Episode 12: Exploring AVEBE's Cooperative Model - Reconnecting on Our Potential Collaboration

0:11 Welcome back to Seeds of Tomorrow, the next chapter. They were exploring a facility model of cultural and industrial innovation. My guest is Marlene Dehon Shooten, director of agro and strategy at Royal Aviva Marine. Welcome to the show. Good morning. And with me in studio, Nuria KE Fernandez, vice president of the Community Plan Variety office. Welcome, Nuria.

0:44 Good morning again. A bit of context before we start. Royal Vebe is a Dutch cooperative with over a century of history owned entirely by potato growers. But they don't just sell potatoes, they control the entire value chain, from breeding their own specific seed varieties through their subsidiary Averis, to extracting high value plant proteins and starters used globally in food construction and packaging.

1:11 It's a pleasure to have you here to discuss how a corporate model can lead the charge in global sustainability and food tech. It's a pleasure likewise, absolutely. Can you tell us a bit more about Abebe, his identity and the value chain? Yeah, absolutely. As Alessio already said, AVB is 100% cooperative, owned by 2000 member farmers in the Netherlands and in Germany.

1:37 We have factories in Poland, Sweden, Germany and the Netherlands. The roots are Dutch. So to tell you a bit more, I think the most interesting bit about Alpha Bay is that we own the complete value chain. So the farmers own the breeding company where the ideas of new seed potatoes are appearing. They own the innovation funnel, the actual breeding program until the multiplication and then the growing of the of the factory potatoes, growing of the potatoes that are processed in the factory until the end of the chain where we have our innovation centre in the in Croninga, where we innovate in for starch, new starch products, new modified starch products, also new protein products, but

2:28 also new applications for new customers, different markets, different segments. So until the moment that it goes to the to the customer, it's all in one value chain and that's all overseen by the APB board. I think that's special. You don't see it a lot. A lot of the breeding companies in Europe are privatized. So they are, they are on their own, so to say. But in in this way we can assure that we have the good raw material also for the future of the AVP farmers. Thank you, Marlene.

3:06 I, I'm very curious about this, this experience, this business model that you have. How do you integrate your breathing objectives into this supply chain? I mean, of course you have to consider sustainability, market value, expectations of consumers, challenges, technical challenges, diseases. But how do you how do you define your breathing objectives with so many expectations from different elements of the value chain?

3:38 Yeah, thanks for the question. I think it's we try to combine them all. We try to integrate them into one breeding approach. As you all know, breeding takes quite some time to to go from an idea to an actual or commercial seed product that's seed potato that you can sell. And we try to combine both the demands from the factory, the demands from the customers that can be in terms of specifications of the product, but can also be in terms of sustainability. Try to combine them with the demands of the growers themselves and the farmers themselves who want to have seed potatoes with higher disease resistance but also good storage characteristics, for example, is, but also high yields is important.

4:22 And to combine those all is, is, is our, is our magic, so to say. That's that's why this integrated chain is interesting because we have direct feedback, very fast, very agile, so to say from the customer back into the breeding program. But as said, we have long term goals and I think the most important objects is that that we have in the program is the agronomic objectives. So disease resistancy yield that's very important and it should be able to grow easily on the on the soil of the of the farmers.

4:57 That's that's the first step. If you have a potato that that fits well on the farm. Also on the type of soils that we have, we have different type of soils, but also climatic conditions, for example in the along the Polish border or in Poland, in Eastern Germany, western Germany, it all differs.

5:19 And that's where we also try to fit it with the right varieties, so to say. So it is. It is a play. It is a play of weighing each individual demands and bring them back into the program where asset agronomic characteristics are key. Yeah. Yeah. Well, that's that suggests that you segregate your varieties in terms of breeding objectives, you know, looking for maybe starch products for the industry or farmers demands in terms of yield for different regional markets depending depending on consumers preferences. So you have all these different targets for breeding. Yep, that's true.

6:04 Yeah. So it depends on the on the area where the where the potatoes are grown. For example, if you have areas where there are a lot of soil borne diseases or or or there is a disadvantage in that area, we we create specific varieties that can grow in that area very good. If we are in an area which which is very dry in summer, we also use varieties that are more resistant to drought. There is no plans resistant to drought. Let's make that clear.

6:34 But they can handle longer than another variety. And so we have for the specific regions, we have our own varieties there. Yeah, that's true. I think an interesting one where we really link it to the end customer so to say is with the Voxy potatoes. So we have bred already a lot of years ago and it's a separate program within our breeding scheme for waxy potatoes with a higher amelo pectin level, which is used very often in in dairy products to make it more creamy for example.

7:10 But that's a separate closed loop. So there we say we have a strict area where we grow waxy potatoes. We have a separate multiplication pool where also the seed potatoes are grown and 100% of the yield of the of the harvested potatoes go back to the factory and our and and there are VOXI products are created. So there you see a direct feedback from the market back to the back to the breeding program. Yeah.

