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Five Factors contributing to the rise of the Farmpreneur

Working as international business consultants we are increasingly exposed to Farmpreneur businesses who are taking modern approaches to selling and marketing their valued added branded food and beverages, creating value from farm to table through direct marketing their produce from paddock to plate. So, what, this is not new I hear you say?  Been happening for some time, has it not? Ever heard of a farmers’ market? How does it affect me anyway, as a consumer or a customer (retailer or foodservice operator)?

The transformation of agricultural and food and beverage supply chains has been brought about by a multitude of factors colliding to create the perfect conditions for farmers to become Entrepreneurs or Farmpreneurs as we like to call them at Creatovate.  Value creators in the supply chain from inputs to outputs predominantly by direct selling and marketing their own “branded” products directly to customers (retail and foodservice) and in some cases direct to consumers as well.

Before we go dive deep into some of the factors contributing to the rise of the “farmpreneur” let us look at some live working examples of these new economy farm to table business models and how you might be able to apply this learning to your own farm, business, brand, customers and consumers.

Gladfield Malt

http://www.gladfieldmalt.co.nz/about-us/#our-history  

Doug & Gabi Gladfield Malt

Doug & Gabi Michael are fifth generation malting barley growers and first-generation maltsters situated on prime agricultural land on the Canterbury Plains of New Zealand.  After many seasons growing and harvesting the best malting barley possible, they grew tired of working harder year after year to increase their barley yield only to have their farm gate price per Tonne of malting barley produced drop due to only having one real option to sell their malting barley – one very large multinational malting company. The Michael Family decided to take the challenge/opportunity head on and plunge into the malting industry on their own adding value to their premium quality barley by malting it on their farm and selling it directly to the rising tide of Kiwi craft brewers.  Over the next decade, and after a lot of blood, sweat and tears and significant capital investment in plant, equipment, laboratory and people and processes they are now very proud owners of one of Australasia’s leading malting companies with customers from New Zealand to Australia and China and a strong growing demand for their high quality premium craft malts from brewers and distillers worldwide.

Crosby Hops

https://crosbyhops.com/the-farm/about-us/ 

Crosby Hop Farm

Transplant yourself 7,000 miles across the great Pacific Ocean to Oregon in the Willamette valley at the foot of the Cascade mountains in the Pacific Northwest of the United States and you will find 5th generation hop growers and first-generation hop merchants, dealers and processors of quality craft Hops – Crosby Hops.  Traditionally growing hops for large third-party merchants or grower co-operatives Crosby Hops and the Crosby Families took the brave decision 100 years on from first starting their hop farm to break away from the traditional grower only business model and started selling their hops directly to local craft brewers like Deschutes in Bend, Oregon. Starting initially with freshly dried whole hops Crosby Hops then moved quickly to design and install their own pellet mill with different processing dynamics suited specifically for the unique needs of the rising tide of craft brewers in the USA and the rest is history.  Again, after many years of significant investment in processing technology, capital, people, processes, laboratory and direct to brewer customer service Crosby Hops has not only retained their premium status as a grower of quality hops but is now also seen as a trusted merchant for sourcing from other farms and processing their hops and securing supply of unique hops to keep craft brewers abreast of the modern craft beer drinkers needs.

The Chia Co

https://thechiaco.com/au/our-story/ 

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John Foss Founder and Chairman of the Chia Co set out in 2003 to sustainably grow process and market Chia Seeds and Chia based consumer products to the world to achieve the company mission to make a positive contribution to the health and wellness of the global community.  A fourth-generation wheat farmer in the Kimberly, John was not happy with two things from growing wheat – 1st – the returns and 2nd – seeing where his high-quality wheat was going and how it turned up on the kitchen table in overly processed sugar added breakfast cereals, baked goods and the like.

