BellringerBellringer
Organic FarmingFreedom Farm
Organic FarmingFreedom Farm
EXPLAIN IN COMPLETE SENTENCES WHAT ARE
ORGANIC VS NONORGANIC FARMING METHODS
Mission statementMission statement
Goal: To build a viable organic farm business in ten years.• To establish the first three years of organic farming
practice while selling on the conventional market until OCIA certification.
• To have all land in organic production within four years and sell on the organic market by the fourth year.
Goal: To build a viable organic farm business in ten years.• To establish the first three years of organic farming
practice while selling on the conventional market until OCIA certification.
• To have all land in organic production within four years and sell on the organic market by the fourth year.
Mission statementMission statement
• To increase cash flow over the next seven years through organic practice while selling on the organic market.
• To replace and improve farm power machinery in ten years.
• To maintain soil fertility while maintaining yield productivity and year to year stability.
• To increase cash flow over the next seven years through organic practice while selling on the organic market.
• To replace and improve farm power machinery in ten years.
• To maintain soil fertility while maintaining yield productivity and year to year stability.
Outline…Outline…
• Industry overview
• Operations
• Human Resources
• Marketing
• Financial
• Feasibility Analysis
• Industry overview
• Operations
• Human Resources
• Marketing
• Financial
• Feasibility Analysis
Industry OverviewIndustry Overview
• $20 billion US
• Majority of industry - Europe, USA and Japan
• Increasing health and environmental concerns
• Aggressive promotion
• Supportive government policies
• $20 billion US
• Majority of industry - Europe, USA and Japan
• Increasing health and environmental concerns
• Aggressive promotion
• Supportive government policies
Canada...Canada...
• $1 billion in annual sales• Annual growth of 20% per year• Predicted increase of 5 to 10% of global
market by 2010 • Net exporter of bulk organic grains and
oilseeds• Significant production of raw products - 80% store products imported from USA
• $1 billion in annual sales• Annual growth of 20% per year• Predicted increase of 5 to 10% of global
market by 2010 • Net exporter of bulk organic grains and
oilseeds• Significant production of raw products - 80% store products imported from USA
Saskatchewan...Saskatchewan...
• Over 1000 certified producers
• 70% of western Canada producers
• $30 million industry
• 30 organic processors– flour, flax oil, oatmeal, bread, cereal
• Over 1000 certified producers
• 70% of western Canada producers
• $30 million industry
• 30 organic processors– flour, flax oil, oatmeal, bread, cereal
About Kipling:About Kipling:
• LLD – SE 5-8-3 W2• Precipitation (427mm)• Temperature (GDD)
1600 > 5 C• Soil Classification
Black soil• Frost Free Days 120
• LLD – SE 5-8-3 W2• Precipitation (427mm)• Temperature (GDD)
1600 > 5 C• Soil Classification
Black soil• Frost Free Days 120
KIPLING
Kipling cont’dKipling cont’d• Southeast transportation committee
• Transportation: Near Trans Canada Highway # 1
Capital OutlayCapital Outlay
2002 2005 2006 2008 2009 2011Land (1680 acres) 432,177 - - - -
Buildings: Shop - 34,239 - - - Grain Storage 26,000 - - - - - Powered Equipment 136,000 30,000 - 50,000 - 50,000 Non-Powered Equipment 29,350 - 15,000 - 15,000 -
Total Capital Outlay 623,527 30,000 49,239 50,000 15,000 50,000
Challenges – rotation choiceChallenges – rotation choice
• OCIA Organic Crop Improvement association
• 3 years to get organic certification
• Crop rotation & tillage for weed control, fertility
• DIVERSITY
• Seed, fertilizer and variable machinery costs
• Are the highest yearly inputs
• OCIA Organic Crop Improvement association
• 3 years to get organic certification
• Crop rotation & tillage for weed control, fertility
• DIVERSITY
• Seed, fertilizer and variable machinery costs
• Are the highest yearly inputs
Rotation orderRotation order
PeaBarleyC/flaxFallowAOat+AWheat7
BarleyC/flaxFallowAOat+AWheatPea6
C/flaxFallowAOat+AWheatPeaWheat5
FallowAOat+AWheatPeaCanolaFlax4
AOat+AWheatPeaBarleyFlaxFlax3
Oat+AWheatPeaBarleyC/flaxFallowCanola2
WheatPeaBarleyFlax FallowAlfalfaOat+A1
Block 1 2 3 4 5 6 7Year
Human ResourcesHuman Resources
• Sole Proprietorship• Sole Proprietorship
• Owner/Operator•farm equipment and mechanical expertise•proven interest in organic food production•management/decision making skills•bookkeeping - overseeing paperwork - accreditation
Salary: $40,000 in year 1,
increasing to $50,000 by year 10
Human Resources cont..Human Resources cont..
• Position #2 - Seasonal Labor (seeding-harvest)
• knowledge of farm equipment• mechanical knowledge
Wages: $9.52/hour
• Position #2 - Seasonal Labor (seeding-harvest)
• knowledge of farm equipment• mechanical knowledge
Wages: $9.52/hour
Product/Service FeaturesProduct/Service Features
• Product within OCIA regulations– Certified “organic”
• “Beneficial Products”
• Serving the buyers needs
• Product within OCIA regulations– Certified “organic”
• “Beneficial Products”
• Serving the buyers needs
CompetitionCompetition
• Over 1000 certified producers in Sask.– Beneficial globally?– Detrimental locally?
