2 March 2001

Ferry leads from front

Effective livestock marketing

is vital for profits. In this

special, we examine

schemes that add value to

beef and sheep and question

the value of pig contracts.

We start with Farmers First,

which is forging new lamb

export opportunities. Edited

by James Garner

LAST weeks export ban on live animals, meat and dairy products temporarily halted a successful export trade in sheepmeat.

At the forefront of this market in the past year, has been sheep export company – Farmers First. And while the ban might have severe implications for its business, group marketing director, Mike Gooding, said the crisis would show just how important livestock export markets are to the UK.

"The priority must be to the control the outbreak, eradicate it and ensure it does not happen again. When it is over we must be in pole position to reclaim markets and come out with all guns blazing."

The farmer-owned business Farmers First – founded only a year ago, when it set up its subsidiary, Farmers Fresh – has managed to build partnerships in Europe that have helped lift carcass trade to the Continent.

The increase in trade from very low levels has undoubtedly helped push lamb prices up in this country over the past few months.

The group includes Farmers Ferry, the live lamb export business, and two other subsidiaries – Farmers Fresh and Farmers Fresh Cymru. These supply processed lambs to the Continent.

It bases its strategy on a new and co-operative approach, that aims to make the most of opportunities in Continental European markets.

In its first operational year Farmers Fresh has achieved an average throughput of 10,000 carcasses a week and is well on its way to reaching 0.5m total sales.

David Owen, the groups chief-executive, said: "Twelve months ago we launched Farmers Fresh in Paris, and now UK producers have their own abattoir and ferry serving European customers with products that meet their detailed requirements."

The business attributes success to working "in partnership" with its customers rather than the traditional competitive "supplier versus customer" relationship.

Farmers First was keen to demonstrate this at the recent SIA Show in Paris, where it had newly negotiated contracts with a French processor Ovimpex for Welsh and British lamb on show.

Mr Gooding said its strategy was based on common sense. "For too long we in the UK have attempted to sell what we produce, rather than produce what customers want to buy.

"It is about identifying what attracts consumers. In France, consumers want lamb that is reared in the fresh air. Lamb has a natural green image; we have to build on that. Each individual customer has different perceptions and these are different in each country. We must not assume that our perceptions are the same as those of our customers."

For example, Farmers First has worked hard to add value by providing products that the French market wants. "Presentation is terribly important for them. Meat needs to be well presented with specific cuts."

Like other countries, meat colour can turn consumers off. "It should not be too red in colour and should have a dry finish. This can be enhanced in the abattoir process to make meat colour paler by chilling it quickly after slaughter."

And the process is continuous, with Farmers First constantly looking at ways it can upgrade what it offers, by making new investments that can help the business develop stronger trade links, increase volumes and result in firmer demand for UK produce, which helps improve the price of sheep.

But achieving price improvement is not just a factor of increased volumes, said Mr Owen. "The £/k relationship remains our greatest challenge in gaining good prices for UK product on Continental markets. Our return to investors is the price paid for their produce."

Strictly speaking, the company is a PLC, but its aim is not to maximise shareholder dividends, but rather to focus on customers, meeting their exact requirements and developing trade.

From the outset Farmers First has set about trying to break down preconceived ideas and with its ferry service and the carcass trade now challenges established thinking.

As the group seeks to shrink the food chain, bringing producers closer to consumers, it continues to create opportunities for farmers to take greater control of their own future.

Mr Owen added: "In the UK, the food chain is dominated by a handful of players where the interests of shareholders are measured by dividend and capital growth.

"Our philosophy is to create a business where the shareholders are actively involved in food production and where primary production is more integrated with the success of the whole chain."

Mr Owen said he was not suggesting that such working practices were the answer to all problems in the UK. "But there are genuine lessons to be learned if we want to succeed, and these rely on primary producers working throughout the whole food chain." &#42

EXPORT FACTS

&#8226 Number of live exports — 2.5m since 1998.

&#8226 Worth £75m to UK producers.

&#8226 Carcasses exported – average 10,000 a week.

&#8226 Main country markets – all Continental Europe.

FARMERSFIRST

&#8226 Working in partnership.

&#8226 Producing what consumers want.

&#8226 Producers closer to food chain.