Focusing on value, not production volume, is key to future growth of the fresh produce business
A farmer and entrepreneur from Queensland says the future of fruit and vegetable growers revolves around creating better value and better quality rather than just focusing on increasing volumes and prices.
Trent De Paoli from De Paoli Orchards had a vision of how to get more agricultural profits by doing something different rather than pure farming – which led him down the path of adding value. He says he has discovered that the most successful companies are those that focus on value, not price wars, as the latter often end up with a discussion of survival, not innovative thinking and evolution. .
“We’d rather make a semi-trailer at $ 20 per kilogram per day than 20 semi-trailers at $ 1 per kilogram per day,” he said. âSo we have used this mantra in our business for many years. Profit cash flow and the ability to reinvest are paramount; I’d much rather have a million dollar “earnings before interest and taxes” (EBIT) on $ 10 million in income than trying to make the same amount of profit on $ 100 million income with ten times more stress. It’s easy to get carried away with big income and big numbers and lose track of what’s important. Be nimble, be quick and leverage; Unless you are the cheapest producer in the world, don’t fight over price, focus on value. Yes, you need to have critical mass, but in my opinion, you need to choose your battles wisely. “
Mr De Paoli’s father, David, created the Austchilli Group over 20 years ago, which not only marketed fresh chili peppers and avocados, but also began to produce value-added products. AvoFresh was established in 2010, the De Paoli family saw an opportunity to provide avocado buyers with a fast, convenient and reliable alternative. The company now has 10 farms scattered around Bundaberg and Childers and offers several products such as food, drink and ingredients such as mash.
Personally, Trent De Paoli says he sees himself as a “beyond the horizon” thinker, and business is the vehicle to be able to do so. He noted that large companies often acquire innovative companies for their ability to pivot and scale rapidly.
“You have to create an ‘economy of attraction’, not a ‘push economy’,” said De Paoli. âUnless you have the marketing budget from Apple or Amazon, I find it easier to find a problem and fix it to achieve mass adoption. Changing a consumer’s habits is expensive. For many years, companies have tried to sell value-added avocado products in the freezer section of the supermarket, and it never worked, because it is a change of habit. People don’t go to the freezer to buy avocado. The problem I solved with AvoFresh was how to make avocado reliable and convenient, with all new benchmarks, and dispel the fear of the bad experience with fresh avocado. Since our launch, this has been incremental for the avocado industry. I have found that it is easier to solve the problems for the consumer than to change their habits. “
He added that companies must âact locally, but think globalâ because they are all connected to the rest of the world, regardless of the sector in which they find themselves; therefore no one is isolated. Mr De Paoli says politics, stock prices, wars, food shortages and cybersecurity threats all have an impact on farms and keeping that in mind will help manage risk and sustain the business. industry.
âThe global financial crisis (2007-2008) has personally brought us more opportunities than we had in the previous 10 years – and COVID-19 will do the same,â he said. âIt becomes purely a holistic approach to business strategy and adopting a holistic mindset in business planning. It’s easy to fall into the trap of just focusing on our farms, headlong, and our customers in Sydney and Melbourne. The reality is that we are all connected to the rest of the world. Plus, the successful businesses of the future must disrupt or you will be disrupted. This way we can set the tone for others to follow, by the time your competition is catching up, you have already moved on to the next product or service that is knocking out the competition. Never take your customer for granted and always find a way to add value to their business. “
Brand loyalty is difficult to establish, according to De Paoli, who says it’s important to focus on a product’s unique selling properties and enthusiasm. Once a business has established a relationship with its customers, it becomes a closed-loop circular economy, and the director of De Paoli Orchards is quick to point out that the business is a marathon, not a sprint.
âAdopting and adopting something unique is a shorter path to financial reward, rather than just being another ‘me too’,â De Paoli said. âValue is always in the eye of the beholder. I don’t like the word supply chain – because we have to focus only on the customer – my favorite word is ‘demand chain.’ value proposition is seen at the point of purchase and we have about three seconds to convince the customer that they are getting value. When exporting, you really need to research that country, rather than just parachuting and hope it works. We rarely see unicorns in the fresh produce industry. So look where the future is going, not where it is today; if you don’t reinvent yourself and grow within of your business, you stand still and by default you back down because your competition is moving forward. “
He also believes that adopting technology is a discussion of yesterday and that we now live in a highly connected world and that technology is the fundamental basis for survival. The adoption of innovative and advanced technologies is the key to business success.
âAdvanced technologies all along the demand chain are imperative to stay ahead, exceed survival and seize opportunities,â said De Paoli. âCompanies that adopt technology that is beneficial to their business will offer a high degree of resilience, efficiency and opportunity. Those who don’t, look at what happened to the typewriter. Artificial technology (AI) will change the world. It is already under development. We will be able to design and market with a greater chance of consumer adoption of new products, so AI will be responsible for many changes in horticulture in the years to come.
Mr. De Paoli was a Nuffield Fellow in 2013 and recently made a presentation at the Australian Banana Congress in Cairns.