With a passion, for the land and the health and wellbeing of his community John saw a unique opportunity to grow and value add to an ancient Chia seed traditionally associated with Mayans and Incas and at the time only available in a sporadic supply from South America.  The unique microclimate of the Northern Kimberley region combined with the farming know how of John and his fellow farmers in the region enabled them to perfect growing a consistent quality clean and nutritious Chia seed that is now supplied to major food processors, retail customers, and foodservice operators globally.

The Chia Co in addition has launched their own range of premium plant nutrition products featuring Chia from whole cleaned Chia Seeds to Chia Pods® to Oats + Chia and Chia Breakfast and Salad Boosters and Chia Oil and Flour.  The Chia Co now boasts customers across the globe and has offices on three continents in Melbourne, New York and London. The Chia Co is a truly global enterprise exporting to over 35 countries with a vertically integrated and value adding business model every step of the way from the farm to the supermarket shelf and back again.

Heartland Potato Chips

http://www.heartlandchips.co.nz/

Heartland Chips Bowan Family

Raymond Bowan is not your average potato farmer – far from it he is the epitome of a farmpreneur from the young age of 18 growing his own potatoes and selling them direct to a local fish and chip shop!  Furious at a large multinational that purchased to scrap the local potato chip factory which Raymond was a key supplier, Raymond took it upon himself with the support of his family to purchase the remaining shell of a deserted factory, fly to the other side of the world and invest in the latest European frying technology and install a state of the art modern potato chip factory literally in the shell and remains of a multinational snack company’s throw away.

The Bowan family ability to grow their own quality potatoes and supply them to their own factory and have them processed in under 12 hours from picking using state of the art technology has given Heartland Potato chips a quality difference from day 1 and customers (retailers and foodservice) and consumers love them! The rest is history as they say, and the business continues to grow from strength to strength on the back of an authentic story, a proud and passionate family and workforce that looks after everything from farm to supermarket shelf and back again.  Heartland Potato Chips has an adoring tribe of customers and consumers on social media who cannot get enough of the chips from the Heart of the South Island, New Zealand.

Five Factors contributing to the rise of the Farmpreneur

1. Farmers’ Markets

growth-in-farmers-markets

Admit it! Who doesn’t love a trip to the market? Its in our DNA!  What do we do when we travel to far flung places or dare I say it the third world tourist destinations? Head to the market of course! Why? We love the dynamics of the marketplace, the hustle, bustle, banter, haggling and freshness of the produce and the direct interaction with growers and stall owners.  Well the good news for growers is the farmers market is on the rise again!

2. Family Matters!

One Degree Organics Family Photo

No doubt you too can see in the shops or in your pantry some fantastic family owned farmpreneur brands that not only taste great but feel great to support.  After all what family doesn’t want to help another family in need.  It feels good to buy from a family you can empathize and connect with as a consumer and customer.  We all love brands, but it is a little harder to say we love corporations unless of course you are a shareholder in them!

3. Co-ops are Crumbling!

MG Sale Fail

Farmer Co-operative business models are crumbling due to their relentless focus on highest volume lowest cost production vs. value adding branded differentiation business models which results in a price race to the bottom.  Many Co-ops grow over time and are committed to taking every litre of milk or grain or seed from their grower owners and will clear them at any cost and aim to process them at the lowest possible cost at all costs!  We need look no closer to home than a local dairy co-op now in family hands after a strategy that focused on scale and cost of production cutting at the expense of branded differentiation and value adding. Net result = fail = sale!

4. Consumer Trust Drops

Consumer Trust

Consumer trust with leading large food multinationals is at an all time low as they read about tax minimisation, restructuring or harsh treatment of growers on the land.  Consumers are reading labels more than before, they are finding things out on social media they never knew about that happen behind the scenes in the relentless drive to meet margins, or retailers demands.  Put simply the behaviour of the world’s largest companies on the supply and retail side doesn’t sit right with a lot of consumers today.  How can they react? Can they change the system? Probably not, but they can vote with their wallets and buy family or locally grown or owned where they can afford to and in many cases that starts in their grocery basket!

