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Clair Doan’s Video Blog: UK, Holland & Germany #Nuffield16 

Sharing my Nuffield experience is a personal goal and commitment I made during the application process one year ago. Despite having a particular topic in which I will focus my final report, there have been many fascinating people and businesses I have met along the way. Attempting to condense 11 days of meetings into 4.5 minutes at the same time as providing substance beyond a photo montage was not easy. I hope you will take the time to watch and even watch a second time as I think there is some interesting information. As for the music? I have been travelling for a few weeks now with Zac Brown Band providing the tunes, or at least in between my satellite navigation system getting me around Europe! 

If you have any questions or feedback, I would be pleased to discuss what I have experienced. 

Clair Doan’s Nuffield Travels Through UK, Holland & Germany

An Ode To Nuffield Hosts #Nuffield16

 
Being a foreign visitor, meeting interesting and diverse people can be a challenge because there is an abundance of data, risk they will tell you what you want to hear and not always the reality. People are proud by nature! At times, the Nuffield traveling study component can be somewhat of a race, however I am very greatfull to my Dutch hosts who welcomed me into their homes, families and busy lives. Dutch Nuffield Scholars, Ruben van Boekel and Roy Tomesen allowed me into their homes for six days, to operate as a makeshift base. However, it isn’t just a bed to use, but the conversations about community, culture and local agriculture issues that provide a sound framework to compare, contrast and double check some of the facts and figures. 

Ruben van Boekel and his partner Lonneke van den Brand are from the small village of Overasselt. Ruben is an agriculture journalist focussed on pork production, in addition works with his family on a 500 sow farm where half the pigs are finished and the balance sold at 20kgs. The world is very small, Ruben’s cousin (3rd or 4th) is my hog producing neighbour with the same family name. Lonneke works as a recruiter in the financial sector which has similarities to recruitment strategies that my wife Kathryn and I discuss at home. On my first night in Holland, Ruben had me in the barn talking production, planning and how they deal with manure.

Roy Tomesen and his wife Maud, have two young boys, Job (6) and Huub (4), the same age as my two oldest daughters. They live on the edge of the Doetinchem, a city of about 50,000 people. Roy’s family has been in the egg business for over 50 years where he has purchased the business from his parents. The farm consistis of 120,000 layers, all in an aviary system, 50,000 of the brown eggs remain in the Netherlands and the balance are white eggs, exported to Germany. Expasion is in the plans for Roy and Maud with a new project starting next week where 40,000 aviary birds, equipped with a ‘winter garden’ will be situated on 1.5ha.

It was in Roy’s on farm egg shop that I saw the self serve egg vending machines, that was a first for me. By explaining firsthand the challenges of balancing low margins and intensive production, this quote that remains in my mind “in cages you manage the birds, but with aviary, the birds manage you” 

 

Many of my friends, family and colleagues have questioned what its like staying in strangers homes.  However I am quick to correct them insisting we are only strangers to a point, but rather we are part of a network with common goals of agriculture and personal development and have embraced a certain mindset. My visits this week will be repaid later in the year when each of Ruben and Roy plan to visit Canada.

The best part of staying with Dutch farmers is there is a tendency of being thrifty (being realistic, Dutch can be cheap). So when I requested a couple of extra nights, it all worked out, and they would have thought poorly of spending unnecessary money!

Ruben and Roy deserve real credit in helping me with my agenda. They connected me with Dutch turkey farmers, Rondeel and an egg grading business, plus the local dairy farm visits. In addition, each of their own farms serve as unique businesses looking to survive in the low cost, intensive Dutch model of agriculture.

But culture is important was well, the coffee, and more coffee, food, some Dutch beer and recommendations of Keukenhof and the World War 2 Memorials made the trip complete.

So to my Dutch hosts and friends, Ruben, Lonneke, Roy and Maud; thank you. Travelling alone can be a strange situation, but having familiar faces at the end of the day makes the world a little smaller.

