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Meakin Enterprises: Balancing Risks in the Agriculture Industry

1) Conduct an industry analysis of a) Farming industry, b) Trucking industry

a) orter!s Fi"e Forces Analysis of Farming Industry

Bargaining Power of Suppliers

Bargaining Power of Suppliers: #o$

&igh

Suppliers are less when compared to the buyers Bargaining Power of Buyer: %oderate The number of customers is very large There are higher number of substutes Threat of New entry: %oderate The entry into the industry is not very

Threat of New $ntrants

#ndustry "ivalry

Threat of Substute

%oderate

&igh

&igh

expensive The labor force can be easily trained Threat of Substutes: &igh The substuon takes very low cost ross product substutes! imported food ompeve "ivalry: &igh The competors are many big and established companies

Bargaining Power of Buyers %oderate

b) orter!s Fi"e Forces Analysis of Trucking Industry Bargaining Power of Suppliers:  #o$ Since there are many suppliers available! the opons are in wide range Switching suppliers will be of low cost Bargaining Power of Buyer: %oderate #n Trucking business! customers re%uire customi&aon and hence less

Bargaining Power of Suppliers

likely to switch suppliers Threat of New entry: %oderate

#/0

'igh investment is re%uired for the new entry into the industry The risk in entering and sustaining is very high Threat of Substutes: #o$

Threat of New $ntrants

#ndustry "ivalry

Threat of Substute

%oderate

&igh

#o$

apacity to penetrate into isolated 'illy and "ural areas Though there are few substutes for Trucks but they are very costly and hence not preferred by customers ompeve "ivalry: &igh The competors are many big and established companies

Bargaining Power of Buyers %oderate

') (se *T#+*T to analyse the eternal en"ironment of a) %eakin Farms Inc-, b) %eakin Industrial Ag Cor.

a) %eakin Farms Inc-

Socio-cultural  

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(ack of availability of skilled labour posed constraints for many farms) *amily+run operaons! where mulple generaons would come together to bring in their own harvest and that of their neighbours) family dynamics were changing! as children were o,en encouraged to pursue post+ secondary educaon! and many did not return to the farm The average age of farmers in Saskatchewan had increased from -.)- in /..0 to -1)/ in /.00)2 *amilies were ge3ng smaller! and farms were ge3ng larger! relying more on large+scale technology to replace manual labour) 4verage 5rm si&es increase) The seasonal nature of the business further exacerbated the problem and drove many prospecve farm workers in rural areas into oil and gas 6obs while farms close to the urban

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centres always contended with the draw of city opportunies) 7any farm owners also maintained o8+farm occupaons to help alleviate the ever+present risk

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of a crop failure and cash 9ow concerns) customers ready to pay premium for organic food products

Technological 

*armers are relying more on large+scale technology The agribusiness management necessary to execute a successful growing season and the

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technical skills of operang modern farm e%uipment) 7ore modern and ecient grain terminals were strategically located in the province to reduce

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the rail infrastructure needed to move the commodies to shipping ports in ;ancouver! 

hurchill! Thunder Bay! and the St) (awrence "iver)
Economic 

Price volality in ferli&er and fuel markets

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4s a result of this supply chain! the farmer had become very much a price+taker with many of the

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crop inputs having volale prices) prices were largely determined by global supply and demand with the dismantling of the anadian =heat Board markeng agency in /.0/! which paved the

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way for a free market system that allowed farmers to capitali&e on market opportunies but also exposed them to risks) 7any farmers argued that the anadian =heat Board>s monopolisc

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system had limited sales and subse%uent price opportunies! while others felt that the pooling system had o8ered the best returns for their commodies (and and (ease rates volality any reducon in revenue! due to crop failure or low commodity prices! directly a8ected the

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operang earnings of the farm operaon with li?le or no reducon of expenses traded in an open market system for decades

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Ecological 

=eather+related factors such as excessive rain or drought! damaging winds! hail! and extremes in

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temperature @heat and frostA) =eather condions were becoming unpredictable! given the in9uence of global climate change) 7odern herbicides were much more e8ecve in controlling pests and led to fewer health and

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safety concerns sll! some interest groups were concerned about herbicides> long+term ecological impacts

Political-Legal 

The 5nal market for commodies varied from year to year! and new markets were emerging for each crop) o for example from case! =hile some of the canola was used locally in crushing plants to create canola oil and meal! anada exported approximately C. per ce nt of the canola produced naonwide) Dey canola markets included the s most signi5cant grain export to some ma6or import markets in the =estern 'emisphere @
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@#ndonesia! hina! and BangladeshA! and 4frica @NigeriaA Some farmer+owned co+operaves and independent intermediaries existed! parcularly in the processing of pulse crops such as peas and lenls! but much of the processing capacity was also held by a few large! mulnaonal agriculture corporaons such

b) %eakin Industrial Ag Cor.

Socio-cultural 

(ack of availability of skilled labour posed constraints for many farms) *amily+run operaons! where mulple generaons would come together to bring in their own



harvest and that of their neighbours) family dynamics were changing! as children were o,en encouraged to pursue post+ secondary



 

 

educaon! and many did not return to the farm The average age of farmers in Saskatchewan had increased from -.)- in /..0 to -1)/ in /.00)2 *amilies were ge3ng smaller! and farms were ge3ng larger! relying more on large+scale technology to replace manual labour) 4verage 5rm si&es increase) growing si&e of farm operaons and the distance of the farms to grain terminals

Technological  

The driver needed to a?ain ha&ardous goods training to haul chemicals) The demand for on+site grain bins had increased in the past decade! as a result of the growing si&e of farm operaons and the distance of the farms to grain terminals) Frain

Economic 

Gne of the challenges in the hauling business was employing drivers over a cyclical year! where

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demand 9uctuated from season to season and even from month to month) 7aintaining loyal! long+standing employees was o,en a challenge! as competors could e nce drivers away by o8ering higher wages) Hrivers could be paid hourly or by piece rate by the tonnage hauled! while some farm employees received a salary and operated a truck and trailer

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as part of their farming dues) *inancing e%uipment for the trucking operaon was relavely high

Ecological =eather had a profound e8ect on the pro5tability of both the farming operaon and the trucking operaon) The excessive rain! drought! winds! and hail that resulted in lower crop yields could also lower the demand for grain bins and grain hauling! and could make deliveries challenging

Political-Legal 

To drive large trucks for the di8erent types of deliveries! a driver needed a lass 0 licence! which re%uired oral or wri?en knowledge tests for lass 0 vehicles and a road test in a lass 0 vehicle)

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The hauling of bins re%uired permits from the 7inistry of 'ighways! and the larger bins also re%uired coordinaon with the provincial power company to li, power lines that crossed the highway)