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PROFIT

16 March 2001

PROCESS TO

PROFIT

Setting up your own company

to process meat can sound

a daunting prospect, but it

may be the only way to

guarantee reasonable returns

to livestock farmers in the

future. Devon beef producer

David Hill explained to

John Burns how it worked

in his case

LIVESTOCK farmers dont realise how strong a position they could be in if they would just get their act together, according to suckled beef producer David Hill. And he is putting his words into action as chairman of Triple S Ranch plc, the Devon-based company owned and controlled by farmers, which was launched last year as the umbrella for an ambitious plan to process and market locally produced meats.

To illustrate his point he draws a simple diagram (see above right). At the base are tens of thousands of farmers, while the millions of consumers are at the top of the cross. Between producers and consumers, at the centre of the cross, are relatively few abattoirs, processors and retailers.

"If this diagram represented a war zone where the only route from bottom to top was through the centre of the cross, the generals on both sides would want control of that central funnel. And thats what we farmers have got to do, take back some control over our own products."

Hence Triple S Ranch and West Country Beef, the first of its wholly-owned subsidiaries.

Not difficult to sell

Working on the assumption that hinds of beef would not be difficult to sell, Mr Hill set about finding outlets for the forequarters. He struck lucky when the business help agency Prosper put him in touch with Abbey Vale Bakery, a small company specialising in high quality pies and pasties.

Its then managing director Peter Nathan enthused about the value of full traceability, and predicted a fast-growing market for quality meat-based products. A contract was drawn up between the two companies which gave no premium on price but promised 1p an item royalty on any new products developed to use Triple S meats. Already ten new lines have been developed.

Thus any market premium for forequarter meat comes from further down the food chain and passes not to producers but to Triple S shareholders, all of whom are farmers. West Country Beef buys only single-suckled cattle born and reared in the south west, and pays only market price for them.

Base price is the England and Wales deadweight average for all steers, published by MLC on the previous Friday, plus 5p/kg ddwt. There is a price grid according to conformation and fat class, with deductions for lower conformation and higher fat class. For example an R4L steer would be paid a further 5p/kg over base price. Heifers are paid the same price as steers unless they incur deductions in which case the penalties are double what they would be for steers.

Although full integration might be ideal, Mr Hill and his board have no desire to invest in an abattoir as long as there is surplus capacity in that sector and it is relatively easy to get stock slaughtered on contract. However, that is becoming less true for pigs and it may prove necessary to have an abattoir when Triple S moves into that sector.

But with processing the story is different. They initially tried having carcasses cut up on contract, but it didnt work out and the decision was made to buy a site and build a state-of-the-art processing plant close to the A38 Exeter-to-Plymouth road and very close to the bakery.

Complete flexibility

Final planning consent was given on Jan 7, 2000 and the plant was in use by mid-October. That was despite the builder going bust in the meantime and the advisers being changed half-way through the contract.

The new processing plant gives them complete flexibility. Carcass fores and hinds can be hung for as long as the customer wants in the plants chill rooms, and sold whole, or in boxed joints, or cut up for processing.

For anyone else considering a similar project, Mr Hill says the following are essential:

&#8226 A group of people who want the project to happen, are willing to find someone able to drive it forward, and are prepared to give that person the authority to do so. "A woolly producer group can not do that," he says.

&#8226 Capital acquired in a form that cannot easily be taken back.

&#8226 Enough money from somewhere to pay the costs to date if the flotation fails to raise enough.

&#8226 Bought-in expertise. "You must have proper expertise and you must accept that it will seem expensive by farmers standards," says Mr Hill.

&#8226 Allow 3-5 years for a return on investment. "Most farmers have an in-built time-scale of one year," he says. "That is not long enough for a business like this."

Mr Hill points to the benefit of having a state-of-the-art processing plant to show to potential customers. "Hygiene and food safety are top of everybodys list these days and theres a lot to be said for building your own plant to the latest spec."

Every hygiene aid

Triple Ss new processing plan has full EEC approval and an unrestricted mincing licence. Because mincing meat warms it up and mixes it, the chance of spreading and multiplying bugs is higher, so most plants have a limit on the amount of mince they can produce daily.

This plant has every hygiene aid known to man and so qualifies for an unrestricted licence. Its recent first Hygiene Assessment System (HAS) inspection produced a mark of 100/100, making it one of only three in the country which have achieved full marks.

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PROFIT

2 March 2001

NEW BENCHMARK ROUTE TO

PROFIT

Benchmarking is set to

become the buzzword this

season as the government

rolls out its latest project

to persuade more arable

producers to take advantage

of research findings.

