Think big and scale up - and remember tech produces profit
As a child, I spent summers on family farms, helping or perhaps hindering with daily chores. If farming was then just a way of life, it is now a sophisticated business with science and commercialism at its core. Farms are getting bigger and dairy herds are expanding. We're already two years ahead of the agri industry targets in Food Harvest 2020. Proudly, we're one of the most sustainable milk producers in the world due to our weather and abundance of grass.
David Leydon, Head of Food & AgriBusiness with ifac, the professional services firm, said, "Last year the value of our dairy exports increased by 19pc. The growth we've experienced in the dairy industry since 2015 has created many opportunities for a range of businesses to develop and meet the evolving needs of dairy farmers. It's good news for rural Ireland."
There are three significant developments in milk production. With selective breeding, cows are producing more milk. Better grass management enables improved and faster grass growth. And restrictive quotas were abolished in 2015.
We also know more about the mineral requirements of cows, in order to produce the premium milk for local consumption and export. The correct balance of minerals aids fertility, milk yield, healthy calving and more.
But because our grass is now growing so fast, the natural mineral content needs to be supplemented and sometimes rebalanced. This is done by hand and through feed mainly. Given that there is a shortage of manpower, farmers are run ragged trying to cope themselves.
Terra Liquid Minerals
Padraig and Tom Hennessy based in Co Kildare have a business called Terra Services. They specialise in supplying and installing piping to carry water to troughs for cows in the fields. Their existing piping is an obvious free carrier for minerals, so Terra Liquid Minerals was born. Employing seven local people, they are the only company in the world doing what they do.
Initially they take blood samples from 10pc of the herd and analyze the grass mineral composition. They also study the herd history in terms of fertility, calving and milk yield. From that scientific analysis, they design a programme of natural mineral supplements to maximise performance. They have a team of technicians calling on their customers every 2-3 weeks, to monitor progress and tweak the mix as required.
The business model that has enabled Terra Liquid Minerals to develop and grow profitability so far, needs to change for the next phase of growth. Right now, it is made up of service and sales (of minerals). They are thinking big, so scaling up is their challenge. But the service element is very labour intensive, as it requires a technician to visit the farm 15-20 times a year.
Scaling Up Tips
Many traditional industries are dependent on people for reaching global scale. PwC or Hilton Hotels for example, could not expand without skilled people who determine their pace of growth. But if you have a service that can be delivered efficiently and effectively with a tech solution, that is an alternative answer. Scaling up for global reach is quicker, more likely and more cost effective too. If that is a possibility for you, consider these steps…
1 Identify the elements within your service offering that can be mechanised with some form of a tech solution. Terra identified an opportunity for remote monitoring of mineral needs centrally in Moone, Co Kildare, through a wifi-enabled controller on the farm.
2 Partner with an appropriate body or team to develop a prototype. To develop their initial prototype, Terra worked with Nimbus Centre (a Research Centre in Cyber-Physical Systems & Internet of Things based at Cork Institute of Technology).
3 Craft a business case to commercialise the prototype. This is where reality has to prevail and where ideas often fall down. Seek help in developing this plan as you'll need a robust document and presentation if you need to seek external support and/or funding.
4 Even if more costly, get the product made locally if possible. That gives you control and speedy response time in the early days to enable further inevitable tweaking.
5 Consider if you have some IP (intellectual property) that is 'protectable'. I appreciate that the protecting process can take time and you can't always wait on that to test sales in the market. But be careful before you source production of your product from other territories.
I am fascinated by this business. I feel a mixture of nostalgia for my youth and pride in the Irish entrepreneurial spirit that created this concept. I'm particularly impressed that Tom and Padraig are seeing this as a global opportunity and are readying themselves for that.
While the controllers will help to determine the mix of minerals to be pushed through the system, Terra Liquid Minerals will also have the capacity to gather valuable data. Think of all the data inputs such as mineral mix, grass and feed composition, fertility rates, calving and yields.
This data will help to change the process and the margin in dairy farming forever. While I appreciate that we have to crawl before we can walk and proof of concept is critical, we need to think big. Scaling up is always the challenge but there may be a tech element to enable it. We have countless clever techie people who are eager to partner with us. Just ask Intertrade Ireland. It's in the tech that you'll find the profit margin.
Alan O'Neill is a change consultant and non-executive director. For 25-plus years he has been supporting global and iconic brands through change. Alan-oneill.com. Business advice questions for Alan can be sent to firstname.lastname@example.org
Sunday Indo Business