The three challenges when creating a sustainable food system – namely food security, a decent livelihood in the chain and improving environmental sustainability – include technological, political, social and economic elements that strongly influence the VanDrie Group's strategy.

Technology

The VanDrie Group needs to make great strides to make its operation and associated processes carbon neutral and minimise nitrogen emissions. The entire footprint of the value chain needs to be aligned with the global climate change mitigation goal.

• Short-term implications: there needs to be investment in innovation with regard to stall systems, circular animal feed and the supply chain

• Long-term implications: getting to zero emissions involves costs and requires continued commitment

Politics

In the coming years, the VanDrie Group is expecting to see significant political interventions in order to stimulate the protein transition, to tax activities that impose pressure on the environment and to improve the revenue model in the chain. Secure government regulation on these issues is seen as inevitable.

• Short-term implications: reduced margin across the value chain, as achieving a value-added price from consumers is not expected

• Long-term consequences: challenges for a fair distribution of costs across the chain and incorporating true cost-price principle into the VanDrie Group's business model

Social

The VanDrie Group sees a dilemma emerging, now that food prices and inflation are high, access to nutritious protein-rich products has become more difficult for various income groups and there is a desire to factor certain social costs of food production into the price of consumer products. The VanDrie Group also expects further regulation on the employment of temporary workers.

• Short-term implications: higher costs not only in the case of contributions to social costs, but also with regard to wage and pension contributions. Less flexibility in hiring employees and higher need for housing for those employees

• Long-term implications: continued urgency to reduce chain cost price. Increasing need for robotisation to address labour shortages and ultimately reduce labour costs in a fundamental way.

Economic

As a result of declining animal protein consumption in Western markets, a transition to more white meat and in expectation of significant government measures, the production and sales market for the VanDrie Group will shrink.

• Short-term implications: elaboration of plans. The VanDrie Group estimates that in the short and medium term, a contraction of 12.5 to 15 per cent in the number of places for calves in the Netherlands is realistic. This will potentially put pressure on the company's bottom line if there is insufficient focus on creating value in the chain.

• Long-term implications: due to ageing population and government measures, further shrinkage is not ruled out.

In the chapters entitled Strategy and Our Results, you can read more about how we are responding to these influencing elements.