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.
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:
• 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.
• Capital acquired in a form that cannot easily be taken back.
• Enough money from somewhere to pay the costs to date if the flotation fails to raise enough.
• Bought-in expertise. "You must have proper expertise and you must accept that it will seem expensive by farmers standards," says Mr Hill.
• 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.