5. Going Direct to Customers and Consumers

middleman

Growers, producers and food manufacturers can go direct to customers and consumers like never.  Retailers are ready and actively sourcing local brands for local customers.  Farmers markets appear in abundance as a great way for growers and consumers to interact directly. Social media and internet marketplaces and platforms from Facebook to eBay to Amazon or Alibaba or TMall afford the opportunity for growers to grow, process, brand and ship directly to consumers from farm to table.  While distributors will also add value in terms of aggregation of many small customers or many small volume products dropped and delivered on a single truck to a seller or buyer there is more and more pressure than ever before to cut out the middleman and modern technology and tools of the trade like e-Commerce and hyper fast logistics are facilitating this transition faster than ever before.

In conclusion, simply put it feels good as consumers to support a farmer and family owned business no matter how small they are today or tall they become tomorrow.  If their values and the values of their branded products align with our own as consumers, we actively seek them out in preference to the brands of faceless corporations.  We take pride in sharing our latest pantry treasures at dinner parties, BBQs or with our friends on Facebook and Instagram.  We take it upon ourselves as consumers and upholders of social justice to help the farmers, other families fight against the behemoth corporations.  Five factors are strongly aiding those farmers and families to take ‘entrepreneurial risk’ and create new value adding business models.  Look out in years to come as we see many more cases in our own backyard or country rise from the soil and land on our supermarket shelves.

Dermott Dowling is Managing Director of Creatovate International and Innovation Consultancy.  Creatovate specialise in helping clients create value through the twin pillars of International Business Development and Innovation.  We believe in the power of sustainable organic growth and using choice-based strategy to clearly articulate where your business is going, how you will get there and when and what resources you will need to deploy to make it happen!  If you are interested in a no obligation face to face or telephone chat, please do not hesitate to reach out to us anytime.For more information on our learning and methodologies head over to our website at www.creatovate.com.au and sign-up for our blog at CreatoBlog

Bibliography & References:

ESTHER ASHBY-COVENTRY (2017) Heartland may employ more staff to cope with growing range of chips February 21, https://www.stuff.co.nz/timaru-herald/news/89630153/heartland-may-employ-more-staff-to-cope-with-growing-range-of-chips viewed on 9/02/2018.

Blake Crosby (2013) A Hop Farmer’s Diary: 30 days in the life of Oregon’s Crosby Hop Farm, Aug 19 https://www.craftbrewingbusiness.com/ingredients-supplies/a-hop-farmers-diary-30-days-in-the-life-of-oregons-crosby-hop-farm/ viewed on 09/02/2018.

Clare Dunn (2015) Is chia the next quinoa? Local growers are positioning themselves to be at the head of the next superfoods trend. The Sydney Morning Herald, May 25, http://www.smh.com.au/small-business/growing/is-chia-the-next-quinoa-20150514-gh1mb2.html viewed on 9/02/2017.

Keith Gribbins (2017) Hop insights: We discuss the rise of Oregon Comet, the slowing of Cascade, Crosby Hop Farm and rock bands with Blake Crosby  https://www.craftbrewingbusiness.com/featured/hops-insights-discuss-rise-oregon-comet-slowing-cascade-crosby-farm-rock-bands-blake-crosby/  April 24, viewed on 22/01/2018.

Abbie Napier (2014) Turning Risky Start-Up into Success The Press, Sep 7, http://www.stuff.co.nz/the-press/business/10467259/Turning-risky-start-up-into-success viewed on 09/02/2018.

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Think Inside the Box

think-inside-the-box

Think Inside the Box – Where is your Food Coming From?

Strolling the many beautiful aisles of BiG (Ben’s Independent Grocer) in Kuala Lumpur earlier in the year with an awesome Aussie food client I was suddenly struck by one product that jumped right off the shelf and slammed me in the face!  Amongst a sea of 50,000+ products (the average number of skus in a supermarket) and BiG is one of the best supermarkets I have ever visited and that’s quite a few in quite a few countries.

