Irish agri-engineering firm Keenan has signed a deal with a Chinese partner Shanghai Yanhua Biotech to bring its feeder wagons to farms in China as
the group focuses on expanding its business there.

Irish dairy companies are making significant headway in China of late. Earlier this month, Glanbia signed a memorandum of understanding to develop business with one of China's top food companies, Bright Foods.

Dairygold is the leading supplier to the Chinese market of demineralised whey, a key ingredient of infant formula. And, in October last year, Kerry signed a partnership deal with China's leading domestic baby formula brand, Beingmate, to supply dairy ingredients for the infant nutrition sector.

In working out its strategy, Keenan wanted to build up a relationship properly.

“We didn’t want to just jump in. We’ve been coming here for about four years, and we had relations within the Chinese Academy of Social Sciences, and we had been able to spend time with importers,” said Gerard Keenan, group executive chairman.

“We needed to have the whole programme, with real value and know-how and commercial protection, requiring a commitment and quality. Then we came across the right company in December.”

Shanghai Yanhua Biotech is a company focused solely on dairy which combines green technology, private finance and feed and nutrition businesses.

“They had known of us,” said Mr Keenan.

Keenan also hired a locally-based Irish graduate and Chinese scholar Ian Lahiffe to help their efforts to develop business in the China market.

“Milk quality is a huge concern here. We can tell them that, by introducing a planned approach to nutrition, you reduce the need to tamper,” said Mr Lahiffe.

The deal is worth between €10 million and €15 million initially, and the first stage will involve selling Keenan’s distinctive feeder wagons to Chinese farmers, followed by the company’s protocols and solutions. The group will eventually manufacture the machinery in China. At the moment, it is sold in a flat-pack format.

“We knew that shipping machinery on its own from Ireland wouldn’t work; we were looking at shipping whole systems to help increase the yield of milk,” said Mr Keenan.

“The farmers here aren’t that different from what we’ve seen around the world. We have 30,000 customers around the world, most of them in the 100 to 400 cows per farm category,” he said.

The focus in China is on family farms with between 50 and 500 cows.

Keenan reckons that by introducing its equipment and solutions on farms, Chinese farmers can improve efficiency by 20 per cent and the company can help the farmers get more from less feed.

“The economic effect is huge. We reduce the feed cost per litre. There is also an animal health factor – the animal lives longer. And there is an environmental benefit, because there is less methane. We improve farmers’ profits without pushing up food prices,” said Mr Keenan.

Keenan is looking at China and India as significant long-term places for its business.

“We’d like to manoeuvre what we have into good partnerships. We’re here to stay. What we have is not just a product, it’s a process. We’re not here to bamboozle, we’re here to help farmers do things. We’re quietly excited,” said Mr Keenan.