Danish Crown on collision course with government over foreign investment

By Gerard O'Dwyer

- Last updated on GMT

Plans to invest abroad have caused tensions with the government
Plans to invest abroad have caused tensions with the government

Related tags Danish crown Investment Denmark Pork

Danish Crown’s decision to invest in facilities outside Denmark risks straining relations with the government in Copenhagen as the company lobbies for state measures to reduce operating costs at local plants.

The meat company’s group-wide cost-reduction plan calls for a cost efficiency review and re-organisation of factory capacity in Denmark. This has angered the government, particularly Danish Crown’s plan to expand pig slaughtering in Germany and Poland, where labour and plant costs are lower.

"At the present time, we process between 21 and 22 million pigs annually in northern Europe. Of this amount, around 15 million are slaughtered in Denmark. Our plan is to expand pig processing to about 25 million animals annually. Realistically, and unfortunately, this increase is unlikely to happen in Denmark,"​ said Danish Crown’s chief executive Kjeld Johannesen.

Agriculture minister Dan Jørgensen told the national parliament’s (Folketing) agriculture committee on May 12 that the government has "more than met Danish Crown halfway"​ in backing reforms to render the Danish pig sector more competitive, which were backed by the company and other meat producers.

He highlighted "reforms that cover enhanced farm modernisation subsidies and a more flexible post mortem examination system for animals".​ The minister added: "We have made it possible for employees to invest in pig farm enterprises. The company has gotten practically everything it asked for, but it seems this is not enough for it to invest in Denmark."

In a significant reform measure, the government has increased the number of pigs that can be slaughtered annually in Denmark by 1.5 million pigs. The government, said Jørgensen, had hoped this reform would meet Danish Crown’s need for more domestic capacity.

Danish Crown’s cross-border capital investment plans have also been criticised by the trade union NNF (Nærings- og Nydelsesmiddelarbejder Forbundet), which organises labour within the slaughtering and meat industry.

"Our members have struggled to make the pig processing sector more competitive. Despite this, Danish Crown wants to focus future growth, investments and job creation abroad. This is not right. It will also reduce private investment by Danes in the company. If Danish Crown doesn’t believe in Denmark, why should Danes believe in Danish Crown?"​ said NNF’s president Ole Wehlast.

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