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A Study of Structures for the Feijoa Industry

A Study of Structures for the Feijoa Industry. Hannah Bruce, Hannah Goodwin, Sarah Crofoot , Michael Lawrence and Katie Gibson Facilitator : Dr. Elena Garnevska. Client Introduction. New Zealand Feijoa Growers Association (NZFGA) 200 Grower Members

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A Study of Structures for the Feijoa Industry

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  1. A Study of Structures for the Feijoa Industry Hannah Bruce, Hannah Goodwin, Sarah Crofoot, Michael Lawrence andKatie Gibson Facilitator: Dr. Elena Garnevska

  2. Client Introduction • New Zealand Feijoa Growers Association (NZFGA) • 200 Grower Members • Funded by levies collected at first point of sale • Purpose: Form grower groups so they can achieve greater supply volumes • Cannot actively participate in market activities

  3. Problem Background • Passionate and innovative growers • Constraints: • Small production volumes • Competition between growers in local market • Fragmented industry structure • Domestic coordination required for increased viability and profitability of growers

  4. Problem Statement and Objectives Determine a structure that will allow the New Zealand Feijoa industry to improve viability. • Identify supply chain segments • Analyse and recommend potential structures for each segment • Recommend a possible industry structure

  5. Methodology • Weekly group meetings and task division • Literature review • Analyse current structure • Determine interview questions • Interview industry participants • 7 growers • 4 representatives from comparable industries • 1 current marketer • Segment recommendation • Industry recommendation

  6. Ethical Issues • Communication barriers • Commercial sensitivity • Personal • Corporate • Willingness to participate • Interview • Recorded • Bias

  7. Current Supply Chain • Fragmented • Key Segments • Packing • Processing • Marketing • Exporting Growers Pack house Processor Procurement Additives Products Marketers Product Manufacturer Exporter Farmers Market Flee Market • Local Retailer • Supermarket • Independent Wholesaler • Wholesale Foodservice Overseas Market

  8. Results Processing • Advantages • Growth in products and demand • Low cost production • Disadvantages • Price undercutting • Low to negative margin • Recommendation • Status Quo Packing • Advantages • Flexibility • Innovative- low cost • Individual control • Disadvantages • Lack of standardisation • Lack of funds • Volume • Recommendation • Regional Co-operatives

  9. Results Marketing • Advantages • Market information • Farmers market takes out middleman • Disadvantages • Not well known • Grower individuality • Seasonality • Too many domestically • Recommendation • Company Exporting • Advantages • Can be good returns • Proactive and passionate • Disadvantages • Risk • Cost • Quality control • Lack of international consumer knowledge • Recommendation • Horticulture Export Authority

  10. National Cooperative • Responsible for: • Packing • Procurement • Processing • Marketing • Quality Standards Regional Packhouses Growers Markets KEY Information Flow Produce Flow Recommended Industry Structure • New Generation Co-operative • Supply only by members • 1 tree = 1 share

  11. Recommendation Implementation • Range of passionate growers and an independent to drive proposal • Produce prospectus • Grower uptake – regional launches • Required production density • Implement prospectus – legal formation

  12. Acknowledgements • Tim Harper (President NZFGA) • Representatives from: • Feijoa Growers • Marketing • Kiwifruit industry • Avocado industry • Blackberry industry • Blackcurrant industry • Faciltator • Dr. Elena Garnevska (Massey University) • Massey University • Dr. Andrew East • Daniel Conforte

  13. Cooperatives (Chaddad and Cook, 2004)

  14. New Zealand Feijoa Production Source: Horticulture New Zealand Fresh Facts 2011

  15. Detail of Recommendation • Goal: 90% registered members by year 5 • Supply: – Only by members – 100% of production • Payment – Based on production – Minimum price plus pool payment • Terms of Trade – 20% of minimum price at time of supply

  16. • Costs – Establishment costs covered from investment – Variable costs paid from revenue – Paid out of retained earnings • Shareholding – 1 share = 1 tree – Share value: Market value Voting Rights – 1 share = 1 vote – Capped at 5%

  17. • Board – 3 growers – 2 independents • Redemption – No exit within 1st 3 years – Shares valued at time of exit – Commitment by September 1 prior to supply season – Payment made by August 31 year following non supply – Shares transferable with sale and lease of trees • HEA : – Look to establish after 7 years

  18. Prices

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