7:37 Since you control the entire supply chains, may I ask you what is the percentage of the turnover that is invested in the in, in, in R&D, in in research, in breeding? And how many varieties do you release? What is the turnover of the varieties in the market? I think it's it needs a bit of background about about Averis.

8:00 Averis is our Delta company. That's that's the breeding company which is part of AVB. Averis started 70 years ago as a subsidiary of the large mother AVB starch and potato protein company. The breeding company has started because of some disadvantages in the in the core regions where we grow potatoes for AVB. And that's why we have always focused on soil borne disease, on Fetophtra, on Avania prevention, that kind of disease resistances that's specific in our program and we are as we are 100% daughter.

8:38 We also delivered until two years ago, 100% of the of the products from the breeding schemes to our own farmers. So to say, it was a close cycle. So only the farmers received the the innovation product of, of AVB. Around 2 years ago, we created a new strategy because we see that there are a lot of demands to go faster, to have more new varieties, to add more disease protection to it, resistance to it at the same time. And that cost a lot of money.

9:13 And that's why we said we should maybe consider to start selling outside AFB. So consider selling to non AFB farmers in Sweden and Denmark in in Czech Republic, in Finland. And that is the interesting part. So if you ask me what's the turnover in comparison to the to the, so how, how large is our is our R&D budget, it's relatively small, but it was only used for our own farmers.

9:49 So it is integrated as a part of AVB. So I think we are now changing that. And by also selling abroad, having multiplication pools also outside the Netherlands and outside Germany, we can increase our turnover and in the end also increase the profit and also use it to create a larger R&D program.

10:11 Yeah, to really speed up the whole innovation process. Your value chain includes the breathing, the cultivation, the processing and the global commercialisation. So which markets can really drive your innovation strategy? Is it European regions? I mean, you mentioned already Netherlands, Poland, Sweden, Germany.

10:32 Do you also have demands from countries outside or this mainly the European market? Yeah. It's an interesting question like AVP is a is a multinational operating worldwide. So we have sales officers in Asia, in America, in Europe and also our customers are over there. They're also partially in Middle East and Africa. So we received amounts from all of those. So an Asian demand for a certain specification in a, in a, in a end product is just as important as it is from Europe. So that's why we have our our local sales teams and they give the feedback also back to to us.

11:17 And that's what we integrate into one objective setting for, for the for the program. Yeah. Yeah, I excuse me, I'm going to ask you now about something that was not already, I mean, it was not foreseen at the beginning of planning our this interview. But I think it's very relevant because we are facing now because of the, the war in Iran a very high, very high, a very high increase of the price of fertilizers and, and, and other inputs.

11:46 And I would like to know your opinion. I mean, what is going to be the impact for, for farmers? I already saw some articles stressing some farmers decisions, you know, that the fact that they are going to change between species to species that require less fertilizers. So this, I guess this is going to also impact your strategies, right?

12:07 Yep, yeah, it always does. So lower inputs is, is important, I should say a balanced input with an optimal plant uptake and as fewer mission towards groundwater as possible. That's of course what we all want. I think we are very well positioned for that. We have bred over the over the last year's varieties that are more efficient in taking nitrogen into yield, into enough potatoes with enough tonnage, with enough volume below each potato plant.

12:51 What we are doing all the time is that we are educating our farmers using study groups, but also using manuals for farmers. Because when you are increasing the speed of the number of new varieties that you introduce, you should also guide them. We have to help them because each variety behaves a little bit different. So there is a new group of varieties that is introduced now that that needs less manure, less fertilizer. That's also depending.

13:22 We see in the Netherlands and along the German border that a lot of animal manures used and for example in more towards the east you see that a more fertilizer is used. If you look at the total uptake, it is most important that farmers use the right agronomic inputs to to grow the the potatoes as efficient as possible.

13:45 And that's starting to work. But that's a program that we started already years ago and farmers love it that they go together with the study group for each individual variety, go through the fields 3 * a year, also take samples along the way. See what the results are at the final harvest, then at the yields at the at the end of the growing season and then learn from each other what have you done, what have I done?

14:11 And also taking our manual variety and there we can see that we can really substantially reduce the fertilizer and manure usage for these varieties. I think if you ask my opinion, that's something where I would put a lot of effort in to educate farmers more, to let them discuss with each other, to take the best economic usages in order to optimise yields on each field. Marline, could you please explain us what is your IP strategy?

14:44 I mean do you protect your varieties? Do you release them without protection only on the on contractual clauses, since you are a company that provides the material to your own breed to your young farmers. So how do you manage in this complex scenario? Yeah. Thanks for the question. We have, I think, I think a quite unique model until, as I said earlier, until a couple of years ago, we were a closed model. So we only sold seed potatoes, our own varieties to our own farmers, so to say.