  

 

Land & Manure: The Dutch Balancing Act #Nuffield16

Picture this: 17 million people, 4 million cattle of which 1.6 million are dairy cows, 102 million chickens, 12 million pigs, 1 million sheep, 0.4 million goats and we cannot forget about the half million turkeys on a total of 5.25 million acres of land.  In all, The Netherlands is situated on an area the same size as the area of Southwestern Ontario.

‘Intensity’ is the one word the best describes the area, farm economy and people who are committed to food production in The Netherlands.  Having a broad perspective of Dutch farmers from my time working with many immigrant families in Ontario; their ideals of space, flexibility and perhaps forms of freedom are what drove them to leave the Netherlands for opportunities in Canada.  However, one common denominator is the shortage of land, I now fully understand why.

The Dutch model of farming is almost exclusively based on being the lowest cost producer, geared toward export. Typically, I think of land required for feed production, however one agribusiness professional felt in the past they had a competitive advantage in sourcing cheap feed for pork and poultry because of the water system to competitively transport feed to regionalized areas.  Now the European Union and Dutch governments environmental restrictions are increasing the cost of production of pork and poultry products, in an already competitive marketplace.

Phosphate quotas have been established to cap the number of animal units on farms, therefore extreme focus on productivity has driven some of the highest production per units in pork and poultry through focussed technical skills (more pigs/sow or eggs/hen).  However, if further growth is required it must come through the acquisition of another pork or poultry unit.  One farmer I visited purchased a 1.5ha vacant hog farm where the buildings will be demolished and a new layer unit established, thus effectively switching the nutrient quota into his specialty.

At times, the monetization and transfer of phosphate units do occur and farmers know the value of the business are linked to these units.  However, these nutrient quotas associated are far less than any Canadian quota values, but they simply are not available.  The cost base for production of poultry, layers and pork has become increasingly challenged due to the limitations of the manure.

A typically intensive pork and poultry farm may be situated on 5 to 10 acres of land, or less, all of the manure must be taken away, often at great lengths to the north, used in digesters to dispose of the manure; but there is a cost.  Given that nearly 80% of the pig manure is liquid, it is estimated that as much as €22/tonne to ship the waste manure off the farm. A turkey producer I met is spending €11/tonne, and that is dry manure.  Although some farmers are paid for their manure, they have invested heavily in separating systems or drying systems; thus adding to the overall cost of production.

Aside from the cost, the administration that comes with the manure is remarkable, can you imagine having to a complete nutrient balance sheet for your farm? All feed shipped in is tracked with GPS monitoring systems, eggs that leave the farm are reported, values nutrient values assigned to spent hens; on top of this, there are separate GPS tracking systems on both the truck and trailers to ensure the system data is linked and no loads of manure go ‘missing in action’.

For now, the dairy sectors past evolution of balanced expansion through land for feed has served them well. With their nutrient quota’s based on stocking densities of about 1 cow plus replacement, per acre. Overall, the dairy sector is slightly better positioned to deal with manure challenges.

As a Canadian farmer, I have difficulty relating; in fact it exposes my shortcomings in fully knowing the nutrients and opportunities that come as waste from the barn, fertilizer and organic matter for my crops.  In a world of increasing pressure to feed global populations it is important to remember that resources are truly finite; particularly land and water! Well, maybe not water for the Dutch.

A Nuffield Scholar’s Agenda, #Nuffield16

Opening new doors has opened my mind through Nuffield, but this doesn’t just happen, it occurs because of a willingness of people to meet, share and engage about their business and personal experiences. Many of you have asked about my agenda while travelling abroad, so here is a summary from the three days in the UK this week.

