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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) 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

. the options are in wide range  Switching suppliers will be of low cost Bargaining Power of Buyer: Moderate  In Trucking business.b) Porter’s Five Forces Analysis of Trucking Industry Bargaining Power of Suppliers: Low  Since there are many suppliers available. b) Meakin Industrial Ag Corp . 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.

and the St.2 in 2011.  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.  family dynamics were changing.  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. and many did not return to the farm  The average age of farmers in Saskatchewan had increased from 50. as children were often encouraged to pursue post.a) Meakin Farms Inc.5 in 2001 to 54. Churchill.  Average firm sizes increase.8  Families were getting smaller. Socio-cultural  Lack of availability of skilled labour posed constraints for many farms.  Use of modern herbicides and pesticides as effective means to control these pests Economic  Price volatility in fertilizer and fuel markets .secondary education.  Family-run operations. relying more on large-scale technology to replace manual labour. Lawrence River. Thunder Bay.  Many farm owners also maintained off-farm occupations to help alleviate the ever-present risk of a crop failure and cash flow concerns. where multiple generations would come together to bring in their own harvest and that of their neighbours. and farms were getting larger.  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.

Bangladesh. particularly in the processing of pulse crops such as peas and lentils. hail.  prices were largely determined by global supply and demand  with the dismantling of the Canadian Wheat Board marketing agency in 2012. Mexico. Asia (Indonesia. which paved the way for a free market system that allowed farmers to capitalize on market opportunities but also exposed them to risks.  Weather conditions were becoming unpredictable. While some of the canola was used locally in crushing plants to create canola oil and meal. given the influence of global climate change. damaging winds. some interest groups were concerned about herbicides’ long-term ecological impacts Political-Legal  The final market for commodities varied from year to year. the farmer had become very much a price-taker with many of the crop inputs having volatile prices. China.  As a result of this supply chain. still. and China and Japan for edible oil. Many farmers argued that the Canadian Wheat Board’s monopolistic system had limited sales and subsequent price opportunities. o for example from case. Colombia. due to crop failure or low commodity prices. 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 Bangladesh). and new markets were emerging for each crop. Key canola markets included the United States. Wheat was Canada’s most significant grain export to some major import markets in the Western Hemisphere (United States.  Modern herbicides were much more effective in controlling pests and led to fewer health and safety concerns. Canada exported approximately 90 per cent of the canola produced nationwide. Europe. Peas were generally used for human consumption in regions such as India. Mexico. and Africa (Nigeria)  Some farmer-owned co-operatives and independent intermediaries existed. while others felt that the pooling system had offered the best returns for their commodities  Land and Lease rates volatility  any reduction in revenue. and China. and extremes in temperature (heat and frost). but much of the processing capacity was also held by a few large. multinational agriculture corporations such b) Meakin Industrial Ag Corp . and Peru). and the European Union for biodiesel development.

while some farm employees received a salary and operated a truck and trailer as part of their farming duties.Socio-cultural  Lack of availability of skilled labour posed constraints for many farms. drought. and many did not return to the farm  The average age of farmers in Saskatchewan had increased from 50. and farms were getting larger. relying more on large-scale technology to replace manual labour. a driver needed a Class 1 licence.  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. winds.2 in 2011. and hail that resulted in lower crop yields could also lower the demand for grain bins and grain hauling. as competitors could entice drivers away by offering higher wages.5 in 2001 to 54.8  Families were getting smaller. as a result of the growing size of farm operations and the distance of the farms to grain terminals.  Maintaining loyal. and could make deliveries challenging Political-Legal  To drive large trucks for the different types of deliveries. long-standing employees was often a challenge. as children were often encouraged to pursue post.  The demand for on-site grain bins had increased in the past decade. Drivers could be paid hourly or by piece rate by the tonnage hauled.  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.secondary education. where multiple generations would come together to bring in their own harvest and that of their neighbours.  family dynamics were changing.  Average firm sizes increase.  Family-run operations. . where demand fluctuated from season to season and even from month to month. Grain Economic  One of the challenges in the hauling business was employing drivers over a cyclical year. which required oral or written knowledge tests for Class 1 vehicles and a road test in a Class 1 vehicle. The excessive rain.

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