Longford groups

“We have three factories that like the fact that they know the numbers and quality of cattle we will have each week”

Longford beef and sheep farmer Kevin Farrell is involved with three separate farming groups – Longford Lamb, Longford Beef and Longford Purchasing Group.

The beef group has been going for 25 years and comprises 40 farmers who kill between 10,000 and 12,000 cattle a year. There are 69 farmers in the lamb group and 100 farmers in the purchasing group. There are a lot of overlaps, with a number of farmers, like Kevin, in all three.

Kevin said the key to the producer groups is building trust with the factory buyers: “Initially the beef factories did not want to hear from us and tried to break the group but now we have three factories that like the fact that they know the numbers and quality of cattle we will have each week.”

Farmers book cattle in with the group every Thursday and factories have one shot at buying them.

“The bonus linked to the base price could vary from 5c/kg to 15c/kg and sometimes farmers working on their own could get the same price,” said Kevin.

Having a relationship also helps to get cattle and lambs killed throughout the year. This has worked well in difficult times like this spring.

The purchasing group helps to reduce costs, with deals done on a range of inputs such as meals, banking and insurance.

“On meal it is not all about price, as quality and value are more important,” Kevin said.

Kevin does not see any potential in trying to get thousands of farmers together into producer organisations, because it would be too hard to control them.

“Groups are not for everyone. We found that while it was easy to get the initial existing farmers who are in the groups, it is proving more difficult to get additional farmers who are like-minded and will work together.”

Irish Angus Producer Group: “We rightly believed that if the end produce carried our logo, it would protect us”

The Irish Angus Producer Group looks ideally positioned to become a producer organisation.

Through hard work and putting good systems in place, it has grown to 8,000 farmers selling up to 60,000 cattle a year. “As well as selling, we always wanted to get involved in the marketing of our beef. We rightly believed that if the end produce carried our logo, it would protect us,” group general manager Charlie Smith said.

“We have developed a good relationship with the supermarkets, which means the processors we work with can’t just turn around in the morning and stop using our beef,” he said.

Charlie is employed by the group to oversee staff and all operations. The group now has 14 staff, which includes their own inspectors at each factory at which their stock is being killed.

They check on the cattle to make sure they fit the group’s tight criteria.

Tiered system

The group has developed a tiered system of premiums to ensure a consistent supply. Farmers are used to planning ahead and booking in stock early to ensure they get the top premiums.

The highest premium is just before Christmas to ensure the demand for extra beef is met. The premium floats with the normal price for beef.

“We deal with Kepak and ABP and there are heated negotiations at times on the base price of beef,” he said.

Charlie is planning to look into the producer organisation format to see if it would be a good fit.

“We have already invested heavily in the systems, including a database for all farmers as well as an app that shows pictures of stock that might not be suitable. At the end of every day’s killing, we produce a cert for each animal and take DNA samples so we have traceability of every animal that goes into the scheme,” he said.

Monaghan Lamb: “I’d have a bit of a reservation about moving to producer organisation if it got into too much legal and other costs”

Michael McHugh is involved with Monaghan Lamb Producer Group and the beef producer group. The lamb group has more than 300 farmers who sell around 40,000 lambs a year.

“One of the main things I would say is any group needs a well-structured system and a very good committee. We are going 26 years and have been lucky in that we had a very good chairman, Philip McCall, for the first 25 of those. He just retired from the job last year,” said Michael.

During negotiations we would give factories a supply profile and can supply lambs for 52 weeks of the year. While we are getting a good price it might not be the best price going on any one week. There will always be deals with factories who are tight on stock in the short term,” he added.

“For most of our group, convenience is a major factor. A lot of members are part-time farmers and they like being able to drop their lambs to collection centres the evening before.

“It takes them just half an hour. We have a person who supervises the lambs when they arrive at the factory right up until they get slaughtered. Members then get paid the next day. The beef group is smaller, with 60-70 producers.

“In the beef group we initially focused on paying for quality with bonuses and penalties. Since 2007 we focused much more on weight band specification with very little on fat score and conformation. We have always had issues with guys selling outside the group for a better price. This was partly due to the deal not been flexible enough to respond to a changing market, like in this spring,” he added.

“I’d have a bit of a reservation about moving to a producer organisation if it got into too much legal and other costs. But then maybe I am just being conservative,” said Michael.

“One problem we are running into is that some weeks our supply is too big for them. This would increase if got a lot more members.”

Glen Barrow: “One of the biggest challenges is to have a partner that is able to buy all the different types of stock”

Glen Barrow producer group was set up in 2000 to add value to local Laois produce and give farmers better bargaining power. John Finlay helped coordinate the group that was developed and received funding help from Laois LEADER.

“We also had a person employed to look at marketing and adding value by creating our own brand. We stopped as it was obvious it required a lot of money to establish a brand to give you back value up the food chain,” he said.

“The group has close to 300 farmers who signed up initially and they got a good deal at the time for lamb with ICM and beef with Slaney,” John said. The grid was not there, so they worked on bonuses on the different grades for cattle. “We took the base price from the Irish Farmers Journal and the premium was applied on top of that. We were supplying 8,000 U and R grade cattle without even having an agent on the ground,” said John. They had issues to deal with, such as when farmers switched to bulls for efficiency but Slaney didn’t want them. “One of the biggest challenges is to have a partner that is able to buy all the different types of stock that producers have in the group,” said John.

Farmers only paid €100 to join, but the costs of running the group was deducted from the factory cheque. They now have a procurement agent on the ground. “Factories like to have groups there on the basis they know they will have 300 cattle a week of good quality. Laois has a reputation of having cattle in late spring when they might find it difficult to source numbers. You also build a relationship that works both ways and allows you to get cattle moved when there is a surplus as well. There are opportunities for producer groups to develop to buy inputs like fertilizer and meals,” he added.

The consultants

The need for structure and efficient systems for larger groups is obvious. Ian Tighe from Strokestown, Co Roscommon, has worked in agricultural consultancy and contacted me about what he sees is an opportunity that can help farmers.

He set up Progressive Irish Farmers as an extension of his existing business to facilitate farmers in the setting up of new purchasing groups and the management of existing purchasing groups.

He sees more groups forming but also sees existing groups not working as well as they could.

“We are working with existing purchasing groups that are looking for outside management to give dedicated time and advice to buy products, bring discipline and a committed drive to maximise savings.

“Some products we purchase on a global basis on behalf of numerous purchasing groups in order to bring increased purchasing power,” said Ian.

On analysis of the groups he is working with, savings for dairy farmers are €4,170 on average.

He said suckler farmers are saving €3,012, with sheep farmers saving €2,248 due to lower input costs. “We have seen savings increase with the introduction of direct billing to farmers,” he said.

“We are also seeing increased demand from individual farmers as they grow to understand the purchasing power of a purchasing group where farmers come together to buy farm inputs compared to operating alone,” he said.

New setups

New setups consist of 40 to 50 like-minded farmers where profitability and efficiency are a key focus.

Another key benefit is to have the products delivered to their yard at competitive prices, losing no time from the real day job of running their farm.

Progressive Irish Farmers is backed up by a team of specialists which include group and meeting co-ordinators, nutritional and financial advisers alongside market/trend analysts.

The company also has a training and development arm which is driven by individual member needs.

“We are now seeing an increase in demand from some of our beef/sheep farmers to review the opportunity of moving towards purchasing groups/producer groups where our members are willing to offer all year round supply of cattle to factories/butchers within the parameters of spec, weight and age. We feel this is a two-way street with financial benefits to both farmers and processors,” he added.

iantighe@progressive irishfarmers.com

087 7216234