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Fitbits for Cows
The digital age and the availability of wireless technology are opening up attractive business opportunities for some unlikely candidates in the business world. One such, which I own in the CFP SDL Free Spirit fund, is Avon Rubber PLC. I recently took the opportunity to visit their Interpuls subsidiary in Italy, in the charming town of Reggio Emilia, centre of the Parmesan industry. Avon’s main business is the manufacture of protective masks for military and home defence purposes, itself a topical subject after the recent events in Salisbury. However, 30% of revenues and profits come from a second division which supplies the worldwide dairy industry with aids for milking. It is this division to which Interpuls has belonged since Avon acquired it from the founding family in 2015 for 25million Euros. Avon’s core product for the dairy industry is a rubber liner which sits on the cow’s udder during automated milking and flexes as the teat is pulsated. Avon is the global market leader in the liner business. Liners need changing every few months, making it a nice repeat business. Interpuls makes the pulsator.
In more recent times, Avon has developed an increasingly integrated dairy offer with the liners, pulsators, milk meters and clusters (of four liners attached to a claw) plus the addition of wireless technology. Smart farming has now arrived. The cow can now wear a pedometer round its front leg or a tag around its neck, and an antenna on the cowshed wall picks up the movements of each individually identified cow (see photos). The system can identify if a cow is limping and needs the vet. It can also monitor how long it feeds in a specific trough. However, the main application is to identify movements or temperature changes which signal that the cow is on heat, and ready for artificial insemination. This in turn leads to the optimisation of calf production and therefore of milk yields.
On this visit, we were given a fitbit to wear round our leg in the laboratory and an individual identity number. We walked in turn towards a system of gates and different “cows” were admitted to different gates: in a real live farm that would enable the farmer to single out those that needed the vet or were ready for insemination.
Currently revenues from the sale of precision, control and intelligence products are 20% of Avon’s dairy division revenues of roughly £50 million, and are growing at around 20% per annum*. Excitingly the group is developing a recurring rental model where farmers can exchange clusters and pulsators regularly for cleaning and servicing. A tag exchange is coming soon. These services revenues are already 10%* of the division and growing rapidly. Farmers are a conservative bunch, and major investments typically only take place every ten years, so smart farming will be adopted slowly, but for Avon’s dairy division the digital future looks bright.
By Rosemary Banyard
*Source: Avon Rubber PLC 2017 Report & Accounts