Meakin Enterprises: Balancing Risks in the Agriculture Industry

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

a) Porter’s Five Forces Analysis of Farming
Industry Bargaining
Power of
Bargaining Power of Suppliers: Low Suppliers

 Suppliers are less when compared to High
the buyers

Bargaining Power of Buyer: Moderate

 The number of customers is very large
 There are higher number of substitutes Threat of New Industry Threat of
Threat of New entry: Moderate Entrants Rivalry Substitute
Moderate High High
 The entry into the industry is not very
expensive
 The labor force can be easily trained

Threat of Substitutes: High

 The substitution takes very low cost Bargaining
 Cross product substitutes, imported Power of
Buyers
food

Competitive Rivalry: High Moderate

 The competitors are many big and
established companies

b) Porter’s Five Forces Analysis of Trucking Industry Bargaining Power of Suppliers: Low  Since there are many suppliers available. customers require customization and hence less Bargaining likely to switch suppliers Power of Suppliers Threat of New entry: Moderate LOW  High investment is required for the new entry into the industry  The risk in entering and sustaining is very high Threat of Substitutes: Low Threat of New Industry Threat of Entrants Rivalry Substitute  Capacity to penetrate into isolated Hilly and Rural areas Moderate High Low  Though there are few substitutes for Trucks but they are very costly and hence not preferred by customers Competitive Rivalry: High Bargaining  The competitors are many big and Power of established companies Buyers Moderate 2) Use PESTEL/STEEP to analyse the external environment of a) Meakin Farms Inc. the options are in wide range  Switching suppliers will be of low cost Bargaining Power of Buyer: Moderate  In Trucking business. b) Meakin Industrial Ag Corp ..

 family dynamics were changing. where multiple generations would come together to bring in their own harvest and that of their neighbours.secondary education. and farms were getting larger. and many did not return to the farm  The average age of farmers in Saskatchewan had increased from 50.  Family-run operations.  Many farm owners also maintained off-farm occupations to help alleviate the ever-present risk of a crop failure and cash flow concerns.2 in 2011.  Average firm sizes increase.5 in 2001 to 54.a) Meakin Farms Inc.  The seasonal nature of the business further exacerbated the problem and drove many prospective farm workers in rural areas into oil and gas jobs while farms close to the urban centres always contended with the draw of city opportunities.  More modern and efficient grain terminals were strategically located in the province to reduce the rail infrastructure needed to move the commodities to shipping ports in Vancouver.8  Families were getting smaller. Lawrence River. and the St.  Use of modern herbicides and pesticides as effective means to control these pests Economic  Price volatility in fertilizer and fuel markets . as children were often encouraged to pursue post. Churchill. Socio-cultural  Lack of availability of skilled labour posed constraints for many farms. Thunder Bay.  customers ready to pay premium for organic food products Technological  Farmers are relying more on large-scale technology  The agribusiness management necessary to execute a successful growing season and the technical skills of operating modern farm equipment. relying more on large-scale technology to replace manual labour.

directly affected the operating earnings of the farm operation with little or no reduction of expenses  traded in an open market system for decades Ecological  Weather-related factors such as excessive rain or drought. and the European Union for biodiesel development. and China. Colombia. o for example from case. but much of the processing capacity was also held by a few large. Bangladesh. Canada exported approximately 90 per cent of the canola produced nationwide. the farmer had become very much a price-taker with many of the crop inputs having volatile prices. still. damaging winds. and extremes in temperature (heat and frost). Europe. Many farmers argued that the Canadian Wheat Board’s monopolistic system had limited sales and subsequent price opportunities. while others felt that the pooling system had offered the best returns for their commodities  Land and Lease rates volatility  any reduction in revenue.  As a result of this supply chain.  Weather conditions were becoming unpredictable. particularly in the processing of pulse crops such as peas and lentils.  Modern herbicides were much more effective in controlling pests and led to fewer health and safety concerns. and new markets were emerging for each crop.  prices were largely determined by global supply and demand  with the dismantling of the Canadian Wheat Board marketing agency in 2012. and Africa (Nigeria)  Some farmer-owned co-operatives and independent intermediaries existed. While some of the canola was used locally in crushing plants to create canola oil and meal. Mexico. and Bangladesh). hail. multinational agriculture corporations such b) Meakin Industrial Ag Corp . which paved the way for a free market system that allowed farmers to capitalize on market opportunities but also exposed them to risks. and Peru). China. Peas were generally used for human consumption in regions such as India. given the influence of global climate change. Mexico. Wheat was Canada’s most significant grain export to some major import markets in the Western Hemisphere (United States. some interest groups were concerned about herbicides’ long-term ecological impacts Political-Legal  The final market for commodities varied from year to year. Key canola markets included the United States. Asia (Indonesia. due to crop failure or low commodity prices. and China and Japan for edible oil.

and could make deliveries challenging Political-Legal  To drive large trucks for the different types of deliveries. drought. as competitors could entice drivers away by offering higher wages. and many did not return to the farm  The average age of farmers in Saskatchewan had increased from 50.  Family-run operations. and farms were getting larger. The excessive rain. and hail that resulted in lower crop yields could also lower the demand for grain bins and grain hauling. winds. as children were often encouraged to pursue post. . a driver needed a Class 1 licence.  family dynamics were changing. relying more on large-scale technology to replace manual labour.  growing size of farm operations and the distance of the farms to grain terminals Technological  The driver needed to attain hazardous goods training to haul chemicals. where multiple generations would come together to bring in their own harvest and that of their neighbours. which required oral or written knowledge tests for Class 1 vehicles and a road test in a Class 1 vehicle. Drivers could be paid hourly or by piece rate by the tonnage hauled. long-standing employees was often a challenge.5 in 2001 to 54. Grain Economic  One of the challenges in the hauling business was employing drivers over a cyclical year. where demand fluctuated from season to season and even from month to month.Socio-cultural  Lack of availability of skilled labour posed constraints for many farms.2 in 2011.8  Families were getting smaller.  Financing equipment for the trucking operation was relatively high Ecological  Weather had a profound effect on the profitability of both the farming operation and the trucking operation.  The demand for on-site grain bins had increased in the past decade.  Average firm sizes increase. as a result of the growing size of farm operations and the distance of the farms to grain terminals. while some farm employees received a salary and operated a truck and trailer as part of their farming duties.secondary education.  Maintaining loyal.

. and the larger bins also required coordination with the provincial power company to lift power lines that crossed the highway. The hauling of bins required permits from the Ministry of Highways.