For DeLaval, 2018 was a record year. We have grown faster than the market and this is thanks to the launch of a full range of new products in both automatic and conventional milking. Furthermore, many innovative aftermarket products were launched, some with the potential to completely change dairy farming.
While some markets were hesitant at the start of the year, all markets were in steep growth by the end. More farmers are investing in automation due to the mounting difficulties in recruiting to the agricultural industry.
Our strategy is centred around the customer. We know that the way to meet customer needs is to ensure improvements in food safety, work efficiency, animal welfare and farm profitability.
These criteria are valid everywhere around the globe and help us focus our efforts in both R&D and sales. They are also important when we improve our internal productivity.
When it comes to innovation, 2018 was a year that saw the outcome of several years of innovative R&D activities. We launched the new DeLaval VMS™ V300, an automatic milking system to which farmers around the world have reacted very positively. At a time when farmers in many countries are finding it increasingly difficult to recruit the right staff to their farms, the work efficiency benefits of automatic milking are highly relevant.
This means that a growing number of large farms are buying several DeLaval VMS™ systems instead of struggling to find the right personnel. Farm automation is generally on the rise because of the labour shortages in the industry. The new V300 is a significant upgrade compared with its predecessor: faster, more efficient, easier to work with and easier to manage.
On the conventional milking side, we have revitalised the approach to parlours and rotaries. The first examples of this are the new E300 Rotary, the new Rotary E100 milking system, as well as the new DeLaval parlour milking system P500.
We have also taken a new approach to feeding with the launch of DeLaval OptiDuo™. More than a feed pusher, it remixes the contents to ensure every cow in the herd gets fresh feed.
In terms of food safety and animal welfare, the liner that attaches to the cow’s teat is of utmost importance. The DeLaval Evanza™ cartridge liner improves milking performance and the liners also last twice as long as normal liners. Perhaps the greatest advantage, however, is from the work-efficiency perspective. It renders significant savings when changing liners and doesn’t require specialist skills. This is a fundamental change in milking.
All of these new solutions and innovations and our delivery to the market are the result of dedicated work from our staff across the globe, not just in R&D and product development, but in our supply chain all the way to the customer.
Our entire sales organisation was restructured a couple of years ago, the results of which we are seeing now. The team has taken on the change exceptionally well, moving more resources closer to our customers. We have also reorganised to become more productive and these changes have led to continuous improvements, ensuring that we all do more with less.
Doing more with less is the rule of thumb we all follow at DeLaval, regardless of where we work in the organisation. It’s also our mindset towards our customers as we pursue our vision: To make sustainable food production possible.
We are certainly aware of the emissions created in dairy production, but we are also conscious of the nutritional value of milk and milk products. Milk is one of the most nutritious foodstuffs on the planet and we have a responsibility to ensure that our customers can produce milk as efficiently as possible. That means taking care of animals and farm workers, which leads to the most productive and profitable farms.
Digitalistion has been a strong trend in recent years and we are no exception to the constant digital development taking place. We often say that DeLaval has been digital since we put the first transponder around the neck of a cow in 1978. We have continuously developed since then and today, more than 3,000 of our customers are managing their farms from the palms of their hand with the DeLaval DelPro™ farm management app “Companion”.
With our ability to collect data on the farm, we can gather information – with the farmer’s permission – and give more accurate recommendations that help them improve their food safety and farm profitability.
We are undergoing an internal digital transformation to prepare us for the next phase of development. This has not been without its challenges, but is crucial to ensure we stay in the lead when it comes to digital development in the dairy industry.
“Digitalistion has been a strong trend in recent years and we are no exception to the constant digital development taking place. We often say that DeLaval has been digital since we put the first transponder around the neck of a cow in 1978. We have continuously developed since then and today, more than 3,000 of our customers are managing their farms from the palms of their hand with the DeLaval DelPro™ farm management app “Companion”.”
From a wider economic perspective, 2018 has been a challenging year in certain parts of the world and we see continued price volatility for both milk and feed prices. The volatility in 2018 was driven mainly by macro-economic challenges such as geo-political uncertainties, trade disputes, currency movements and local milk shortages. These issues have become more important drivers of farm profitability than the overall direction of dairy and feed commodity prices. The continued trade dispute between the US and China has affected many industries and clearly affected milk and feed (especially soybean) commodity prices around the globe.
The renegotiation of the North American Free Trade Agreement (NAFTA) is another area of geo-political uncertainty. Until the new agreement (USMCA) is ratified later this year, the raised customs tariff on American cheese into Mexico, for example, is putting pressure on Class III milk prices in the US that negatively affects farmers’ margins.
Despite these uncertainties, we have experienced an increase in net invoicing of € 31.4 million in prevailing currency, up 3.2 per cent compared with the previous 12 months. Overall, the US continues to be our largest market, followed by Germany and Japan.