What captured my attention from One Degree Organic Foods was firstly a QR code front and centre of pack with a call to action to discover the ingredient story and what’s actually inside the box!  Funny you would think you could just read the ingredients panel for that information wouldn’t you?  You might also expect to see the usual blah blah blah statements that hide the truth on that same ingredient panel. Statements like “made from local and imported ingredients”, “sourced locally where possible”,…etc etc.  Not here, the family who own and operate One Degree Organic Foods are farmers themselves or as I like to call them farmpreneurs – the new breed of farmers who are entrepreneurs taking their value added brands and food products directly to consumers and baring their all in the name of authenticity and pride and passion!

We can not say it better than the owners so I will just quote what they say on their website: “We’re not a conglomerate, nor a big-box retailer, nor a chemical company with a food division. We’re a family who cares deeply about family farmers and the integrity of your food.” Does that resonate with you? It did with me in a busy brilliant independent grocer in KL, Malaysia in a cereals aisle that had local and imported options from the 4 corners of the globe to choose from.  I ended up standing at the shelf scanning QR codes and watching engaging YouTube videos of Pecan farmers in Peru, Buckwheat growers in central Canada and connecting with the passion these farmers showed to their land and the ingredients inside the box!

This is example is not only good social business its smart business and its smart marketing.  The best of the best in my mind.  Brilliantly efficient and transparent in a modern age where BIG is bad – who trusts large Multinational Profit Shifting Corporations anymore these days?  In fact in food, many have resorted to ‘faux branding’ creating cottage brands and hiding behind PO Box or Head Office Addresses with ABC Pty Ltd passing off a mass produced food item as something akin to a cottage industry startup family food brand.  If they are not creating ‘faux brands’ they are buying the genuine article and bringing them into their fold – founders and all to run alongside their mainstream food brands.  I have spoken  and written about this recent trend at Food&DrinkLive! in Sydney, Australia 2015 and in an earlier CreatoBlog Think, Act, Adapt and Innovate like a Startup!

Shoppers and consumers are asking nowadays – where is my money going? When I shop whether locally at an independent grocery store or with a major national supermarket chain they are already making a decision as to where they invest their hard earned $$$.  After get to the supermarket shelves or jump online you faced with 100s upon 100s of brands to chose from before you make another decision as to which company will you support. That support is being consciously or unconsciously driven more towards small, independent, family owned businesses more than ever before and there are many reasons for those choices.

Think about your own shopping decisions you take.  Of course price is important and as the famous jingle goes “everyone loves a bargain! ”  However do you also think of the following factors in your decisions at the shelf or when shopping online?

  • How is this food grown? How are the animals treated? Is it sustainably farmed?
  • Is this a genuine real article?  How much has my food been processed, added to, tampered with and packaged up?
  • Where is this food from? What about the ingredients that go into making it? Is it safe to eat and feed to my family?
  • Who am I supporting here? A large multinational or a family owned or small business?

Brands BIG and small need to start to think! act…and adapt to these fast changing times.  Technology is making it practical and cost effective for small to meet BIG and beat them on the playing field. Why? Because they come from a place of realness and not marketing puffery. Consumers connect with founders and their startup stories cooking on the stovetop, growing and processing their own farm produce and packaging up and telling their story in a way that is authentic and real.  You can not copy that if you are a large Corporate and it outpositions BIG as BAD and small is GOOD!

The examples we can list of brands that are doing this well is long and numerous but the list of brands NOT doing this is 100+ times longer.  Why not, take the opportunity to use technology to connect with consumers and customers and share your story? The time is now – there has never been a better time to be a farmpreneur or a small food producer. Here is a few other great examples you might like to explore and if you are interested in taking your own business to the next level of consumer connectivity give us a call or drop us a line.

We love working with independent family owned fast growth businesses @Creatovate.  In fact, we have by accident or choice managed to specialise in it with a focus on the twin pillars of sustainable (profitable) growth – Innovation and International Business – what are you waiting for? Get out and tell your story – its real, it’s authentic and consumers and customers want to hear from you!

