Organic Farming Final Presentation

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Organic Farming Freedom Farm :

Organic Farming Freedom Farm Commerce 492 Business Plan Rosalind Ball Heather Hack Murray Nelson Myles Thorpe

Mission statement:

Mission 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.

Mission statement:

Mission 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.

Outline…:

Outline… Industry overview Operations Human Resources Marketing Financial Feasibility Analysis

Industry Overview:

Industry Overview $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

Saskatchewan...:

Saskatchewan... 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 KIPLING

PowerPoint Presentation:

Kipling cont’d Southeast transportation committee Transportation: Near Trans Canada Highway # 1

Capital Outlay:

Capital Outlay

Challenges – rotation choice:

Challenges – 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

Rotation order:

Rotation order Pea Barley C/flax Fallow A Oat+A Wheat 7 Barley C/flax Fallow A Oat+A Wheat Pea 6 C/flax Fallow A Oat+A Wheat Pea Wheat 5 Fallow A Oat+A Wheat Pea Canola Flax 4 A Oat+A Wheat Pea Barley Flax Flax 3 Oat+A Wheat Pea Barley C/flax Fallow Canola 2 Wheat Pea Barley Flax Fallow Alfalfa Oat+A 1 Block 1 2 3 4 5 6 7 Year

Human Resources:

Human Resources 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

Product/Service Features:

Product/Service Features Product within OCIA regulations Certified “organic” “Beneficial Products” Serving the buyers needs

Competition:

Competition Over 1000 certified producers in Sask. Beneficial globally? Detrimental locally? Competition minimal due to infancy of industry

Distribution/Pricing:

Distribution/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

Strengths:

Strengths Educated farmer/businessman Knowledgeable hired help Production diversity Producing a “Healthy product” Location- soil, climate, moisture

Weaknesses:

Weaknesses 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

Opportunities:

Opportunities 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

Threats:

Threats 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/Customers:

Processors/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

Customers – Summary:

Customers – 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

Financial Plan:

Financial Plan

Financial Analysis:

Financial Analysis

IRR and NPV:

IRR and NPV Base Case Without 2% growth in price:

Yield and Price Fluctuations:

Yield and Price Fluctuations

Conclusion and Summary:

Conclusion and Summary

Any Questions?:

Any Questions?

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