Andrew Blake reports

RECORD, compare and be prepared to change if necessary. That is the principle behind a new £270,000 MAFF-funded drive (Arable Feb 9) administered by ADAS to improve profitability.

Key to the exercise is a series of technical benchmarks allowing growers to assess their performance in 12 critical areas.

The aim is to encourage more farms back on to the road to recovery, explains ADASs Bill Clark. "The top 10% of farms are still making money. Its all about identifying what they are doing to make a profit and helping raise others to their level."

Farm size clearly has little influence on profitability, notes colleague James Clarke. But yield and price have a significant effect.

On average, the top 25% of winter wheat growers achieve an extra 1t/ha (0.4t/acre) and get £2/t more for their grain.

"Yield is a major contributor to profit for all combinable crops and sugar beet. Price and quality are essential for potatoes, but also important for all crops."

The best wheat producers spend slightly less on better timed inputs, and are prepared to invest relatively more than other farms in labour and machinery, says Mr Clarke. It is a similar story with other crops, where the outlay of the top 25% tends to be focused more on revenue earning crops rather than breaks.

The new technical benchmarks give growers the chance to see how well they are doing. But adequate records are a must to make the comparisons, he warns. Suitable forms to help can be downloaded from the new project web-site (www.agriknowledge.co.uk) which also provides access to a wide range of research findings.

"As a first step you must have detail, at least at enterprise level, for yield and price," says Mr Clarke. Also required are records of pesticide use, labour and machinery. Individual field records are more valuable, but may initially be a step too far for some growers, he acknowledges.

"I am still surprised by the huge number of farmers who do not keep enough records to be able to monitor their own performance," says Mr Clark. "Many still do not record what they spend, for example, on fungicides."

First benchmarks under the knowledge transfer programme cover machinery/cultivations and wheat fungicides. Another 10 are planned by this summer.

Subsoiling benchmarks

Working depth: 355-405mm (14-16in)

Hp/leg 35-45

Note: Winged subsoilers best. A 3-leg machine should achieve 0.8ha/hr (2 acres/hr).

Ploughing benchmark

Power requirement:15-25hp/furrow.

Note: Adding a press to match plough width increases power requirement by 0.5-0.75hp/furrow, but may save a following cultivation.

Disc harrows benchmarks

Power requirement 33-66hp/m width

Work rate/hr 0.66ha/m width

Note: Target for 3.6m wide machine is 2.4ha/hr (6 acres/hr).

Power harrows benchmarks

Power requirement 26-33hp/m width

Work rate/hr 0.33ha/m width

Note: Target for 4m wide model is 1.33ha/hr (3.3 acres/hr).

Overall power benchmarks (hp/acre)

Combinable crops only Combinable crops & roots

Farm size (acres)

300-500 0.5 0.8

500-1000 0.4 0.65

>1000 0.4 0.5

Note: Main tractors including self-propelled sprayers.

Crop sprayer benchmarks

1000-litre 12m mounted on 70+hp tractor

Farm re-filling Bowser re-filling

Work rate (ha/hr) 6 7.3

Note: A well operated 12m sprayer should cover 178ha (440 acres) within the target of 25 spraying hours after recommendation.

Seed drilling benchmarks

Sowing-only drills Cultivating & sowing drills

Hp/m width @

5mph 23 26

Work rate of 2.2 (@ 5mph) 2.6 (@6mph)

4m drill

Combine harvester benchmarks

Available hrs* 300 in South & East 200 in North & West

Threshing losses Up to 1% acceptable for optimal output

Header losses Can be five times threshing losses.

* Consider well before harvest.

Note: Apply as much attention to header losses as rear-end threshing losses to maximise harvested grain.

Available cultivation days

Aug Sep Oct Nov

Dry year

Light soil 30 28 25 20

Medium soil 30 28 24 17

Heavy soil 28 23 17 5

Wet year

Light soil 26 24 22 13

Medium soil 25 21 16 9

Heavy soil 24 17 7 2

Fertiliser spreader benchmarks

Spinning disc & airstream distributors* (12m machines carrying 1t@ 5mph)

Work rate (ha/hr) 6.9

* Disc machine on 70+hp tractor.

Airstream needs extra 15hp

Note: Fertiliser spreading is less weather critical than spraying. So either type should achieve 57ha/day – adequate for 400ha (1000 acres) of crop

Rolls benchmarks

Power requirement 16.5hp/m

Work rate/hr 0.4ha/m width

Note: 3mph good compromise speed. At this a 6m set should cover 2.4ha/hr (6 acres/hr).

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