• Competition minimal due to infancy of industry
• Over 1000 certified producers in Sask.– Beneficial globally?– Detrimental locally?
• Competition minimal due to infancy of industry
Distribution/PricingDistribution/Pricing
• “Price Taker”– price depends on world markets and demand– price dependent on quality and volume– research different buyers frequently
• Distribution cost responsibility of buyer
• “Price Taker”– price depends on world markets and demand– price dependent on quality and volume– research different buyers frequently
• Distribution cost responsibility of buyer
StrengthsStrengths
• Educated farmer/businessman
• Knowledgeable hired help
• Production diversity
• Producing a “Healthy product”
• Location- soil, climate, moisture
• Educated farmer/businessman
• Knowledgeable hired help
• Production diversity
• Producing a “Healthy product”
• Location- soil, climate, moisture
WeaknessesWeaknesses
• Marketing– getting the best price at the right time– “Price Taker”
• Marketing unfinished product• Starting from scratch
– inexperience in the agriculture industry– cost: significant capital needed
• Limited database on production practices and outcomes
• Marketing– getting the best price at the right time– “Price Taker”
• Marketing unfinished product• Starting from scratch
– inexperience in the agriculture industry– cost: significant capital needed
• Limited database on production practices and outcomes
OpportunitiesOpportunities• Organic industry 15-25%/year• Emerging markets – Australia, New Zealand• Organic processors expanding• Premiums for production• OCIA most recognized – high visibility products• Low land cost and pest populations in Saskatchewan• Health and environmental problems related to
pesticides decreased
• Organic industry 15-25%/year• Emerging markets – Australia, New Zealand• Organic processors expanding• Premiums for production• OCIA most recognized – high visibility products• Low land cost and pest populations in Saskatchewan• Health and environmental problems related to
pesticides decreased
ThreatsThreats
• Infancy of the industry
• Expansion of producers in Sask. - Opportunity?
• Government regulation
• Transportation (exporting - union strikes)
• GMO crops (canola, wheat, etc.)
• At the mercy of nature
• Mining of the soil- minimal nutrient amendment
• Lack of global quality standardization– NOP - National Organic Program
• Infancy of the industry
• Expansion of producers in Sask. - Opportunity?
• Government regulation
• Transportation (exporting - union strikes)
• GMO crops (canola, wheat, etc.)
• At the mercy of nature
• Mining of the soil- minimal nutrient amendment
• Lack of global quality standardization– NOP - National Organic Program
Processors/CustomersProcessors/Customers
• Popowich Milling, Yorkton– Oat processing (oatmeal, flour, etc)
• Bioriginal Food & Science Corp, Melville– edible oils and flax seed
• CSP Foods - bakery mixes
• Proven Organics, Gravelbourg– whole and split peas, flax and hulled barley
• Popowich Milling, Yorkton– Oat processing (oatmeal, flour, etc)
• Bioriginal Food & Science Corp, Melville– edible oils and flax seed
• CSP Foods - bakery mixes
• Proven Organics, Gravelbourg– whole and split peas, flax and hulled barley
Customers – SummaryCustomers – Summary
• Grower controls decision to sell• Expect competition from other growers,
prefer broad base of supply• QUALITY – and price• Market is growing, buyers have sourcing
problems
• Grower controls decision to sell• Expect competition from other growers,
prefer broad base of supply• QUALITY – and price• Market is growing, buyers have sourcing
problems
Financial PlanFinancial Plan
2002 2004 2005 2006 2010 2011Total Revenue 155,341 124,467 296,805 302,741 327,697 334,251 Total Expenses 139,527 103,489 113,855 113,263 109,160 107,617 Net Income 15,814 20,978 182,950 189,478 218,537 226,634
Financial AnalysisFinancial Analysis
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Total Revenue Total Expenses Net Income
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2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
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Total Revenue Total Expenses Net Income
IRR and NPVIRR and NPV
Net Present Value of Equity Investment (72,049) Internal Rate of Return on Equity Investment 12.2%
Net Present Value of Equity Investment (114,221) Internal Rate of Return on Equity Investment 10.4%
Base CaseBase Case
Without 2% growth in price:Without 2% growth in price:
Yield and Price Fluctuations
Yield and Price Fluctuations
60% 75% 90% 100% 110% 125%40% -100% -100% -100% -100% -100% -100%60% -100% -100% -100% -4.3% -1.2% 3.0%80% -100% -4.3% 1.7% 5.1% 8.2% 12.2%
100% -4.3% 3.0% 8.9% 12.2% 15.2% 19.2%120% 1.7% 8.9% 14.6% 17.9% 20.8% 24.7%140% 6.7% 13.8% 19.4% 22.6% 25.5% 29.3%
Yield (% of Expected Average)
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HOMEWORKHOMEWORK
DESCRIBE ALL ASPECTS OF
THE FARMING PLANNING
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