OPINION: Keenan CEO on how livestock sector must change
Feed technology supplier Keenan’s chief executive Gerard Keenan, sets out how the dairy and livestock sectors need to change in order to boost the bottom line of the entire industry. Jane King reports.
It’s 30 years since you launched the first Keenan feeder mixer wagon to UK farmers at the Royal and Highland shows. What changes have you seen that have led to the biggest gains for the dairy and livestock sectors over that time?
In Britain, the thing that’s been really striking is the expansion in the herds, reductions in the cost of labour and huge improvements in efficiency that farmers have achieved. British farmers have been better at these things than anyone else. But there was more money and a better lifestyle across the livestock sector 30 years ago. I think farmers here have had to go through an enormous shift and have done an awful lot of stuff right – working hard, taking costs out and investing in efficiency – but it doesn’t necessarily feel they are better off as a result of it.
Why is that?
Partly because farmers have scaled up and invested, and that’s put stress on them and the business. I have a picture in my mind of more fun and humour around in the 1980s. I don’t think it’s all gone because there are a lot of young people coming in. But there was a lot more margin in it then and more people working on the farm. The owners tended to have more of a life then, whereas now they take on more themselves and face greater pressure. I see people under extreme stress and input costs have been horrendous.
It’s not surprising that we have protesting farmers. These are proud people and I don’t think protesting would be their first option. They are suffering.
Across the world the food chain is taking more and leaving the farmer with less. Wherever you go there is a similar argument. If you compare UK farming with the Irish or French, then there seems to be a lot more stress here.
There is a lag in prices compared to the rest of northern Europe. On the face of it, Britain always had a great advantage with the home market for food.
Gerard Keenan in a minute
What or who inspires you?
People such as Nelson Mandela and General George Marshall – great leaders who were very generous in their actions and beliefs, and also far sighted.
Tell us something not many people know?
I have a fascination with history and wars – what causes them, the challenges citizens faced during them and the leaders, such as Winston Churchill, who helped us during them.
What book did you last read?
I’m reading Max Hasting’s book All Hell Let Loose about the Second World War.
How do you spend your leisure time?
With my family – my wife Maree and four children. My youngest daughter, Alice, is doing agri science in Dublin and may well end up working on a farm.
The home liquid milk market was seen as the jewel in the crown, but perhaps the over-dependence on it is no longer an advantage. Those countries that are more export focused have been opportunistic and they get higher prices on average.
The future will be about overseas markets. That’s where the dynamism will be. It will also be very good for the dairy and beef industry to do business abroad because you are exposed to creative thinking and entrepreneurialism. Our business is far better for going overseas. Today we have more than 31,000 customers in 40 countries with France our biggest market and China a new emerging one. About 70% of our turnover is now overseas.
Do you think there should be intervention to sort out the inequalities in the system in Britain?
The top 25% of dairy farmers are doing OK, but it’s the average farmers, those not at the top in performance, who are really struggling. There’s a stalemate position – if you talk to the top quarter they complain about cost plus pricing because they see it setting limits on their profitability and pulling them down to where everyone else is.
It requires creativity to come up with a base income. The sector needs a situation where the guy that’s average makes a decent living. The world is full of lots of averages – not everyone can be a brain surgeon or star in the Olympics. In every country there is a level of profitability for the farm that’s an acceptable level of income and it needs to be higher here to help those struggling. That helps everyone to strive to do even better. If you are making nothing, you can’t improve and invest.
The average are a necessary part of the whole – without them you have a very small industry. You need people in the middle who want to be improving and motivated. It can’t just be about the top farms. If we’re to produce more, then we have to address this thorny issue of income. It’s been cut to the bone. There will be a resistance to improvement all the time there isn’t a decent base income at the start.
Is there enough collaboration in the industry?
People blame the farmer but the food chain begins before that and includes advisers and suppliers who need to be brought into the equation. An awful lot of what the farmer is doing is influenced by the people who advise them.
There is a lot of know-how and expertise from advisers like us that can make a difference. In the arable sector, agronomists are integrated better into the supply chain but in livestock a lot of the improvement opportunity is lost because people like feeding advisers, vets and consultants are not included enough. There is a potential alignment of interests that is being wasted.
What can the British learn from the Irish?
Ireland has got a target to increase milk production by 50% from 2015 to 2020. There’s a number of ways it can be achieved and grass is a big part of it. The average production per cow in Ireland is quite low at about 5,000 litres based on grass. We have been working with Dairygold, a farmer-owned dairy co-operative and feed company on a grass-cum -feeding programme, to substantially increase milk production to 7,000 litres per cow with grass and concentrate. It’s been going for less than a year and we see this as an important strategic move that is working very well.
Dairygold has 3,500 dairy farmers with an average herd size of less than 70 cows. If we can improve milk production, rather than expand herd size, then we have helped these guys without them having to invest heavily in more cows, facilities and labour. We have similar schemes working like this in beef and we are doing the same in France on dairy and getting big margin improvements.
The industry has had 10 years of battling it out with hand-to-hand combat within the supply chain and it hasn’t worked. There’s another way of doing this and it’s about working together to improve the lot for everyone. A collaborative approach is much more than just sorting out the milk price.
According to the experts, there’s always about 30% waste in every supply chain and so you never run out of improvement opportunities.
Retailers, processors, feed companies are all slowly recognising that by aligning interests there are major benefits on farm and in the chain. There is a huge opportunity by narrowing the range of variation and by getting consistent composition quality in milk from farm with positive effects on things such as processor cheese yield, shelf life, flavour and value. Also, feed efficiency can reduce feed waste.
What does the future look like?
I think the NFU’s strategy on dairy is absolutely right. They talk about allowing 3.5p/litre for investment and that’s what’s required. Smart technologies and use of data are going to make a difference in the future. Even in China, the next generation will not want to work like their older generation did. We are going to need technology and labour-saving equipment to free up and improve performance. But you need to have money to embrace the technology and it needs to be available to more than just the top quarter of farmers. So it comes back to sorting out the milk price first.