Glanbia/Kepak Twenty20 Beef Club: A look back over the first year of the programme

In April of last year, Glanbia Ireland and Kepak Group announced the introduction of the Twenty20 Beef Club.

As we know, the ‘club’ involves the rearing and finishing of calves – originating from Glanbia suppliers’ dairy herds – under a guaranteed-pricing model in a Kepak slaughtering facility.

To be eligible for the programme, all inputs such as: fertiliser; nutrition (feed, milk replacer, crunch, etc); and animal health products (with the exception of prescription-controlled antibiotic products) must be purchased from Glanbia.

Therefore, the initiative operates on a ‘closed-loop basis’. Steers and heifers of any breed – with the exception of Jersey or Jersey-cross calves – are eligible; bull beef is excluded.

All the ‘nuts and bolts’ of the club – including the inner workings of the programme and the finer details in relation to the pricing structure – can be obtained in the article below.

The only change to the pricing structure is that the ‘Club Protocol Bonus’ – depending on the spec and grade of the animal will range between 12c/kg and 20c/kg; this is in line with the changes that were agreed as part of the Beef Sector Agreement, September 15, 2019.

For example, an R-, 3= steer or heifer will receive a Club Protocol Bonus of 20c/kg, while an O-, 4+ steer or heifer will now receive the agreed bonus of 12c/kg.

Additionally, in 2020, P-grade cattle will also receive a 12c/kg Club Protocol Bonus if the target weight of 280-360kg is achieved.

While the collaboration was under the spotlight soon after its launch, it was also welcomed by industry stakeholders and farmers. The pilot year was oversubscribed, with some 6,000 calves wanted initially.

Now that the first year has passed, AgriLand sat down with Kepak Agri-Business development manager, Mick O’Dowd, and head of beef at Glanbia Ireland, Martin Ryan, to find out how the opening year played out and what the plan is for year two and beyond.

Getting the programme started

Once expressions of interest had been submitted by farmers, the analysis of Glanbia suppliers’ herds began. It heralded a search for suitable calves that would meet the criteria for the club – i.e calves that had the genetic potential to meet the weight requirements for steers and heifers at 280-360kg (carcass weight).

This was an important step, as no advice or support was supplied during the previous breeding season and the genetic history of the dam and sire had to be analysed.

The cut-off for Jersey percentage make-up is 25% in the cow and 12.5% in the calf. The reason for this, based on Irish Cattle Breeding Federation (ICBF) data, is that once you get down to that percentage the sire effect would far outweigh the Jersey influence.

Once a herd qualified, decisions on who entered the club were based on trading history between both Glanbia and Kepak, the quality of the calves (as mentioned) and the suitability of the farm itself.

Despite the initial target of 6,000 calves, an extra 500 calves were subsequently enrolled in the club – bringing the total number to 6,500 in year one.

Both dairy and suckler members

The club is open to Glanbia suppliers that finish some or all of their calves and to suckler/beef farmers, provided they purchase at least 25 calves from a dairy farmer.

In addition, the suckler farmers’ home-bred calves are eligible for the club – provided all inputs are purchased from Glanbia.

The suckler-bred stock must also kill-out within the club weight requirements of 280-360kg. Year one saw a total of 85 contracts drawn up, which consisted of both dairy farmers finishing their own calves (67%) and suckler/beef farmers (33%).

The breeds include, but are not limited to: Friesian; Aberdeen Angus; Hereford; Limousin; Aubrac; Belgian Blue; and even a proportion of Charolais-sired calves.

Below is analysis of the sires of calves on the farms that applied to enter the programme. These are from the expressions of interest for 2019/2020 applications completed last year.

Breakdown (by sire breed) that applied to enter year 1 of the programme

The 85 club members are spread across some 14 different counties – a good geographical spread has been achieved.

As would be expected, farms in the Glanbia catchment area feature prominently, but club member farms stretch across Laois, Kilkenny, Offaly, Westmeath, Waterford, Cork, Tipperary and Wexford – to name a few.

But saying that, both Mick and Martin noted that while there is capacity to stay within dairy farm operations, the programme is very much open to suckler and beef farmers – which are expected to play a bigger role in year two, with some 20,000 calves needed in 2020.

In terms of farm size, the largest holding has 150 calves, but units with 35 head to 100 head are common across the board.

Larger-scale units were deliberately avoided for the pilot phase, despite numerous expressions of interest; these units will be considered in the future.

Martin noted that the 2019-born calves performed well on-farm, and are expected to hit club target weights; with the first animals expected to be slaughtered in November or December 2020.

Another unique aspect of the club is the availability of a finance package for club members (subject to credit approvals, etc), whereby they can receive up to €770 per animal (in the club).

Then, they would receive a monthly payment from the third month to the 20th month of €35/head.

While a small number of farmers have opted for the finance package, it is predicted that this number will grow as the programme progresses and the balance tilts more towards the beef finisher.

The second year

Expressions of interest are now welcome – and ongoing – for the coming year and, as mentioned above, some 20,000 calves are needed in 2020. However, this figure may be increased.

Also, as mentioned above, there are some changes to the Club Bonus Protocol – payable to farmers at slaughter.

Again, in 2020, the Club Reference Price will be €4.00/kg. Going forward in 2021, the reference price will be the average price paid across the previous 104 weeks.

On the topic of the breeding policy, there will again be a strong focus on genetic evaluations, genomics and the Dairy Beef Index (DBI); a panel of sires will be provided that dairy farmers can choose from.

In relation to AI bulls only, a minimum of €25 on the beef value (sub index within the DBI) was used for selection criteria; this will now be moved to a minimum of €30, with at least 90% reliability for calving ease.

Since the January evaluation, stock bulls that are now available on the DBI can also be used this year. Farmers using Friesian sires will use the beef sub-index within the Economic Breeding Index (EBI) as selection criteria.

Sires will also be selected on the beef eating quality index – which is being developed by the ICBF and Meat Technology Ireland. Mick noted that this is “not quite over the line just yet”, but will be available in the not-to-distant future.

Efforts will continue to be made to further improve the climate credentials of the whole initiative, by implementing strategies such as reduced age at slaughter – targeting an average age at slaughter of 24 months (the national average for dairy-beef is 29 months) – through efficiency and breeding.

Methane-reducing feed additives are also being used, along with following the breeding indexes.

It is predicted that some 250-300 farmers will be needed to reach the target of 20,000 calves. This figure could hit 600 by this time next year.

At the outset of the programme, the objective was to have in the region of 1,000 farmers supplying 50,000 head by year three. However, if the same trend continues, there will probably be less than 1,000 farmers needed to hit 50,000 head.

Commenting on the pricing and consumer aspect of the club, Mick said: “Current members describe the Twenty20 model as the type of structure that the Irish beef industry needs, as it brings greater certainty to their beef enterprises – from planning, performance and financial perspectives.

“Market insight research shows beef consumers care about the provenance and sustainability of their meat supply chains. Twenty20 provides the consumer with the reassurances that they seek to justify a premium.”

For more information on the workings of the programme (published previously, albeit without some of the updates detailed above), click on this link (below):

Also Read: The Glanbia/Kepak Twenty20 Beef Club: Here’s everything you need to know…