If you are interested to come and hear Dermott talk about creating value for consumers and customers in consumer packaged goods you might like to come to Changing the Landscape – The Flexible Packaging & Label Makers Association on 10-11 November 2016 in Melbourne, Australia.  Dermott will give a keynote talk on 11 November titled – Creating Value for your customers in the 21st Century for FMCG’s

Dermott Dowling is Managing Director @Creatovate, Innovation & International Business consultancy. Creatovate help businesses create, innovate and growth through sustainable innovation processes and spreading their wings outside their home base.

Bibliography & Additional Sources:

http://www.consumerreports.org/cro/magazine/2014/03/too-many-product-choices-in-supermarkets/index.htm viewed on 16/9/2016

The Big Group: http://thebiggroup.co/BIG/?p=about

Transperant Supply Chain https://www.onedegreeorganics.com/transparent-supply-chain and our team https://www.onedegreeorganics.com/our-team

 

 

 


Aim, Fire! Adjust :-) Lead, Learn & Innovate like an entrepreneurial startup

You don’t have to be a start-up to learn, lead and innovate like one…

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1. Entrepreneurs are built, not born 

By correlation we can imply all businesses have innovative capacity and building that capability can be through strategy, resource allocation, process, culture and leadership.  Most importantly having a go!  After all is not the best form of learning the practical as opposed to the theory.

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2. Start-ups are unique

They are not small versions of large companies and hence traditional business thinking tends to stifle the start-up.  Likewise if a large organisation is looking to innovate and ‘learn by doing’, they need to be open to start up ways of working, managing, funding.  Less ruling by command & control and more by seeking, solving, encouraging and seed funding.

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3. The Search for a Business Model

Under lean start up models the founders search for repeatable and scalable business models, rather than settling on one when the venture is launched.  For larger corporates they tend to apply new ways of doing things through existing business models more often than not as the ‘status quo’ police of middle management apply traditional ways of reaching customers and consumers.  Instead a healthy start point might be a small venture team based diverse group of individuals starting with a blank sheet of paper literally and saying ‘without constraint’ what is the best way we can create value from this idea/insight/trend/unmet need and take our product or service to customers and consumers in new and innovative ways.  Senior leadership should give encouragement for the venture teams to take this approach and be open to growing some babies or children outside the corporate home or traditional business model.

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4. Run Fast

Successful start ups observe when their business model is struggling, respond to new facts, decide which parts of the business model require urgent change, and act.  Less time on detailed business planning and more time on testing in market with real live tests.  How often do you sit in board rooms with your peers either a) presenting or b) picking apart detailed business cases on products or services with 5 year business revenue and profit projections that could be better spent on inquisitive questioning like “how can we test this for small dollars to get large learning”.  What are some creative entrepreneurial ways we can find out if this is going to work before we scale it and go full blown national launch for example?

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5. Pivot and Turn

Pivoting is about iteration, testing and validation, and can be as simple as realising you have priced a product or service incorrectly.  Start up founders realise that several pivots maybe required in the early years to reinvent the venture.  They ensure the culture and staff are flexible enough to turn on a dime if required.  By correlation in many corporate cultures its often launch and leave or launch and run in case things don’t go well.  Culture is an integral part here of creating a testing, learning and adaptive team based culture where the venture teams are kept together post product/service launch and report back in frequently with learning and recommendation to pivot, stop, start again, push harder, invest more/less, etc.  Some large businesses realise that traditional leadership structures or meetings and forums do not allow for this type of learning and iterative process and set up incubators, skunk works, or get senior grey haired veterans to run these entrepreneurial business units.  Cell based structures may also be appropriate and leaders will need to work out how and when the satellite businesses are brought back into the mother ship or scaled and grown by the battalion as opposed to continuing to operate like the special forces.

