Economic responsibility

At HKScan, economic responsibility means that we safeguard the profitability and competitiveness of our business both in the short and long term. A sound economic foundation forms the basis also for our other areas of responsibility, i.e. social and environmental responsibility, and animal health and welfare. The concept of economic responsibility also covers the impacts we have on stakeholders: for instance, we pay wages to personnel, dividends to shareholders, and taxes to the government.

Investments and exports support profitable growth

HKScan’s strategic objective – profitable growth – was the key driver of our work in 2016. HKScan invested in growing product categories for instance by constructing a new production facility in Rauma, Finland, specialising in poultry products and currently under construction, and the expansion of the bacon plant in Swinoujscie, Poland.

Good progress was made with the Rauma investment project. The construction was launched in the first half of 2016, the environmental permit was granted in March, and the cornerstone laying ceremony was celebrated in May. The production facility is expected to be completed at the end of 2017. The project is HKScan’s most significant production plant investment to date, and it will help to preserve food industry jobs in western Finland. The new production plant will replace the existing plant in Eura.

In May 2016, HKScan decided to invest in the expansion of the Swinoujscie bacon plant in Poland. Production technology will be upgraded and production capacity increased, with the result that the Swinoujscie unit will be one of the Group’s most sophisticated production plants.

These projects will enable the development of new branded products for growing product segments and added-value product groups. Additionally, they will improve product quality, occupational safety and working conditions while decreasing environmental impacts. In parallel with these investments, HKScan is improving efficiency by simplifying its production structure and centralizing its production technologies.

HKScan recognizes the opportunities offered by new export markets, in which respect 2016 was a milestone year also in internationalization. In January, HKScan opened a sales office in Hong Kong. In conjunction with the opening, Rypsiporsas® (rape seed fed pork) products were launched on Asian markets. Previously, HKScan has only exported frozen meat to Asia, but now high-quality fresh Finnish meat can be delivered to Asian consumers. The growing demand for Nordic meat products is based specifically on Asia’s desire for safe raw materials and increased health awareness. Responsible production and supply chain transparency are also important factors for Asian target groups.

Producers and HKScan collaborate to boost productivity

HKScan’s animal sourcing is based on long-term contract production and close collaboration with producers. Growing interest among consumers, customers and other stakeholders in issues related to responsibility, such as the origin of meat, product safety, quality, environment, and animal welfare, is a major driver of continuous improvement at HKScan, in which primary production plays a big role.

Intensifying competition also underlines the importance of continually improving the competiveness of HKScan and the entire meat value chain. A responsible, transparent supply chain and efficient and high-quality primary production can only be achieved through seamless collaboration with our producers.

Collaboration is conducted on many levels: our regional animal sourcing teams and producer service specialists work directly with the farms (Read more: HKScan Agri magazine, only in Swedish), while we have special co-operation groups working on issues common to HKScan and our producers. Shared issues are also discussed on a more general level in various producer meetings and seminars. Dialogue between primary producers and the company’s top management, marketing and product development is equally important. This dialogue helps HKScan to monitor the opportunities and challenges in our primary production, and utilize this information in the development of our products and operations. At the same time, our contract producers can learn more about HKScan’s future targets and can better highlight their strengths and express their ideas about shared development opportunities.

Cases

1. In 2016 a 25-year-old Danish poultry producer invested EUR 1.6 million in new production facilities, increasing the farm’s annual production capacity from 250 000 chickens to one million.

2. HKScan engages in collaboration in areas such as feed transports. Transportation costs account for a significant portion of feed costs. Working together, HKScan and its partners have been able to optimize delivery routes, eliminate overlapping functions, decrease transportation fleets, and increase fleet operating hours, which has significantly lowered costs. Measures to boost efficiency improve the sector’s competitiveness and also benefit meat producers. A new operating model was adopted during the first quarter of 2016 in Finland.

3. HKScan offers various services to producers to support their profitability and competitiveness; examples include advisory services related to animal feeding and health. Additionally, HKScan offers producers advice in the design and construction of new facilities (Read more: HKScan Agri magazine, only in Swedish), and in production start-ups, as well as financial advice and financial services.