ABP and the meat processing industry in Poland

Tthe Irish Farmers Journal paid a visit to Poland recently to look at the meat processing industry and how it compares with Ireland. While there, we visited ABP’s two processing factories and spoke with Finbarr McDonnell, who heads the Irish and Polish arms of the ABP business.

Just as on-farm beef production differs dramatically between Ireland and Poland, so does beef processing. However, since the Larry Goodman-owned ABP Group acquired two factories there in 2011 and 2014, we are much more conscious of the Polish beef industry and we watch with interest how it develops.

Poland is the second largest net exporter of beef in the EU after Ireland, and fits with ABP’s long history in developing export markets from Ireland.

As referred to previously, Polish beef originates from its dairy herd and has a farmgate price of around a euro per kilo less than Ireland. Polish factories have traditionally bought their cattle on a liveweight basis from middlemen or dealers who buy from the thousands of small farms around the country and sell to a factory once they have a load put together.

ABP buys from these middlemen and is also actively encouraging suppliers to deal directly with the factory and get paid on a deadweight basis. It also uses the pay-on-the-day principle, whereas normal practice in Poland can mean payment takes as long as two months.

Currently, ABP kills approximately 2,000 cattle per week at its original site in Pniewy, which was acquired in 2011. When asked, McDonnell emphasised that it is their intention through acquisitions and capital expenditure to at least double this capacity over the next three years.

Significant player

ABP is a significant player in the Polish meat processing industry – which is still dominated by small local abattoirs, as was the case in Ireland 30 years ago – but it is not as big as Biernacke, Danish Crown (Sokolow) and OSI.

The typical kill profile is 60% bulls, 25% heifers and 15% cull cows. Steers are non-existent in the Polish indoor production system and bulls are bred primarily from dairy-type cows, mostly O grades, and kill at around 340-350kg at 20 to 26 months.

There are two lairages in the ABP factory, one for the bulls which get a fast pass through the slaughter system and the other for cows and heifers, which provide the buffer stock for the line. When bulls are in lairage, they are held in single confined pens.

Surprisingly this is best animal welfare practice for these animals as it represents the tethered system they are kept under on-farm. The success of this from an animal welfare perspective is also reflected in the company’s low 2% of animals with a high PH reading compared with the industry norm of around 11% in Poland. PH is the measurement of the acidic nature of a carcase with anything over 5.8 considered high, resulting in dark cutting and less marketable beef.

As in the rest of the EU, cattle receive an ante-mortem veterinary inspection and their identity is confirmed through the passport and entered on to the factories traceability system.

Processing standards

Inside the factory, the line is, as McDonnell says: “of a very high standard” typical of other ABP plants and many others in Ireland and Britain. It is an Irish-sourced GM steel line with an upward pulling hide puller said to minimise damage to carcase fat on the important and high-value loin and rump cuts on the animals’ hindquarters. Operating capacity is 52 cattle per hour and it presently operates at just over 40 cattle per hour.

Cattle are treated with ABP’s Ultra Tender Process – a system the company believes gives maximum tenderness in the steak meat. When the cattle are chilled, they are transported to the other ABP site in Klosowice, 30km away, where the cutting and storage facilities are located.

Boning and storage plant

When the cattle arrive in the cutting plant, they enter the boning room where the carcase, already split into quarters, enters the robotic boning system. From this they are placed on a conveyor belt where the skilled team trims the carcases to customer specifications.

As well as extensive capacity in the boning hall, the company has extensive chilled and frozen storage and blast-freezing facilities on this site with considerable capacity to extend the processing

Impact on Irish Farmers?

The big concern for Irish beef farmers and the obvious first question for the ABP chief is what does ABP’s expansion into Poland mean for Irish farmer suppliers. At first glance a country with a similar number of cattle available at a euro per kilo cheaper seems a threat and a means of keeping a lid on Irish prices.

However, McDonnell emphasised that this absolutely isn’t the case. From an overall group perspective, he says that Poland provides a value range for European customers while Ireland will continue to supply customers with the premium range. The prices aren’t the same but neither is the product, with Polish beef coming from bulls at around two years of age that never grazed a blade of grass, whereas Irish steer beef is a very different product.

When pressed on the subject, he said no Polish beef would be coming from ABP to Ireland from Poland, and negligible amounts are sold, with clear country-of-origin labelling, to the food service market in the UK at present, though he did accept that the food service market in the UK was a potential market.

Target markets

McDonnell also stressed that the UK retail market would not be a potential destination for the product, with the focus being on the German, Italian and other European markets.

Almost all of Poland’s beef is exported as there is virtually no domestic beef market. Sales have been traditionally as carcases but ABP are moving away from carcase sales to vacuum-packed primal cuts into retailers and food service outlets.

Listen to Phelim O'Neill's account of his visit to Poland in our podcast below

In line with its good animal welfare practice, ABP has introduced a company version of a quality assurance scheme based on some of the principles of the Bord Bia Irish scheme. These initiatives give the company a point of difference with the rest of the Polish industry.

Russia was an important market for Polish beef prior to the EU trade embargo, as was the Middle East before ending of non-stun ritual slaughter in 2014. It was the loss of these markets that made us more aware of Poland as a beef exporter as they were then competing with Ireland in mainland European markets.

ABP had no trade from Poland to Russia, nor did it carry out ritual slaughter, so its markets weren’t affected by these incidents.

Turkish potential

At present, central European markets take the ABP Poland production but it sees considerable potential in Turkey, which is currently importing large quantities of Polish beef. Turkey is a heavily protected market and switches on and off. However, with possibilities of sanctions on Iran relaxing, there is great scope for doing business there and with other Middle East countries.

Britain

Returning to the British market, the biggest barrier to developing business is the strong preference for UK-origin product in the retail sector, with even the discounters such as Lidl and Aldi sourcing 100% British beef for their UK stores.

McDonnell says that for UK retailers, British beef comes first and in the retailers that do accept beef from other markets, Irish is a strong and trusted alternative, particularly used in times of promotions.

There are only ever a few cuts from the Irish carcase that get used in retail; the rest has to be sold in wholesale where it competes with other imports, particularly German, Dutch and other European markets.

Carcase weights

Away from ABP’s Polish business, a key issue for Irish farmers is where the company is likely to stand on the issue of carcase weights with the moratorium agreed at the Beef Forum last November due to expire at the end of the year. McDonnell said that ABP wouldn’t have a company-wide policy, with each factory making its own decision reflecting the type of their supply and customer requirements. He did see some opportunity for heavy cattle and one possibility was that a factory would be dedicated for these.

The core advice was that anyone wanting to produce heavy cattle, which, according to McDonnell: “is anything in excess of 380-400kg ... They should not produce on speculation but work with their processor and make sure there is a customer requirement.”

As for the expected surge in Irish production from late next year, his message was that if weight, age, movements and QA specification were complied with, the market could handle it.

Read more

Farming in Poland: three case studies

Poland: a large beef-producing nation built on small farms