Aviko Acquires Agrico's Business Activities in Processing Potatoes

Agrico will focus on the breeding, multiplication and production of seed and table potatoes with the ambition to expand its position in (inter)national markets.

12 Nov 2010 --- Agrico will transfer the trading activities in processing potatoes to Aviko Potato on December 1st. Agrico concluded that it is hardly able to make the difference with the traditional trade in processing potatoes. As a consequence, Agrico is unable to pay a sufficient return to the growers concerned. The enlarged acreage contracted provides Cosun subsidiary Aviko Potato the opportunity to strengthen its positions in upper quality segments of the chips market. The employees concerned will be offered jobs at Aviko Potato B.V. Growers change trader on a voluntary basis. Attractive conditions are offered to that end, including contract types that were offered by Agrico up to now.

The market, which is dominated by a few large-scaled potato processing companies, can be characterized as very competitive and dynamic. Presently, expectations are that the market for processing potatoes will remain supply driven. The Agrico processing potato acreage is under pressure, especially in the traditional Agrico regions. In addition, more than 30 percent of the acreage is grown by non Agrico members and an important part of the acreage is grown through agents. Agrico had to conclude that it is facing more and more difficulties in turning a profit with the traditional trade in processing potatoes. Expectations are that Agrico will not be able to distinguish itself in this specific trading market in the future as well. For this reason, taking into account the interest of the membergrowers of Agrico and the employees, Agrico decided to transfer the trading activities in processing potatoes. Agrico will focus on the breeding, multiplication and production of seed and table potatoes with the ambition to expand its position in (inter)national markets.

Especially in the polders Aviko Potato aims to expand its contracted acreage, in order to strengthen its positions in upper quality segments of the chips market. This ambition can be realized in cooperation with the member-growers of Agrico. The Agrico acreage is favourably situated for Aviko factories. In addition, the increased potato volume enables Aviko to lower the costs in the potato chain. Moreover, the range of varieties of Agrico perfectly suits the needs of the Aviko-group.

The acquisition by Aviko Potato secures the interests of Agrico’s processing potato growers. Starting harvest year 2011 new, but comparable, contracts are offered to growers by Aviko Potato. Aim is to convince as many growers as possible to sign with Aviko Potato B.V. Attractive conditions are offered to that end. The existing Agrico pool system contracts remain available for the former Agrico member growers. Two member-growers will be given the opportunity to join the potato growers board of Aviko Potato. On behalf of the pool, this board decides on the sales of potatoes from the pool.

Along with the acquisition, the Agrico employees concerned will be offered jobs at Aviko Potato against the same terms of employment. They will remain responsible for the Agrico-activities of harvest year 2010, working from the Aviko Potato office in Dronten.

The transfer of the trading activities in processing potatoes to Aviko Potato B.V. entails for Agrico as well as Aviko an important step in the accomplishment of their strategies, in the conviction that the long term interests of the involved growers and employees are met in a sustainable way.