Organic Oat Processors

1. Organic Oat Processors Prepared by: Jesse Coleman Cody Hansen Megan Hall Rachel Li

2. Industry Overview • In 2003, organic oats make up about 48707 acres of prairie farmland • Organic oats are experiencing approximate growth of 20% growth, which is expected to increase

3. Operations • Land will be purchased, building and storage facilities will be constructed. • To obtain financial support from local producers or companies. • Production will run 288 days per year to achieve 7000 tonnes in the first year, and reach 324 days production for 11048 tonnes in year 5.

4. Organizational Structure

5. Facility

6. Product Flow

7. Average Day, Week, Year • Plant would be open 21 hours a day, and run 17 hours. • 6 days per week • Employees will be scheduled around 3 shifts per day, operating 6 hours per shift • One Hour Lunch Break • 5733 hours of operation in a year(48 weeks) • 4 weeks of holidays per year

8. Certified Oats • HACCP- prevent any future problems • Saskatchewan Organic Certification Agency- make sure proper organic rules are being follow • Saskatchewan Food Inspection Agency- follow the procedures

9. Human Resources Plan

10. Job Descriptions General Manager • Look for potential employees • Report directly to the Board of Directors • Overall responsibility for all aspects of the operation • Give direction of the purchasing of the key materials Administration • Accounting and administrative • Receive orders and setup shipment, as a back up GM Head Miller • Experience in operating any kinds of oat milling operations • Maintain all aspects of production, shipping and receiving at optimum

11. Job Descriptions Quality Assurance • Responsible for quality control and quality assurance • Performing technical service and support for the customer base Grain Manager • Familiar with the raw grain • Easily recognized the grain quality and milling characteristics Assistant Head Miller • Running evening or night shift as back up to the Head Miller Labors • Three labors maximum • Bagging, warehousing and outbound shipments of grain

12. Training • Training will be provided for the employees upon joining Organic Oat Processors . • Certain courses will be taken to work at certain job in the facility. • All laborers required: • WHIMIS • First Aid • HACCP

13. Human Resources Strategy • Offer above average salaries • Increase with inflation and possibility of bonuses • Christmas parties and staff/family BBQ to ensure high company morale. • Everyone can get a Company jacket

14. Employment Cost at Farm

15. Marketing Plan

16. Promotion • Organic Oat Processors will be marketing their product to larger companies that are not in the area, or in the province. • Local media ads will not be needed. • The company will hire an advertising company to be sure that their target customers are informed of their product, how to contact them and how to get the product.

17. Place • The market for organic oats is a very small one in Saskatchewan. • Will be marketing to large companies, areas such as Michigan (Kellogg’s), and Chicago (Kraft)… • To move product into those areas or to grocery stories across Western Canada, trucking will be the main mode of transportation.

18. Segmentation, Targeting, Positioning Segmentation • Large retailers: Kraft, Robin Hood. • Could also target the individual consumer. • Possibly address the potential of ordering product through the internet

19. Segmentation, Targeting, Positioning Targeting • Target the large retail consumers. • These groups would purchase the most amount of product. • Companies like Kraft, Robin Hood, and Kellogs

20. Segmentation, Targeting, Positioning Positioning • You would most likely try to market your product as being of very high quality. Promoting the health and consistency of your product to set it above the competition. • This will allow you to bring a premium and make the consumer feel more at ease about buying your product.

21. Market Analysis The Market • Growing industry • Organic oat can be made into many different food products. • Possibilities are endless for this product if properly marketed. • Also there’s a strong demand for organic foods in Europe which opens up a large new market for organic oat’s.

22. Market Analysis Competition • Two major companies involved with the mailing of organic oats in North America are Grain Millers and LaCrosse Milling. • Grain Millers recently purchased the Popowich mill located in Yorkton. Locally this will be the only competition here in Saskatchewan. • Other large milling companies include General Mills, ConAgra Grain Processing Group, and Can Oat Milling Product Inc.

23. Financial Reports

24. Sales Revenue • For a 2008 projection, Oat Processors could receive up to 6,160,000 dollars • Looking further down, there could be revenues reaching over 11,000,000

25. Best and Worst Case Scenario • We factored in a price swing of 20% in either direction. The numbers show that a 20% decrease in price would produce a negative net income. This would translate into a loss of 1,632,059 with a IRR less than zero. Where as best case scenario would bring a net income of 120,000, and an IRR of 62%.

26. Sensitivity Analysis • Looking at price as a critical variable, we discovered that the price would be able to move from a 34.1% IRR (Internal Rate Of Return) to a 0% IRR by fluctuating price 14%. This means that if the product price moved down from $650.00/tonne to a 0%IRR ($560.00/tonne) the price sensitivity is 14% of the predicted sales price.

27. Cost of Oats • 3,001,250 Raw Product (245.00/tonne) • 4,697,679 Total Cost of Goods Sold (671.10/tonne)

28. Sales Revenue • 4,550,000 Finished Goods Revenue • 420,000 By-Product Revenue =4,970,000 Total Sales

29. Gross Profit 4,970,000 - 4,697,679 = 272,321 First Year Projections Vs. 2,837,024 Ten Year Projections