Glanbia Ireland and Kepak launch new calf-to-beef club with advanced payments and bonuses
- Plans to rapidly expand numbers in the programme to 50,000 per annum
- Concerns among farmers about having to purchase inputs from Glanbia
Glanbia Ireland (GI) and Kepak Group have today announced an ambitious and innovative new calf-to-beef programme.
Both companies state that the “Twenty20 Beef Club” will afford Members a guaranteed market for their heifers and steers with a predictable and transparent pricing formula at time of slaughter; a production blueprint supported by safe and secure high-quality farm inputs and leading-edge technical advice.
This year will be a pilot year for the programme, with a target of 6,000 calves from Glanbia Ireland supplier dairy farms in the Republic of Ireland.
Over the coming years Glanbia Ireland and Kepak have ambitious plans to rapidly expand numbers in the programme to 50,000 per annum.
Glanbia Co-op has provided funding for the pilot phase to allow its Members of the Twenty20 Beef Club to benefit from an advanced payment of up to €770 per animal to provide cashflow during the animal’s lifetime.
This optional programme component, administered by Finance Ireland, will pay a Twenty20 Beef Club Member €35 per animal per month from months 3 to 24.
Glanbia Ireland and Kepak Group are in discussions with Finance Ireland whereby this advance payment option would be offered to all qualifying Club Members after the pilot phase.
The Twenty20 Beef Club is open to Glanbia Co-op Members and current Kepak suppliers.
Members can be either dairy farmers or beef finishers, with a minimum of 25 calves required per farm.
Suckler farmers that purchase dairy beef calves can also enroll qualifying animals bred and produced on their own farm that meet the Club criteria in the programme.
Animals enrolled in the first two years (2019 and 2020) of the Club will be paid the average market price, plus a Club Premium of 15 to 25 cent per kg, as well as a Club Protocol Bonus of 12 c/kg.
Club Members will also benefit from additional price support in the event of a weak market price (see examples in Appendix).
There will also be a “seasonality” bonus to promote the marketing of animals in April (+6c/kg), May (+10c/kg) and June (+6c/kg). Members of the Club will also be eligible for Angus or Hereford breed bonus payments, which are guaranteed at the point of entry for the pilot phase.
At an average market base price of €4.00/kg, a Twenty20 Beef Club Angus steer slaughtered in April 2021 will qualify for a net price of €4.43/kg; at a market price of €3.75/kg, the same animal would earn €4.28/kg.
To assure the feed and food safety credentials of beef from the Twenty20 Beef Club and to deliver the optimum animal performance, all relevant farm inputs consumed by Club herd will be sourced and supplied by Glanbia Ireland (GI).
GI and Kepak technical teams will provide farm support and nutritional advice to participating farmers.
Guidance on sire selection to optimise animal performance and eating quality, on meeting market requirements and on slaughter timings will be provided to Club Members by Kepak’s agriculture team.
For the beef customer, this will create a high quality “closed loop” supply chain from animal genetics through to the market place.
Strict rearing programme
Members of the Club will be required to strictly adhere to a defined rearing programme – jointly developed by Glanbia Ireland and Kepak.
Glanbia Ireland and Kepak have designed the initial five-year Programme to meet ambitious economic and environmental performance targets. These include:
- A reduction in the average age at slaughter of Club cattle – to 24 months on average;
- A reduction in the average Carbon footprint of Club farms- through the use of methane reducing feed additives, reduction in the average age of slaughter, improved feed conversion efficiency, reduced feed waste and improved fertility across the herd;
- An improvement in the eating quality attributes of the Club meat through a combination of better genetics; nutrition management and optimum processing techniques;
- An increase in the proportion of dairy bred cattle meeting market specified targets;
- An increase in beef output and sales value per hectare – through enhanced on farm efficiencies, breeding, feeding, grassland management, animal health/welfare and slaughter preparation and selection.
