KMC CEO Michael Jensen: interview on potato starch challenges

For 17 years Danish company KMC had Uffe Andreasen as its CEO and he transformed the company from a raw material supplier to the food industry to dedicated partner and supplier of functional solutions worldwide. Late last year Michael Jensen took over and is set to continue the company's global growth.

KMC is unusual in the competitive world of modern business. The company started in1933 as part of the co-operative movement that brought Danish agriculture from small-scale self-sufficiency to being Denmark's major post-war export industry.

Denmark was, in fact, one of the world's earliest practitioners of the co-operative idea in its modern form.
The many small farmers in this tiny Scandinavian country pooled resources to invest in machinery and know-how so that they could become more competitive in world markets.

The whole idea was to help each other get better and stronger.

KMC and its seven factories began the first Danish commercial production of potato starch, after a political agreement at government level.
People regarded the start-up of these factories with scepticism, partly because growers had to put their signature to an obligation to deliver potatoes. Practically every previous attempt to start a potato starch factory had resulted in big financial losses for the growers.

Today, KMC is a modern company with a distinctive way of doing business that has evolved from its unusual background.
The company is still formally a co-operative company owned by the 1,500 or so Danish growers who supply the potatoes that are the basis of KMC's production in Denmark.
The members of the board of directors are elected by the growers and are at the same time part-owners.
This offers a unique, dynamic configuration where the owners, suppliers, management and board have the same shared interest. They all work to ensure KMC is a prosperous company making the best possible use of the crops from the farmers who are its suppliers.

Michael Jensen took over at the end of September last year and while emulating Andreasen might be a ‘tall order', Jensen is eager to take on the challenge of guiding KMC not only through the current global recession, but even more so through the challenging situation in the international starch markets.

So, what are the challenges?

Said Jensen: "With the forthcoming cessation of EU subsidies in July 2012, KMC is facing a huge challenge in creating a new business foundation that, as a minimum, will create additional earnings in the order of the lost subsidies."
He said that while Danish starch potato farmers had both a right and an obligation to deliver, ‘we face the risk of receiving significantly fewer potatoes for processing in our factories with resulting free production capacity'.
This, he said, could create a vicious circle with ‘decreased earnings and even lower payments to our farmers'.