Exchange relationship between Breeder organization and Breeder

This information applies to the whole conventional pork supply chain, a large part of which is covered by the VION Food Group.

Purpose of exchange:

single transaction versus long-term relationship

Nature of communication:

anonymous versus firm to firm

Formality of exchange:

formal versus informal

Type of contract:

classic (closed) versus relational (open)

The breeding company has long-term franchise contracts with 120 breeders of production sows and 7 boar producers.

Objective of the contracts is twofold: (1), to support second-line sales of genetic material; (2), to secure and improve various populations.

Breeders are independent organizations in The Netherlands.

Firm-to-firm-communication. The breeding company gives technical and commercial support to breeders.

The technical team, the members of which visit farms at least once every 14 days (in The Netherlands), supports the production process at farm level (e.g., by identifying and selecting animals).

A commercial team supports breeders in the marketing of genetic material (e.g., by seeking customers for them).

Communication between breeding organisation and breeders is mostly formal. The company's commercial and technical teams have to write a summary of each farm visit.

Each year, each breeder is evaluated (e.g., on breeding performance, commercial capabilities).

The company deals with a combination of hierarchical and market governance to deal with low performing breeders (i.e., low performing breeders are not matched with new customers; furthermore, these breeders will not able to pay for franchise fees).

Contracts are specific with regard to product (like type of sperm used) and process conditions (like type of vaccination schemes) and with regard to profit sharing (breeders pay a fixed franchise fee per animal sold) and risks (breeders carry their own production risks).

Objective of the contract is to set baseline product/process conditions. Contracts are open enough to give breeders the freedom to adapt standards to the specific demands of the flora and fauna in which they produce.