Over 250 farmers finishing 200,000 veal calves yearly

By Justin McCarthy

During my recent visit to the Netherlands, I met Herbert Bouwers, general sales manager with the Alpuro Breeding, part of the Alpuro group.

The Alpuro group is one of two major veal producing and processing companies in the Netherlands who, between them, control 70% to 80% of total production.

Herbert gave me an outline of the mechanism that was in place between the Alpuro group and their 250 farmers, who produce over 200,000 white veal bulls per annum. There is significant variation in the level of scale to which each unit operates. Some units have capacity for 200 calves, while others have capacity for over 3,000.

Like winter finishing in Ireland veal production is a high risk and capital intensive system.

In general, veal units tend to be filled and emptied over a few days. Therefore, farmers are very exposed to the market forces in that their buying and selling window is extremely narrow.

Secondly, the level of capital investment required on the larger units is significant. To bring a 14 to 20-day old calf through to a carcase weight of 140kg at 26 weeks as white veal will require an investment of €650 per head, including the purchase price of the calf. Therefore, a unit with a carrying capacity of 1,000 calves would require in the region of €650,000 in operating capital.

To reduce the level of risk carried by the farm, Herbert explained that while the farmer pays for the young calves when they come into the unit, Alpuro will pay the farmer the full purchase price of the calves, including interest, two weeks before the calves are due to be slaughtered.

This is paid on the number of calves that go into the shed and takes no account for mortality.

The Alpuro group also carries a significant proportion of the feed costs in that they provide the milk powder, which in a white veal system represents 90% of total feed costs.

Depending on the individual farm, they will also supply the 100kg of pellets that each calf will consume over its lifetime. However, this is flexible with some farmers opting to include maize silage in the diet.

The level of maize silage and pellets included in the diet of white veal calves needs to be monitored very closely.

Diet
While increasing the level of both products in the diet will significantly reduce production costs, high levels will affect meat colour and, therefore, significantly reduce carcase value.

The exposure of the farmer to the narrow selling window is eliminated as they are paid a management fee when the calves are slaughtered and their returns are not based on market prices.

There is a baseline management fee agreed in advance of the calves going into the unit. However, there is also a bonus/penalty structure incorporated which is based on achieving performance targets such as carcase weight, mortality and feed conversion. Therefore, although farmers are insulated from the market there is still a real incentive for them to maximise performance levels.
The Irish Farmers Journal, August 7, 2010
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