John Alliston, Former Dean, Nuffield Alumni, Royal Agricultural University

  • Agriculture education, relevancy and attracting talent to the sector
  • Historical walk down memory lane connecting with profs from my time in ’99-‘00
  • Leadership in agriculture; John coaches, promotes and encourages continuous learning

Martin Waite, Regional Manager – Agricultural Mortgage Company, Division of Lloyds Banking

  • On farm debt levels, ratios and ability to react in volatile markets
  • A comparison of UK vs CDN ag banking systems
  • Farmers focus on risk mitigation through the use of fixed rate 30 & 40 year loans

Malcom, Liz and Tom Hughes – Salford Lodge Farm, 600,000 Unit Broiler & Diversified Farm

  • An evolution from converting turkey production to broiler chickens
  • The continuous improvement of poultry housing, meeting a growing demand for product
  • Understanding the business cash flows, including turnover of barns every 7 weeks
  • UK chicken: windows, campylobacter, marketing and a need to comply

Richard Hutchinson – Sales & Marketing Director – Europe, Aviagen Turkeys

  • The future of European turkey production evolving with changing demands and markets
  • Opportunities and challenges in growth segments of turkey domestically and abroad
  • A balancing act of expanding markets while adhering to the genetic research, development and time invested

Dan Roberts – Area Farm Manager Supervisor, Faccenda Foods

  • A randomized connection through the Nuffield/Social Media network
  • Mutual exchange around the benefits of the professional development, especially Nuffield
  • Talking production, logistics and farm management of corporate owned poultry units

Burgess Adams – Adams Turkey Farm, 6 shed, 24,000-unit turkey grow out farm

  • Commercial turkey production grown from 5 to 19 weeks of aged, brooded offsite, utilizing the Grader Maker variety
  • 22 years of turkey experience working with at least three processors as the industry evolved through stagnant and even shrinking market growth
  • Being on site and in the barn was a terrific experience to witness the small things; bale carriers, radiated heat and assessing litter quality

Alastair West – Senior Category Manager, Poultry – Faccenda Foods

  • Fascinating to actually have a turkey product specialist go through the steps needed to develop and launch a new product
  • Making a consideration that turkey is not chicken and that real substation is coming from the red meat sector
  • All about the 5 P’s, Product, Price, Promotion, Placement and Profit – need every single element
  • Relationship, relationship, relationship – at the processor/retailer level in order to gain success

In Pursuit Of The Golden Turkey Market, #Nuffield16

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I found a Bronze turkey; But I am going for Gold!

In my turkey oriented life, I rank turkey meat as a healthy, flavorful, lean white meat that has a low environmental foot print, rich with potential in product diversity through further processing because of the high meat yield on these large birds. I see opportunity!

Reality, I am unsure if my perception of turkey, my ideal food, actually exists: On the very first day, of my first Nuffield trip a month ago, I was keen to learn about Irish turkey, but was quite disappointed to learn the largest processor had stopped processing turkey and now only handles turkeys at Christmas for the seasonal market. No worries I thought, I am off to the UK, surely their business is robust. Unfortunately, my research into British turkey production remains somewhat inconclusive as poult placements have reduced by over 50% in the last decade. So where have all the turkeys gone? Why can’t I find a larger selection of turkey production on store shelves and local menus? So what has changed in the landscape of production and consumption of turkey?

Understanding the economic, political and environmental groups and the impact they have on production is key to evaluating change in turkey production. We all know economies are evolving and developing nations where protein has increasing demand is an opportunity for many firms, but what about mature, stable markets like ours in Canada and similar to Western Europe? In reality, as farmers in a supply managed sector, we focus almost exclusively on producing a quality product where our ‘controllable’ variables are driven to minimize cost and maximize output. Supply managed farmers don’t have to worry about marketing, because definition of a market is that a processor will buy our poultry is guaranteed.

Having completed the first phase of my independent travel, I took the opportunity to learn a great deal about myself, leveraging my personal, professional and Nuffield network. Personally, I have stretched my own abilities to share my story and ask the questions that are meaningful to me, and ultimately to Canadian agriculture and those invested in supply managed production.

If I compare myself to a race horse, my blinders are off, the world is exposed, and I am looking over my shoulder to see where turkey production is evolving. These 11 days are being invested in visits to the UK, Holland and Germany where production has seen a boom, a bust, and a shift into Eastern Europe.

Volatility, Uncertainty & Change: The UK Dairy Sector

The U.K. dairy sector is in flux, it was thrust into the world market last year after the milk quotas fully deregulated within the European Union, compounded by record global milk production and challenging markets in China and Russia. Keeping in mind the quota system within the UK was nothing that resembled the Canadian model, but rather a heavily fragmented system with many processors directly contracting milk with farmers and virtually minimal monetary value associated with quotas prior to deregulation.

