What are the key factors for success in strategic planning for a poultry business?
Iowa State University Extension and Outreach (Ag Decision Maker) define strategic planning for farm businesses as:
“…development of long-term strategies to increase the profitability and competitiveness of your farm business.
This may involve developing new enterprises for your farm such as:
- organic production,
- on-farm processing,
- direct marketing of your products to consumers, or;
- the efficient production of traditional farm commodities.”
(Source: ISU)
In a phrase, strategic planning is your plan for:
Growing and protecting your investment for the future.
- Increasing profitability means more financial health.
- Increasing competitiveness means more unique benefits for customers when buying from you.
Let’s take a look a our case study subject, Senthilvela’s strategy for achieving the points above…
Example
Small zero-debt start
Senthilvela knows (his corporate career perhaps giving him insight) that the journey to a profitable business venture begins with zero debt.
DIY funding means, ongoing, your gains remain in your pocket.
“[Senthilvela] started his poultry farm on a 1.5-acre land he took on lease from a friend with 200 chicks in a 450 sq ft shed.”
“He regularly pumped in money into the farm, which is now spread over three acres with a 7,000 sq ft shed.” (Source: The Weekend Leader)
Minimising external inputs
Going the organic route means Senthilvela foregoes the cost of drug input.
This can add up considerably when multiplied by the number of birds reared.
“[Senthilvela] resolved to avoid antibiotics or vaccines on the chicken and rear only country breeds.” (Source: The Weekend Leader)
This poses considerable cost savings for his business and therefore profitability.
The trouble most commercial producers have with the organic model is scale.
This because the practice involves no pharmaceutical aid so packing in the birds in intensive conditions will be devastating to survival rate.
Also, the land requirement is capital intensive.
So, how will Senthilvela overcome these growth hurdle with his organic model?
Scaling up by cooperation – maintain sovereignty (& margin)
“Hence, I am planning to set up a co-operative by bringing in more like-minded farmers to produce (chicken and eggs) and sell in bulk…” (Source: The Weekend Leader)
There we have it, Senthilvela intends to use the advantages of the cooperative poultry farming model.
This way he avoids the direct capital costs and complexities of internal expansion.
But through partnership in production and training all members himself he assures quality and standards conformity.
Plus, he can grow the enterprise rapidly by way of recruiting and preparing more coop members.
This all sounds good…
…But what about the operational duplication of serving so many customers across so many farms?
Concentrating buyers
Senthilvela intends to attract larger corporate buyers.
“Some of the top hotel chains…in Tamil Nadu are also his customers.” (Source: The Weekend Leader)
By this way, he plans on simplifying his sales and marketing efforts (which will be largely performed by him alone).
To take the pressure off a little…
…he may bring in partners with more managerial experience for account management assistance.
Higher margin birds
Some breeds of native chicken carry a larger premium than others.
For example, Kadaknath (Black Chicken) has a price tag that is 150% higher than the other country chicken breeds.
“While the live country chickens are sold at Rs 350 per kg, the black chicken fetches Rs 750 per kg. Each chicken weighs around 1.5 kg, and the chicks are sold at Rs 65. Black chickens account for 25 per cent of his total chicken and egg business.” (Source: The Weekend Leader)
Senthilvela’s business is 1/4 Kadaknath. He could grow this proportion of his sales.
But there are draw backs with this idea.
Kadaknath chicken is massively popular and the marketplace for production is quite competitive.
Other breeds have less production and therefore lower market availability.
This present more opportunity. Perhaps softer sales ground to break into.
Low cost labour
“It would help them in supplementing their income and also create rural employment
With four permanent labourers working on his farm, he gets daily wagers as and when needed.” (Source: The Weekend Leader)
Organic farming is labour intensive (naturally the case).
Senthilvela, currently has 4 permanent staff members who are daily wagers – keeping his labour cost commitment low.
Other cooperative farmers joining the efforts, will also benefit from this model of labour recruitment.
This adopted model also presents significant social-economic benefits.
One such benefit:
(Which is much needed in India and many other national economies) is creation of rural employment.
Digital communication for lower cost coordination
Senthilvela will use the low cost advantage of the internet for recruiting his cooperative members.
Plus, he’ll conduct training online too – reducing travelling costs for all involved.
“Through digital media, I can reach out to as many as possible, and help them learn the best practices,” he adds.” (Source: The Weekend Leader)
Diversification (increase profit per sq. ft.)
Making the most of his square footage is a key to maximising future farm profits.
Diversification will help him with this.
Plugging in all the gaps in potential production on the farm will help him generate optimal profit from his land investment.
“He has also started producing organic Moringa and Lemon at his farm to increase income generation.” (Source: The Weekend Leader)