Munster Bovine has agreed a deal to compensate milk suppliers who used the Holstein Friesian AI sire Cloonigney Canning last year and subsequently had poor conception rates, the Irish Farmers Journal understands.
The issue came to a head when a Munster Bovine board meeting was convened at short notice on Monday after rumours of legal correspondence between Munster Bovine and the National Cattle Breeding Centre (NCBC) emerged late last week.
If there was any move in a legal direction, it could have been awkward, given that Richard Hinchion chairs both Munster Bovine and NCBC.
The Irish Farmers Journal understands that up to 5,000 straws from the sire were used last spring
The issue has been simmering for a long time and the inaction on compensation could have led farmers to believe there might be a standoff between Munster Bovine and the NCBC, which had Cloonigney Canning insured.
The Irish Farmers Journal understands that up to 5,000 straws from the sire were used last spring, with subsequent conception rates very low. It is not clear how many straws were used by Munster Bovine and how many were used by Progressive Genetics. Progressive Genetics has already settled the issue with its farmers who had used the straws from the bull.
The exact payout between NCBC and the insurance company is understood to be as yet unresolved, but nearing completion
The Irish Farmers Journal understands Munster Bovine is set to compensate farmers by up to €150/straw used, with additional refunds on initial cost and any subsequent inseminations required to get the cows in calf. If we estimate total cost at €200/straw, the total cost to Munster Bovine could be in the order of €500,000.
The exact payout between NCBC and the insurance company is understood to be as yet unresolved, but nearing completion. The Irish Farmers Journal understands that both AI companies have made the payments from their own funds in order to move on with clients ahead of the 2021 breeding season. Young test sires are lower in price than proven sires and dairy farmers need to use a certain level of young bulls to allow genetic improvement to continue. However, sensible use is crucial and hence using teams of these young sires is essential.
Recently Munster Bovine unveiled a price increase of €1/straw for 2021 and a planned €1/straw increase for 2022.
Estimates suggest this should net Munster Bovine another €500,000 in AI income in 2021 and a further €500,000 in 2022.
Milk recording charges are set to increase and again this price hike is likely to net Munster Bovine another €500,000 annually at current numbers.
He suggested the AI charge increase is €2 or 7.6% over two years
With changing EU rules on dry cow management, the number of farmers milk recording is set to increase considerably and it is understood that inseminations were up 10% last year.
In a recent presentation to Dairygold regional members, Munster Bovine CEO Kevin Coffey suggested the price changes were necessary as Munster does not have the ability to mitigate all costs with volume and that the last price changes were a decade ago.
He suggested the AI charge increase is €2 or 7.6% over two years.
In his presentation to the Dairygold regional committee, Coffey suggested new EU rules on dry cow management could potentially see a 50% increase in the size of the milk recording business in Munster and significant capital investment will be required.
Ongoing competitive tensions between Munster Bovine, Progressive Genetics and Dovea lifted up a notch this week after details emerged from Dairygold regional meetings showing the cost of AI charges for the three organisations compared side by side.
The slide was presented by Munster Bovine CEO Kevin Coffey in order to justify the increases in AI charges and milk recording. The slide showed the list price of Munster Bovine charges at €27 per first insemination and €9 per repeat. Both other companies were listed between €35 and €37 for first insemination and €15 per repeat.
They also suggested they have lower rates for synchronisation projects, multiple sales and larger groups of inseminations
When contacted this week, both Dovea and Progressive Genetics said this was not a fair reflection as this example is not comparing like with like.
Munster Bovine charges a visit fee of €7 in spring and €10 in winter, while Progressive and Dovea do not.
They also suggested they have lower rates for synchronisation projects, multiple sales and larger groups of inseminations.
Munster Bovine CEO Kevin Coffey was questioned about ongoing investment in technology and the development of an application called FarmOps.
At a regional Dairygold meeting, Coffey presented figures showing the capital budget was revised upwards in June 2019 by approximately 17% as the project got more complex and the developer rate moved up by 10% in 2019 also.
When questioned, it is understood the Munster boss would not reveal the full extent of the investment, seemingly suggesting that it was the equivalent of a farmer investing in 100 acres of land. He presented details showing that over 7,600 man days, 60,700 hours of development and 38 man years equivalent had been part of the development and over 1,200 farmers had already downloaded FarmOps. Coffey told the Irish Farmers Journal that the board is “happy with the app and that it is going well”.