Become a Farmer
We firmly agree with the wise words of renowned American investor Jim Rodgers and become a farmer. Young people should consider a career in farming rather than the oversupplied markets of lawyers or bankers.
He claims that the stock brokers are going to ones driving taxis for Uber in the future, and the farmers are going to be the ones driving the Lamborghinis. Rodgers believes farming or value-added agriculture (vineyard economic model) is going to become one of the most exciting professions in the next twenty years or more.
The winds of change – Are you ready?
Agriculture technologies are increasingly capturing the imaginations of investors and the consumer worldwide. The images of GPS drones buzzing over orchards and farmland, satellites capturing the rural images and farmers working the fields iPad in hand (note to self iPads and dirt do not go together!) is the stuff of back to the future. A revolution is occurring right under our noses. Not to mention the less glamorous, but arguably more critical of the move towards new soil technologies to improve the health and nutrition of our soils. These new soil technologies are combining old with the new together to the benefit of the farmer – higher natural yields at a lower cost.
However even with these incredible technological advancements. Somebody has to be in the fields and orchards, even if it is a robot driving the tractor. Someone has to tell the tractor what to do. Unless we inspire youth into agriculture, we have a large demographic problem with the average age of U.S. farmers being 58 and in South Korea 65. In the U.S., more people study public relations than study agriculture. However, it is always the same at critical structural inflection points in the economic cycle. Remember no one would have agreed with to going to work in Technology or on Wall Street in the late 1970’s or early 1980’s. Now? It’s the place to be. So we encourage youth to be contrarian and look at the trends of organic food production over the 10 to 20 years as a guide in choosing your future career.
Future trends for local organic food?
We have and are still firm believers in the positive long-term trend towards healthy food or the consumption of organic food. Back in 2009, when U.S. sales were only $21 billion, we stated that this figure would rise to over $100 billion over the next ten years or so.( You may be interested to note this would be the same size of the global electronic gaming market.) It is currently between $50 to $60 billion. Of all the food produced now sold in the United States, 12 percent of it is organic, a market share that has more than doubled in the past ten years when organic produce sales accounted for only 5 percent of the fruit and vegetable market.
We still believe the $100 billion mark is still attainable and over the next ten years, organically produced food is set to become the norm in fresh or frozen – with fruit and vegetables having the largest share of overall sales.
Organic products have shifted from being a lifestyle choice for a small number of rich Babby Boomers to purchased by a majority of consumers and Generation Y one in particular. Nearly 81% of American families buy organic food at least occasionally, and American organic food production has increased nearly 240% between 2002 and 2011 compared with 3% in the non-organic food market. Is the writing on the wall?
There have been numerous studies on these buying trends in America, in Europe and Asia. The results consistently indicate consumers prefer organically produced food not only due to its taste and health but to support their local farmers and environment.
The Whole Foods Indicator
Early signs of the change in consumer behavior away from ‘Big Tasteless Food’ to organic foods were first evident in the early 1990’s. When Whole Foods went public. Since then most of us would agree that Whole Foods meteoric revenue growth, since 1995, has served as a long-term proxy for the growth trend of organic foods in general. The chart below shows the company’s revenues rising from around $1billion in the early 1990’s to over $14 billion in 2014.
How are the ‘Big Traditional’ brands responding? Campbell Soup Company is perhaps a good example of a large company that since the early 1990’s. They have grown a bit, contracted a bit. They have restructured, sold divisions and even purchased a few small health food companies. In stock market terms Campbell shares have strongly underperformed, as their long-term commitment to their 20th-century brand and on a token toe in the water to health food. However there recent share price performance suggests this balance may be reversing. The chart below shows the relative performance of Whole Foods (blue line) and Campbell Soup Company (red line).
These structural changes where market ‘Growth Drivers’ have changed hands has been commonplace for the last twenty years – Amazon taking over from Walmart or Apple taking over from IBM. And now Google taking over from Apple? Also, it is worth noting that these long-term trends are rarely a perfectly straight line and do not happen overnight. There are tests of faith along the way as with Amazon in 2001. Perhaps Socrates was correct when he said – ” The Secrets of change is to focus all your energy, not on fighting the old, but on building the new.” The bottom charts show Amazon (AMZN) to Walmart (WMT), and the next one shows Apple (AAPL) to IBM (IBM).
What has this to do with Honeyberries?
Well we believe, it places Honeyberry opportunity right at the heart of the organic food or farming revolution. We would argue the Northern or cold climate fruit or berry grower have been crying out for a crop to become a ‘blue diamond ‘ in the orchards for years or even decades. The problem is now it has arrived – do they believe its too good to be true.
Growers should take a good long look at the opportunities, and it’s already proven in Japan and Russia, becoming so in North America. As you recall – Canola or Yellow Rape Seed was just a good idea 30 years ago.
Winds of berry change
It’s not only about seasons anymore or locally produced or imported fresh berries. Changing demographics and growing trends of convenience are re-balancing the traditionally very traditional berry market. We encourage you not just to sell berries as another commodity.
Future farming trends:
- Locally and seasonally produced price premium
- Organically grown to become the norm (fresh or frozen)
- Nutritional value – Soil and food health are human health
- Solution commodity based or premium based
- Alcohol and micro-distilling – Turning berries into gold
- Grower’s story of transparently connecting to the consumer
- Meet change with something new or a new story
- Change your thinking to a vineyard model rather than a commodity berryard
- It is not about a new berry. It’s about a story of a locally produced new berry, organically and nutritionally grown, lovingly processed in a format that’s convenient for consumers
- A premium story of better and attractive margins
- The Honeyberry ‘Holy Grail’ is Alcohol – Do not grow grapes, rather grow bottles of wine
- Higher revenues per acre
- Lower Orchard costs and higher yields
- Organic low cost growing solution
- Team based solution similar to a vineyard based solution
- Tourism: Build it and they will come
- Create a similar Honeyberry and soft fruit branded regions that are similar to the French wine growing regions. Honeyberry will help return the growing of soft fruits to the terroir rather than ‘Substandard Substrate’.