As we predicted last week, Kepak has reached agreement to buy the red meat division of British-based 2 Sisters Food Group. The deal will effectively double Kepak’s processing capacity, bringing its annual cattle throughput to over 500,000 head, with sheep reaching 1.35m.
The deal, for an undisclosed sum, strengthens the processor’s strong relationship with the retail giant Tesco, with the Kepak group now supplying Tesco Ireland and Tesco UK. It is understood that Tesco played an influential role in ensuring the deal between the two processors went ahead, therefore giving Kepak an immediate blue-chip retailer as it re-enters the British beef and lamb processing sector, having exited back in 2007.
This latest deal further reinforces the dominance of Irish-controlled meat plants in Britain. ABP Food group and Dawn Meats have been very aggressive in the mergers and acquisitions space over the last 10 years – with ABP having traditionally bought individual processing businesses located in strategically important areas, while Dawn Meats recently acquired a controlling shareholding in the Dunbia group.
As a result, three Irish-controlled meat processors – ABP Food Group, Dawn Meats and Kepak – control just over 50% of the British cattle kill, with ABP and Dawn each controlling 20% and Kepak, through 2 Sisters, controlling 11%. Across Britain and Ireland, the same three processors now control 60% of cattle slaughtering.
So, how have three Irish-controlled meat processors managed to secure 50% of the British cattle kill? A central plank to their expansion programme over the past 10 years has been their ability to develop strong supply relationships with the leading British retailers. This week’s announcement now sees ABP, Dawn and Kepak closely aligned to the three largest retailers, Tesco, Asda and Sainsbury’s, which between them control around 60-65% of the highly prized British retail market. The processors’ dominance is also evident at the premium end of the food service market, and with the leading burger chains.
Finished cattle prices in Ireland can range from €100 to over €300 per head below the British price
A key element to developing a strong supply relationship with any retailer is being able to deliver a high-quality product at a competitive price. It has often been lamented by British-controlled processors that the key to running a successful meat processing business in Britain is having meat factories in Ireland – a direct reference to the fact that finished cattle prices in Ireland can range from €100 to over €300 per head below the British price.
In assessing how Irish processors have gained such a strong foothold, it would be wrong not to acknowledge the standards to which they operate across their British and Irish sites. This is evidenced by their ability to develop business across the world in a trading environment that has undergone continuing change.
All of these companies successfully utilised the intervention buying support system for beef in the 1970s, 1980s and into the 1990s. They availed of the EU export refund support to build international export businesses until they ended in 2005. More importantly, when these supports ended, they were in a position to invest in infrastructure and acquisitions to launch an assault on the unsupported retail and food service sectors in Britain and beyond to mainland Europe. There were setbacks like BSE and the horsemeat scandal, yet the Irish supply chain retained the confidence of its British customers.
The expertise of the Irish meat industry to provide an excellent service and develop markets is a given. However, it is also valid to question the significance of access to an Irish cattle pool that is consistently €100 to €300 per head below the British equivalent, yet the promotional material refers to “British and Irish”.
What’s more, the price to the consumer is the same, whether for a retail pack of meat or a Big Mac, irrespective of the fact that the cattle from which the beef was taken were bought at a much cheaper price if they were Irish.
The ability to blend British and Irish product clearly delivers Irish processors a competitive advantage when dealing with margin-hungry retailers.
With the private ownership structure and lack of legal obligation on transparency, it is impossible to quantify how important the Irish cattle element of “British and Irish” beef is to the companies that have access to both. The acquisition pattern of the past decade and more suggests Irish processors have had an edge on British counterparts, and in the absence of evidence to the contrary, the importance of cheaper Irish cattle is a plausible explanation.
This is reinforced by the inability of British-based businesses to access Irish cattle due to labelling regulations, leaving the concern that there are higher margins from Irish cattle going to Irish-controlled processors, and not to Irish farmers.
