The big interview: Keenan talks dairy, innovation and strategy
Irish companies with a focus on innovation and exports are fundamental to economic recovery. This was according to Gerard Keenan, executive chairman of Richard Keenan & Co Ltd, who spoke at the Economic Recovery Series at the RDS earlier this year. Here’s a recap of the interview.
Based in County Carlow with roots in engineering, Keenan is an Irish family-owned agri-business that has developed world-leading feed technology for sustainable food production. Its first mixer wagon was launched at the RDS Spring Show in May 1983.
Speaking at the event, Keenan said there was a major opportunity for Ireland’s economy and people in the development of “an Irish version of the German Mittelstand”.
“This is perfectly possible but will challenge our business eco-system and our businesses, require long-term commitment and courage.”
He said the Irish food industry has massive opportunities but also major economic and financial challenges, similar to all sectors in Ireland and Europe. However, these challenges can be the catalyst for Ireland to take a lead in developing a broad-based innovative supply chain, he added.
Keenan is an Irish-owned company, which employs 250 people, 160 in Ireland and 90 worldwide. It derives 90 per cent of its sales from exporting engineering, animal science and information technologies to Europe, Canada and now Asia.
It has 31,000 customers in 50 countries around the world, and works with farmers across the world to improve farming efficiency and enterprise profitability.
Key to its success, said its executive chairman, is that it spends five per cent turnover on research and innovation.
In the area of feed efficiency technology, Keenan is a world leader. “This is driving the recent development of strategic alliances with major food-agriculture companies, already in Ireland, France, Britain, China and Japan, new revenue streams, new routes to market and a platform for sustainable business growth,” he outlined.
He referred to Keenan’s as “an Irish form of the German Mittelständler.
“These are those German family-owned companies, generally SMEs, employing 500 people or less, who employ 80 per cent of Germany’s workforce and are a crucial factor in Germany as a good place to live as well as an economic success.”
“Good things that are truly sustainable don’t generally appear from nowhere,” he added.
“Over many years Keenan has built a unique knowledge bank on the best ways to mix feeds and forages in our mixer wagon. These mixing programs are unique to our mixer wagon which is itself a unique design.”
In January of this year, it was presented with the ‘Practice with Science Award’ by the Oxford Farming Conference for the Keenan Mech-fiber System, which the judges said “improves the farmer’s economic, animal health and environmental performance through precision feeding of the rumen through an integration of engineering, animal science and information technologies”.
In terms of technology, Keenan’s began to document feed efficiency data and over time began to measure the effect of a defined feeding system on a farm.
“The databank is the largest of its type in the world – 11,000 farms, 1.1 million cows in 25 countries,” Gerard explained.
Going back to its roots, Gerard explained the beginnings of Keenan’s. ”The business began 1978 by my father at the age of 60 who sold his interests in a wel- known engineering firm, Keenans of Bagenalstown, and committed the entire proceeds to a new business based on products yet to be designed, manufactured and marketed.
“What drives someone to sell out of a successful business, to start again at 60 from scratch with totally new products? Bit of madness maybe, some of his friends thought so. What guided his thinking, his business philosophy, was he wanted to make a real difference for farmers.
“This was a strong emotional driver for the business but also a very rational business strategy – be genuinely valuable to your customer and the customer will value you, do business with you – and most often, on win-win terms.”
In terms of challenges it has faced head-on, Keenan noted the early struggles to get critical mass profit and the BSE crisis of 1996, where British and Irish beef markets collapsed. ”Our group sales collapsed by 25 per cent and we responded in 1997 with major cuts, 25 per cent of people and overheads. At the end of the cutting we were still hemorrhaging, suffering unsustainable losses.
“TQM (supply chain technology) saved our business in 1998. We found a way to get the same with less, then more from the same. Not less people. Our people became team members working on the big issues of the business, seeking to eliminate waste and create new opportunity.”
He also talked about the KK Club, the Keenan Kepak Beef Club, which saw three grouping co-operation between the beef processor, farmers and Keenan to produce consistent quality beef to forecast for a high-priced export market.
“This worked on win-win-win basis. This project has endured and was a major contributor to moving Ireland from low-priced beef for third world markets to restoring high priced EU markets.”
In 2003 it also established a Scientific Advisory Board of respected experts in agriculture and food from Britain, US, Australia, France and Ireland. This was chaired by Dr Liam Downey, former head of Teagasc. Over the past 10 years this board has carried out some 20 research projects.
In terms of recent breakthrough developments, it introduced PACE Connect, a first in the world – a smart ‘black box’, a patented information control processor that is programmed to decide the best way to mix a combination of feeds.
Keenan explained: “This converts the years of field experience into a simple form for our customers anywhere in the world. The customer switches on PACE Connect and it simply tells the operator what feed to put in and when the mixing time is finished for optimal mix preparation.
This is a bit like getting the right ingredients and mix process for a myriad of cakes, around the world, and producing a consistent quality cake, whether coffee or Madeira or whatever, every day!”
In terms of expansion into China, Keenan explains that developments are going according to plan.
“In Asia, food production is a government issue, a huge priority. Countries have got to produce milk more efficiently to sustain rural development, improve farmer incomes without pushing up food prices, and meet environmental limitations.
“China is especially interesting for Keenan because we were getting the endorsement of leaders in nutrition even before we started doing business in 2013.”
He said the visit last June of Dr Zhang, China’s Vice Minister for Agriculture with responsibility for technologies, was crucial.
“His presence was a powerful statement of China’s interest in Keenan feed efficiency technology. Since the visit, we have reached agreement with a state owned enterprise, Caams, for a service infrastructure to support our food chain alliances, Yan Hua and others developing.”
Another key alliance this year is with Dairygold, he added.
“This is hugely important because this directly relates to the ambitious targets to grow Ireland’s milk production by 50 per cent. Dairygold is a major milk processing co-operative and it’s a major feed supplier.
“Dairygold want to help their farmers increase milk production through feed efficiency. This is a breakthrough in Ireland’s ambitious plans to increase milk production by 2020.”
“Ireland has a huge natural asset in grass. The average milk production per cow is 5,000 litres. Last year the average milk production was 5,000 litres per cow and concentrates fed per cow was one tonne. We are confident a target of 7,000 litres per cow from one tonne is a very achievable goal.”
In terms of increasing milk production by 50 per cent, he said there were two conventional ways for Ireland to do this. “One is to increase cow numbers and the other is to increase the concentrate portion of the ration. The third way is feed efficiency using the best of Irish grazing technology and the best feed efficiency technology.”
He believes the feed efficiency option is far superior to the other two options. “It carries less risk, less investment and more returns to farmers. This too is vital to processors gearing up for expansion and markets opening up as quotas lift. The limiting factor could be farmers’ willingness to expand.”
What Dairygold and Keenan are doing is absolutely relevant to Ireland’s 2020 goals and to the industry across Ireland, he added.
“More milk from the same land, feed and water resources is good for farmers, processors, agri-business and the wider economy.”
Pictured: Dr Gordon Purvis, University College Dublin, Gerard Keenan, speaker and Dr Liam Downey former head of Teagasc