FrieslandCampina has hardly cut down on emission in previous years. With its expected growth numbers, their emission reduction targets for 2030 are hardly realistic. Especially when comparing the targets to the realised numbers of the last decade.