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6. Lean and Learn 

True learning comes from testing aspects of the business model and market hypothesis early and quickly. Rather than spending months researching start ups get their minimum viable product (MVP) to market quickly and let their customers inform them.  Speed is the imperative and their most precious asset.  In the age of ‘accelerate everything’ where we live by the mantra ‘I want it now!” and I can find it in 7 seconds or less on Google this is a very potent message to large corporations.  Research is often done to reassure internal stakeholders and appease layers of management the homework has been done before the big artillery of $$$ of Advertising and Promotion are spent in the market to support this new product or service.  More thinking can and should be devoted to how multiple controlled live tests can be launched simultaneously for e.g. 7 different products in 7 different states and review and learn after 6 months which 1 or 2 continue and we invest redevelop and roll out.

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7. Feedback Loops 

Start up entrepreneurs create feedback loops to measure customers response to new products, at least at the very start, to decide whether to ‘pivot or perserve’ with their business model.  They constantly source customer feedback and let it  shape their business model.  With the advent of social media this process of continuous feedback loops should arguably be much easier for the larger corporates than the start ups.  They have the millions of likes on Facebook constantly feedback criticism or favourites on new products and prototypes.  Corporates often have very sophisticated customer engagement models and survey tools as well through third party providers.  Turning these tools towards active engagement on product and service beta development, controlled market tests and post launch analysis with equally prompt redesign and redelivery will increase customer and consumer engagement and arguably make the large corporates a more nimble and liked business by their customers.  The challenge is on the big to be ‘small & nimble’ far more so than the other way around in the modern age of instant gratification, response and listening.

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8. The Critical Formula 

Under lean entrepreneurship thinking, chaos + speed + pivots = success.  Start ups  realise they need to operate in environments of extreme unpredictability (chaos), use great skill to change quickly as circumstances dictate (speed) and reinvent aspects of their business model (pivot) to respond to threats and opportunity.  This seemingly choatic, manic, back flipping or zig zagging appearance will not sit well inside many corporations where the mandate is often 10% topline and 10% bottom line growth year on year.  However, entrepreneurship be that corporate or start up is never 10% steady year on year growth and its up to senior leaders to create ‘gambling funds’, set aside intrapreneurial seed capital and manage their own intracompany adventuring like a venture capitalist.  Not all bets come off and provided the company accepts that some bets and teams are like the house money in the casino but that it could be the next one or the next one that comes off they are on the road to learning and the more they learn by doing the more that appearance of fast, pivoting, chaos will start to feel like the new normal around here and that will be a demonstration that culture has come to match the business innovation strategy, they have succeeded in allocating scarce resources to new ventures and they have a process that is producing results.

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9.  Entrepreneurship is Management 

While it may not sit well with many strong minded entrepreneurs or creative innovators, Ries notes entrepreneurship is essentially another form of management.  The start up management style recognises the uncertainty of entrepreneurship with its increased risk and reward profile and the need to adapt and develop a stream of constant innovation.   For many large corporates like conglomerates who operate across different industries, geographies or have multiple business units they are already a great example of using multiple business models and management styles.  To them entrepreneurship may not be new and maybe something we have been doing for years without the name tag e.g. Wesfarmers, Tata, China Resources Enterprise to name a few.  For other large corporates who have not yet tackled this head on or are thinking about tackling it head on I can recommend a couple of immediate things to do.  Step 1 Pick up a copy of Lean Start Up and note down everything as you read that is interesting and new, anything you learn and lastly but most importanly, what you can take and apply to your own context.  Step 2 immerse yourself in the learning process.  Go and see some start ups in action in your industry or adjacent industries.  Go and seek to understand how large conglomerates can operate with multiple entities and entrepreneurial divisions inside a large business structure.  Step 3 and the most important step.  Get the strategy out, make sure it has an innovation strategy component and invest some ‘gambling chips’ into starting some ventures.  Back those ventures and applaud their bravery across the business until what seems unnerving, unnatural and unreal becomes the new ‘way we do things around here’

It might take a lot of guts, determination and persistence but then again so does starting your own business as any entrepreneur out there will tell you over a coffee or cold beer or glass of wine.

Create Innovate Grow 

Dermott Dowling @Creatovate


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