15:17 So yes, we have IP registered, We have our varieties being registered. That's also in contractual clauses with our areas where we have multiplication programs elsewhere. But we're still exploring this, how to improve this further. If we, we often get questions as we invested for 70 years in, in building more resistances in our in our varieties, we get often the question, can we have trades, for example, can we have licensed trades from you?

15:53 Until now that was never possible. We have not. We're we're still exploring what the potential model could be as we just recently changed our strategy of affairs. Yeah, very interesting. I think you're new in this, in this, in this world of protection. But again, I mean, if you are moving from a model of a closed comparative into third markets, I think you should definitely consider protecting and then dealing with it because at the end of the day, this is a business company, right? Yeah, absolutely.

16:27 Yeah, thank you. Maybe we can move on into technologies, I mean in the in the breathing sector. I mean, what what is your view regarding the new technologies, new genomic techniques? Yes, of course there's there's a lot of discussion about this. So the new genomic techniques are interesting. I think we were all a bit surprised that it was that it's going so rapidly now in, in EU member state decision making. I think if you would have asked me 1 1/2 year ago, I would not have expected that we were this far already. And I assume that's maybe it's for you the same. But that's good.

17:06 That's, that's very positive given the fact that our medicine box of, of plant protection measures is, is getting smaller and smaller because of the environment, because of debate, the the more societal debate. It's good that we get more room to manoeuvre in the area of new genomic techniques. So, but I don't see it as the Holy Grail.

17:30 It's an add on. It's something that that could help us along the way. I think the conventional breeding, the hybrid breeding and also the new genomic techniques alongside each other combined with some other breeding techniques could strengthen the full program. We have just decided together that we also want to explore this. It's it's like the molecular sample testing that started 10 years ago at our at our breeding company. This is another moment in time where probably technology push will also advance and accelerate the full breeding program. So we will start exploring.

18:10 We already did. We have the right people on the right machinery in house to do so, the right equipment and we will start exploring this and also edit to our program. I think from a customer point of view, it's an interesting discussion. How will it be perceived and NGT one should not be perceived as a genetically modified Organism.

18:33 But we know about the discussions in the 70s and the the 80s where it was a very hot debate, so to say. So I hope that we all see this in the right perspective. And that's also the customers accept this way of breeding as well because it's really helps us in a world where we where we can use less every year there are land protection measures that are taken away, which obviously has a reason, but then we have an we should have alternatives.

19:03 So this could be a very nice alternative. We do get questions from customers about, hey, what's happening in Europe and where are you? And we try to answer them as clear and as transparent as possible because that's that's where we're for and that's also what we want to be. We want to be transparent about this. But I see it as a very nice opportunity to increase the speed of the breeding program.

19:27 But I also see that we should have our conventional breeding program at the same time with the same focus moving forward because you still need the improvements as well in your in your base. Yeah. Yeah, that's a, that's a very good point to to keep the the wide genetic diversity in the base, not to limit it because it's true that the Ng TS you know may limit the base as you are always performing these small changes in the same varieties. That's it.

19:58 It says very well said. Finally, I mean we are just getting to the end of our interview, but I would like to ask you, I mean you are a quite a unique case, one of the few and I only know another case in Spain it too, but you're a very particular. You know, model business in which you integrate every element.

20:20 You are also owned by farmers themselves. And I would like to ask you what is the specific value of this model business? Why would you recommend it? Why do you think this is a success? I mean, to have it owned by farmers to, to, to, to control every element of the supply chain, to own the breeding or maybe it's a subsidiary. But you also control even the innovation part at the end of the, you know, specific products you want to do the packaging. So you control the entire thing.

20:48 So what is the the value of these uniqueness? What is the is the secret of success? Yeah, it's a very interesting one. We have discussed this very often. I think allowing yourself to have a long term perspective is the the most valuable part of this model. And so we can have targets within our breeding program that are further ahead. We are not 100% fully commercial having to compete with with all our breeding targets because for example with with disease resistances, if if I would ask an individual farmer, he would probably say I want to have a potato with a highest yield. Yeah, it should have bit of disease resistances, but yield is the most important thing.

21:39 But if we would have only focused on yield, we would not have been so far in, in for example developing in soil borne disease resistances. And because we are a cooperative and we have a long term perspective, we also this is going to be a huge thing in the future. We we need to invest in getting better in, in those disease resistances and that's why we invested in those and not only focus on yield and that's why we are so nicely having very nice disease resistances at the moment for those diseases.

22:18 And we are, we are very good to to have varieties for light sandy soil with a quite an intensive grown scheme. We can still have very nice yields in those areas and I think I said if we would have only focused on commercial or only individual demands, we would have not gone so far as we are now. Thank you very much, Marlene.

22:47 Marlene, thank you very much for your time and for your wisdom that you passed through. Very good. Nooria, thank you to you too and to our listeners. I think that we learned today that the food, the sustainable agriculture is just isn't just about new technologies. It's also how you you drive your business model.

23:07 And I have a proof that a century old grower owned cooperative can lead the way in global innovation. This is a resident is signing off and this was the season of tomorrow.