Gene editing: court decision a challenge for the EU
Last week’s decision by the European Court of Justice (ECJ), which ruled that new breeding techniques like gene editing come under the legislation which governs genetically modified organisms (GMOs), represents another challenge for the future development of the EU.
Many new technologies have been developed since the introduction of the GMO legislation which have the potential to significantly alter the genetic fine-tuning of humans, animals and plants for the good of society. As these advances have now been put on ice, the EU has two options:
1. Live with the current ruling. This will prevent the EU from benefiting from the technological advances available to societies elsewhere.
2. Change EU legislation to enable proven safe technologies and products to be developed so that society can benefit from advances in science.
Do our MEPs have the vision and conviction to act for the future of the EU? It is surprising that farm organisations have not reacted more vocally to the ECJ decision given its potential impact on the long-term development of food production within the EU and the global competitiveness of EU farmers.
Ironically, on the same day of the ECJ ruling, we had the announcement that the EU had agreed to buy increased volumes of GM soya beans from the US.
Drought and feed crisis: missed opportunity as Minister Creed fails to grasp fodder relief options
Seed bed preparation under way on John Stokes' tillage farm in Co Cork, where Westerwolds will be sown to alleviate pressure on the fodder shortage.
It will come as a major disappointment to those struggling with the impact of drought conditions that Minister for Agriculture Michael Creed has failed to take any meaningful steps to address what has the potential to be a major fodder issue for many farmers next winter.
The European Commission has a wide range of measures available to enable member states help farmers boost fodder supplies, including allowing governments provide direct income support to farmers. Yet the Irish Government appears reluctant.
While growth conditions have improved, the minister is missing out on a real opportunity to boost national fodder reserves. By not moving to encourage tillage farmers to plant catch/fodder crops, the window of yield opportunity is reducing weekly.
Farmers will be asking why the minister has not moved on the flexibilities provided by the Commission around greening and broadening the catch crop species base.
Unfortunately, the minister appears more focused on the promotion of what others are doing to help farmers rather than taking serious action on behalf of the Department.
As we predicted last week, Kepak has reached agreement to buy the red meat division of British-based 2 Sisters Food Group. The deal will effectively double Kepak’s processing capacity, bringing its annual cattle throughput to over 500,000 head, with sheep reaching 1.35m.
The deal, for an undisclosed sum, strengthens the processor’s strong relationship with the retail giant Tesco, with the Kepak group now supplying Tesco Ireland and Tesco UK. It is understood that Tesco played an influential role in ensuring the deal between the two processors went ahead, therefore giving Kepak an immediate blue-chip retailer as it re-enters the British beef and lamb processing sector, having exited back in 2007.
This latest deal further reinforces the dominance of Irish-controlled meat plants in Britain. ABP Food group and Dawn Meats have been very aggressive in the mergers and acquisitions space over the last 10 years – with ABP having traditionally bought individual processing businesses located in strategically important areas, while Dawn Meats recently acquired a controlling shareholding in the Dunbia group.
As a result, three Irish-controlled meat processors – ABP Food Group, Dawn Meats and Kepak – control just over 50% of the British cattle kill, with ABP and Dawn each controlling 20% and Kepak, through 2 Sisters, controlling 11%. Across Britain and Ireland, the same three processors now control 60% of cattle slaughtering.
So, how have three Irish-controlled meat processors managed to secure 50% of the British cattle kill? A central plank to their expansion programme over the past 10 years has been their ability to develop strong supply relationships with the leading British retailers. This week’s announcement now sees ABP, Dawn and Kepak closely aligned to the three largest retailers, Tesco, Asda and Sainsbury’s, which between them control around 60-65% of the highly prized British retail market. The processors’ dominance is also evident at the premium end of the food service market, and with the leading burger chains.
Finished cattle prices in Ireland can range from €100 to over €300 per head below the British price
A key element to developing a strong supply relationship with any retailer is being able to deliver a high-quality product at a competitive price. It has often been lamented by British-controlled processors that the key to running a successful meat processing business in Britain is having meat factories in Ireland – a direct reference to the fact that finished cattle prices in Ireland can range from €100 to over €300 per head below the British price.
