MARKETING AND SALES IN RISKY TIMES

©JAMES CALVERTTAS PRIME OYSTERS P/L

What are some of the main attributes our markets expect from a farmer?

Good communication Competitive price Fresh, quality produce Reliability of supply

What are the main factors our markets demand?

A food safe product No product recalls

It is our duty of care to protect our

customers and consumers

BIO-TOXINS, FRESH WATER RUNOFF (ANIMAL E. COLI), SEWAGE SPILL, PRODUCT RECALLS, REPUTATION DAMAGE?

• 4 years (2010 – 2014) of unprecedented closures • Caused market and sales problems• All bays/regions have been affected, some more than others

How does a closure impact a 100,000 doz per annum farm?

A few days closure … on average manageable, slight inconvenience but no real damage done. Sales should commence as per normal when farms are opened.

NB: Has the potential to cause some major damage if occurs around Christmas harvest

How does a closure impact a 100,000 doz per annum farm?

A few weeks closure … starting to become more serious! Customers begin sourcing product from other farms/states., wanting to know when sales will re-commence

Cash flow problems not too bad, but starting to worry.

Stock management still ok but would not like to go on any longer

Annual revenue now down by 2,000 dozen ($14K) but still manageable.

How does a closure impact a 100,000 doz per annum farm? 1 Month closure … Shit!

Customers have stopped calling, they need to source their supply else where. How am I going to get back into the market?

Cash flow starting to dry up, need to speak with the bank.

Stock management becoming a problem. Juvenile stock needs grading but no free baskets on shore.

Might have to delay seed inputs due to no room and cash flowHave now lost 4 weeks growth and sales, 8,000 dozen ($56K)

How does a closure impact a 100,000 doz per annum farm? 2 Month closure … WTF!! Start yelling at the kids and kicking the dog …

Cash flow now my major issue. Wages and OPEX don’t stop!

Seed inputs cancelled for the short term, worry about that when life returns to normality

Stock management has become a nightmare! Need to free up some baskets somehow? Product keeps growing.

Just deferred my seed inputs and lost 2 months growth & sales, cost is 16,000 dozen ($112K)

How does a closure impact a 100,000 doz per annum farm? 3 Month Closure … Crisis management

Cash is king, need to start changing farming techniques. Is there opportunity to sell some on-grown? Reduce staff numbers and OPEX? Do I start dumping stock to make room?

I know my bank manger quite well now! Marriage councillor is next!

Still no seed inputs, now lost 3 months of growth & sales ($168K), or 25% of income – All your annual profit is gone!!!

Every week a farm has no stock inputs (seed) or

defers grading to rotate product into the next size

range, is lost income.

It is our duty of care to protect our

customers and consumers

Closure costs (approx)

Farm Size (production)

<1 week 2 weeks 1 month 2 months

50,000 0 $7,000 $14,000 $28,000

100,000 0 $14,000 $56,000 $112,000

200,000 0 $28,000 $112,000 $224,000

How do we mitigate against closure risk and keep our sales moving?

Spread the risk – farm in multiple growing regions

Share the risk – form relationships with growers in other bays who may be able to hold/buy stock (both ways)

Eliminate the risk – Depuration tanks? Can our businesses survive long periods of closures. Would be a sad day for Tasmania but common practice around the world

To satisfy the market , it is critical that we have supply continuity of quality, food safe product.

Evidence suggests there will be a major extended period of closure from a bio-toxin event in the future, are we prepared for such an event?

Communication is key for Exports!Closure problems for export product escalates stress to another level! Asia does not have weekends and operate in different time zones!

Export customers cannot afford to hear of a Friday evening bad test result on Monday morning … product is already being processed and consumed 24/7. The potential for problems is increased dramatically

Communication is key for Exports!Export recalls are difficult and cause major damage to reputation

Customers are more fickle, harder to contact & communicate (language) and are easily lost. Foreign government agencies become involved and international trade regulations and issues are raised

We need to get better at mitigating against closure risks

Thank youTas Prime Oysters P/L“farm gate” price list effective 1st November 2014

Strong demand for export!!! Please contact Tas Prime Oysters if you can help

Bistro Buffet/Plate Standard Large

Domestic 6.20 6.80 7.30 8.20

Export 6.50 7.30 7.80 9.00