IFA President Joe Healy said the Glanbia/Kepak Twenty/20 Beef Club represents much-needed new thinking for the sector.
He said the model on dairy beef could deliver greater certainty on beef prices and better cashflow on farms.
The IFA President said the contract-style pricing arrangement which Glanbia pioneered on dairy has worked well for dairy farmers and this move on beef could be a first step in a similar direction.
However, he said some of the detail needs closer examination.
“There would be concerns among farmers about having to purchase all of their inputs for all of their enterprises from Glanbia,” he said.
IFA National Livestock Chairman Angus Woods said this move from Glanbia/Kepak involving greater certainty and reducing the risks on price is a new and important step forward for the beef sector.
Angus Woods said the reality is that for any beef system to be viable, including dairy beef, it must return a price above the cost of production and leave a margin for the farmer.
He said it is very important that beef farmers understand the precise details of the scheme, particularly the pricing model which is based on average quoted factory prices and the QPS (Quality Payment System) with additional bonuses.
Angus Woods said it appears that the ask from farmers in the scheme will evolve over time. Glanbia and Kepak must communicate this clearly and support farmers to generate the level of trust required for this scheme to progress and develop beyond the first two years of the pilot stage.
Requirements for Twenty20 Beef Club members
- Must be Glanbia Co-op members (ROI) or Kepak suppliers.
- Can be either dairy farmers, suckler farmers or beef finishers.
- All dairy calves must come from Glanbia Ireland milk supplier farms
- Calves must be finished on the farm of birth (Glanbia farmers) or after one movement to a finishing farm
- Minimum calf/cattle number is 25. No maximum
- All animal breeds (incl Friesian, Angus and Hereford) with the exception of Jersey and Jersey crosses.
- Objective selection criteria applied if oversubscribed – including trading history with GI/Kepak and animal genetics.
- Members must have the capability to adhere to strict production & farming standards.
- Members must comply with contractual obligations
Advance Cashflow Package
- An Advance Payment Package will be available to all Glanbia Co-op members participating in the Pilot Programme (2019); thereafter it be will available to all credit approved Club members (subject to funding being secured).
- The finance package will allow the Club Members to be advance paid up to €770 per animal over the life span of the animal
- Members will be paid up to €35/ head each month commencing in month three of the animal’s life and ending at month 24 (paid sooner if the animal is slaughtered earlier)
- At the time of slaughter, Members will be paid the balance due on the carcase’s value in excess of €770 per animal; the €770 plus interest will at that stage be re-paid to the finance provider.
- The Advance Payment Package will ensure a consistent cash flow to Club Members over the life of the animal.
- An interest charge of 3.75% will be charged against the funds provided as an advance payment.
- The Market Price: Average weekly price for heifers and steers as quoted in the Agri Media (Average Quoted Price – AQP)
- The AQP reflects the average weekly price quoted by ROI beef processors
- The market price and relevant bonuses are paid subject to carcase weights falling within the range of 280kgs to 360kgs
Club Protocol Bonus
- Club Protocol Bonus of 12c/kg
- Bonus paid for adherence to the programme Blueprint including the Bord Bia SBLAS and Origin Green
- For years one and two, Club Protocol Bonus will be paid regardless of carcase grading
Club Breed Bonus
- The Club Breed Bonus will be reflective of commercial practices applying in the market
- Capped at 10c/kg, and confirmed annually
- For year one and two, Club Breed Bonus paid regardless of carcass grading
- ‘Club Premium’ will be paid to all Club members on carcase weights falling within the range of 280kgs to 360kgs
- Club Premium ranges from a minimum of 0.15c/kg up to a max of 0.25c/kg
- Where the market price (AQP) is at or above €3.85/kg, the Club Premium will be 0.15c/kg
- Where the market price falls under €3.85c/kg the Club Premium will increase cent for cent with any market decline up to a maximum premium of 0.25c/kg.
- The Club Premium rewards adherence to the Club Protocols