In assessing how Irish processors have gained such a strong foothold, it would be wrong not to acknowledge the standards to which they operate across their British and Irish sites. This is evidenced by their ability to develop business across the world in a trading environment that has undergone continuing change.
All of these companies successfully utilised the intervention buying support system for beef in the 1970s, 1980s and into the 1990s. They availed of the EU export refund support to build international export businesses until they ended in 2005. More importantly, when these supports ended, they were in a position to invest in infrastructure and acquisitions to launch an assault on the unsupported retail and food service sectors in Britain and beyond to mainland Europe. There were setbacks like BSE and the horsemeat scandal, yet the Irish supply chain retained the confidence of its British customers.
The expertise of the Irish meat industry to provide an excellent service and develop markets is a given. However, it is also valid to question the significance of access to an Irish cattle pool that is consistently €100 to €300 per head below the British equivalent, yet the promotional material refers to “British and Irish”.
What’s more, the price to the consumer is the same, whether for a retail pack of meat or a Big Mac, irrespective of the fact that the cattle from which the beef was taken were bought at a much cheaper price if they were Irish.
The ability to blend British and Irish product clearly delivers Irish processors a competitive advantage when dealing with margin-hungry retailers.
With the private ownership structure and lack of legal obligation on transparency, it is impossible to quantify how important the Irish cattle element of “British and Irish” beef is to the companies that have access to both. The acquisition pattern of the past decade and more suggests Irish processors have had an edge on British counterparts, and in the absence of evidence to the contrary, the importance of cheaper Irish cattle is a plausible explanation.
This is reinforced by the inability of British-based businesses to access Irish cattle due to labelling regulations, leaving the concern that there are higher margins from Irish cattle going to Irish-controlled processors, and not to Irish farmers.
Gene editing: court decision a challenge for the EU
Last week’s decision by the European Court of Justice (ECJ), which ruled that new breeding techniques like gene editing come under the legislation which governs genetically modified organisms (GMOs), represents another challenge for the future development of the EU.
Many new technologies have been developed since the introduction of the GMO legislation which have the potential to significantly alter the genetic fine-tuning of humans, animals and plants for the good of society. As these advances have now been put on ice, the EU has two options:
1. Live with the current ruling. This will prevent the EU from benefiting from the technological advances available to societies elsewhere.
2. Change EU legislation to enable proven safe technologies and products to be developed so that society can benefit from advances in science.
Do our MEPs have the vision and conviction to act for the future of the EU? It is surprising that farm organisations have not reacted more vocally to the ECJ decision given its potential impact on the long-term development of food production within the EU and the global competitiveness of EU farmers.
Ironically, on the same day of the ECJ ruling, we had the announcement that the EU had agreed to buy increased volumes of GM soya beans from the US.
Drought and feed crisis: missed opportunity as Minister Creed fails to grasp fodder relief options
Seed bed preparation under way on John Stokes' tillage farm in Co Cork, where Westerwolds will be sown to alleviate pressure on the fodder shortage.
It will come as a major disappointment to those struggling with the impact of drought conditions that Minister for Agriculture Michael Creed has failed to take any meaningful steps to address what has the potential to be a major fodder issue for many farmers next winter.
The European Commission has a wide range of measures available to enable member states help farmers boost fodder supplies, including allowing governments provide direct income support to farmers. Yet the Irish Government appears reluctant.
While growth conditions have improved, the minister is missing out on a real opportunity to boost national fodder reserves. By not moving to encourage tillage farmers to plant catch/fodder crops, the window of yield opportunity is reducing weekly.
Farmers will be asking why the minister has not moved on the flexibilities provided by the Commission around greening and broadening the catch crop species base.
Unfortunately, the minister appears more focused on the promotion of what others are doing to help farmers rather than taking serious action on behalf of the Department.
This is a subscriber-only article
SHARING OPTIONS: