Anchondo family organic dairy pp cow

Anchondo Organic Dairy

Greg AnchondoFMA 490 Feasibility Study

Dr. Nancy MerlinoMay 24, 2012

California State Polytechnic University Pomona

GA

Executive Summary

• Family Owned and Operated

• Cooperative with Horizon Organic Dairy©

• Certified Organic Dairy Supplier

• California

GA

Technology ConsiderationsLand47 acre land $704,250

EquipmentUsed Milk Tank Truck $117,000 * 4 = $468,000Forage Harvester Used $24,500Used Free Stall Scraper $10,500Large Scale $945.92 * 2 = $1,891.84

LivestockCow $2,000.00 * 30 = $60,000.00

MilkingEquipment $6,000.00 * 30 = $180,000Hoses $60 * 200 = $12,000

CoralPanels $197 * 100 = $19,700Gate $492 * 4 = $1,968Chute $8,700 * 4 = $34,800Crowding tub $3,178 * 4 = $12,712

CleaningSupplies 1,259$ * 30 = 37,770$

IdentificationLeg Bracelets 2.69$ * 30 = 80.70$

EST. TOTAL $879,085 $828,923EST. GRAND TOTAL $1,708,007

Dairy Costs

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Product/Service Marketplace

• Market Size– Less than 100 organic dairy farms in California

• Sales Volume– California Organic Dairy Sales = $133.5 million

• Production Volume– California produced 18% (501.8 million lbs)

• Growth Rate– Horizon Organics = 7% (2011-2012)

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Competitive ComparisonDairy Strengths Weakness Product(s)

Anchondo Organic Dairy

Family Farm, Supply to Large

Organic Company,rBST & rBGH free

New, No Capital, Lack of Experience

and Training

Organic Milk

Straus Family Creamery

Only Dairy in CA to run fully Organic

Dairy & Creamery,rBGH free

Remote Location in Northern California

Organic: Cream-top milk, ice

cream, yogurt sour cream, & butter

Clover Stornetta Farms

1st Dairy West of Mississippi to offer

rSBT free milk

Still paying off Organic

Conversion

Organic and Natural lines of

dairy

McClelland’s Dairy Large Family Farm since 1930

Stick to old Traditional Ways of Dairy Farming

Complete line of Dairy

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Marketing Strategy

• World Ag Expo – Tulare, CA– Samples– Brochures

• Client List– Email– Farm Tour

• Horizon Organic Dairy– Commercials, Ads, etc.

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Organization & Staffing

Owner

General Manager

Feeding Herdman

Feeder Feeder

Milking Herdman

Milker Milker

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Schedule: From Cow to Consumer

Rearing

Harvest

Storing Transportation

Lab Test

Processing Packaging

Selling

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Schedule: Transportation

Our dairy travels from our barn in Porterville, CA on a 1,092 mile, 18hour journey to Broomfield, CO which is the headquarters and processing location of Horizon Organic Dairy.

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Financial

• Farm Bill 2008– Section V: Credit

• Subtitle A: Farm Ownership Loans• Subtitle B: Operating Loans• Subtitle C: Emergency Loans• Subtitle D: Administrative Provisions

• Cost of Milk (/cwt –hundred weight)– USDA $15.85/cwt– Horizon Organic Dairy $28/cwt

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Years 1, 2, & 3Years 1, 2, & 3

Year 1 Year 2 Year 3Net Farm Income Operations 148,347$ 50,000$ 20,000$

Rate of Return on Assets 9% 12% 5%Rate of Return on Equity 9% 15% 5%Operating Profit Margin 20% 25% 15%Asset Turnover Ratio 46% 45% 30%operating Expense Ratio 71% 50% 60%Depreciation Expense Ratio 1% 10% 15%Interest Expense Ratio 1% 10% 15%Net Farm income Ratio 27% 35% 25%Current Ratio 117503 1.75 1.25Working Captial 107$ 65,000$ 32,500$

Debt/Asset Ratio 6% 40% 50%Equity/Asset Ratio 94% 60% 50%Debt/Equity Ratio 7% 67% 80%

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Findings & Recommendations

• Maintenance• Marketing• Feed & Fuel Costs

Feasible? YES