Over the past week, I had the opportunity to investigate the U.K. dairy sector, where I learned first-hand the diversity of production systems, geographical challenges with access to processing capacity. I met ‘have’ and ‘have not’ farmers in terms of milk contracts and consequently the price paid for their milk.  The post quota market in the UK is a living experiment on the how industry reacts to change in a global marketplace.

Production systems in the UK ranged from those mimicking the Irish grassed based systems; spring calving herds utilizing Kiwi cross cattle averaging 5500 litres per year through to farmers maximizing production with 3 times per day milking systems that resembled a North American model.  Overall, farmers are adopting a systems approach to dairy production where by highest output per cow is not necessarily the ultimate goal.

Every farmer I met was able to describe their perceived competitive advantage in terms of cost cutting measures, including areas where they hoped to improve. Unfortunately, a common theme rang through the group, that of ‘luck’.  Many were unable to differentiate why their farm was fortunate to have a super market contracts or the luck of farm location to utilize well drained fertile soils with strong grass growing capacity.

The cost of production models on farm ranged significantly, however a common theme is that every farmer knew their break even cost on a per litre basis. The cost range of £0.16 to an estimated average of £0.22 up to £0.26 per litre in the most intensive herd.  However, the intensive herd also had the supermarket contract. Prices being paid were about £0.21 to £0.26 for most but the specialty markets, including super markets it was closer to £0.36/litre.  It was estimated that only 10% of the milk was linked to the richer supermarket contracts.

The farmers I visited had contracts in place, but the likes of Tesco are demanding to see the financial statements of its farmers to make sure they are not too profitable. The specialty jersey milk contract is at capacity and will not take any additional milk, let alone struggle with the bulges of seasonal production. Then there are the international processors that buy milk in other countries, whereby the UK gets the same European pricing, it’s COP’s are most likely higher than its European peers. The group I have not mentioned, nor met are the farmers without a contract, selling to milk brokers at prices resembling world market. These farmers have immense & immediate pressure; they are perhaps receiving less than £0.15per litre.  Keep in mind, some selling to milk brokers benefited from higher milk prices last year.

However, three of the farmers I met this week had expansion on their mind.  As with many businesses, the conscientious managers will survive, and remember, we are still in Europe and single farm payments will be paid as usual which could be in the range of £80.00 per acre.  One farm I met has opted out of the government subsidy on sheer principal, I suggested they take the money, reduce debt or invest to reduce costs. His response was interesting and similar to other comments I heard within the UK; subsidy determines how farmers invest in their business. His explanation was clear, policies encouraged farmers to be environmental stewards, not farmers, as such farm and agriculture infrastructure such as processing plants, supply companies and a competitive value chains were never efficiently developed. These farms are now competing with global milk prices in a region that is disadvantaged due to the side affects of subsidization.

When asked what was the one metric used as a guide for management purposes; cost of production was a clear indicator of short term break even performance, however long term goals are based on return on invested capital. This is an interesting measure because to be it says farmers have a focus on profit and are willing to adapt and change as needed.   It was suggested that on farm; we should be aiming for 5 to 10% return on capital with firms invested in value added should seek returns up to 30%.

The processing side of the UK dairy sector is one element of total confusion; fragmented by local firms, varying sizes of cooperatives and a host of multinational companies give me a sense of market chaos, in other words as with the ‘have’ and ‘have not’ farmers, the same applies to UK firms processing milk and having the necessary infrastructure and markets.

The future is UK dairy is uncertain, however a major challenge is the vast disparity between farmers and no clear national strategy. The UK dairy farmer looks across the English Channel to the lowest cost, export based, Irish dairy sector, and to the east is the intensive and efficient Dutch model.  Positively, the U.K. has a large population who supports British food and love their milk and cheese based products, but farmers are entirely reliant on their processor to meet the market and compete in a global stage. Remember, in the European Union, food knows no borders.

 

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