Skip to main content

New markets -- dealing with unknowns

Last week, we had a strange visit to the farm.   An American firm approached us to sell our butter in the US in ultra-high-end shops.   We did see such supermarkets in the US but did not pay attention.  Now, 100% of our butter is for the restaurant trade, it was created to compete with the best butters in the business.  Our butter is not sold on price but on quality.   

So this US company (Jennifer spoke to them) came to us and asked if we would sell them our butter with a 50% discount so that we could "penetrate the US market".  We have no appetite for developing foreign markets, especially in the butter segment, because we already do not meet domestic market demand.  In addition, they are asking for us to cut our sales price by half, effectively selling the butter at a loss.   

Their solution was to cut input costs to raise profits, in other words, destroy what has been our product's value proposition.   To enter into a market that offers no attraction.   Needless to say, the answer was a polite "no", but this is the most amazing part, they contacted two of our "competitors" and said that we were on board.  How do we know, it's easy, they called us to inquire about our appetite in the US butter market.  

Jennifer took all the calls (two of our "competitors" and the American exporter).   Her answer "Fu$king lying Yanks".    

Comments

Post a Comment

Popular posts from this blog

Ok so I lied...a little (revised)

When we began looking at farming in 2013/14 as something we both wanted to do as a "second career" we invested time and money to understand what sector of farming was profitable.  A few things emerged, First, high-quality, source-proven, organic farm products consistently have much higher profit margins.  Secondly, transformation accounted for nearly 80% of total profits, and production and distribution accounted for 20% of profits: Farmers and retailers have low profit margins and the middle bits make all the money. A profitable farm operation needs to be involved in the transformation of its produce.  The low-hanging fruits: cheese and butter.  Milk, generates a profit margin of 5% to 8%, depending on milk quality.  Transformed into cheese and butter, and the profit margin rises to 40% (Taking into account all costs).  Second:  20% of a steer carcass is ground beef quality.  The price is low, because (a) a high percentage of the carcass, and (b) ground beef requires process
Post a Comment
Read more

21st century milk parlour

When we first looked at building our farm in 2018, we made a few money-saving decisions, the most important is that we purchased our milk herd from a retiring farmer and we also purchased his milking parlour equipment.  It was the right decision at the time.  The equipment dates from around 2004/05 and was perfectly serviceable, our installers replaced some tubing but otherwise, the milking parlour was in good shape.  It is a mature technology. Now, we are building a brand new milk parlour because our milking cows are moving from the old farm to the new farm.  So we are looking at brand new equipment this time because, after 20 years of daily service, the old cattle parlour's systems need to be replaced.  Fear not it will not be destroyed instead good chunks will end up on Facebook's marketplace and be sold to other farmers for spare parts or expansion of their current systems. All our cattle are chipped, nothing unusual there, we have sensors throughout the farm, and our milki
Post a Comment
Read more

So we sold surplus electricity one time last summer...(Update)

I guess that we will be buying an additional tank for our methane after all.   Over the past few months, we've had several electricity utilities/distributors which operate in our region come to the farm to "inspect our power plant facilities, to ensure they conform to their requirements".  This is entirely my fault.  Last summer we were accumulating too much methane for our tankage capacity, and so instead of selling the excess gas, that would have cost us some money, we (and I mean me) decided to produce excess electricity and sell it to the grid.  Because of all the rules and regulations, we had to specify our overall capacity and timing for the sale of electricity (our capacity is almost 200 Kw) which is a lot but more importantly, it's available 24/7, because it's gas powered.  It should be noted that the two generators are large because we burn methane and smaller generators are difficult to adapt to burn unconventional gas, plus they are advanced and can &qu
Post a Comment
Read more