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brucebennett@gmail.com
21 Posts |
 Posted - 11/01/2009 : 11:52:10 AM
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| OK let's start a fiber co-op. It will take around $800,000 and we will be ready to go. As mentioned, then the fiber producer can take advantage of the value added profit. I'm all for it. One alpaca farm cannot produce enough fiber to keep any small, which we are relative to the rest of the textile industry, textile manufacturer busy. Our knitting mills use 1,000 to 3,000 pounds of yarn in one production run which comes to around 3,000 sets of long underwear, for an example. Our weaving mill can produce 100 yards of light weight fabric daily, on a bad day. If a spinning frame is running correctly one person can watch 100 spindles. |
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gatewayfarm
1104 Posts |
Posted - 11/01/2009 : 12:57:52 PM
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quote:
Originally posted by brucebennett@gmail.com
OK let's start a fiber co-op. It will take around $800,000 and we will be ready to go. As mentioned, then the fiber producer can take advantage of the value added profit.
That would be the goal, wouldn't it?
Now, if I had a million dollars of equipment sitting around, and I was trying to increase throughput to reduce costs and increase overall profitability, I might start thinking in terms of joint venturing with some outfit that could provide me with large enough lots to make it work for both of us.
Might result in reduced incremental margins, but increased annual profits.
But then again, some people say I am crazy...
Gateway Farm
Alpaca, a natural elegance... |
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bturner
74 Posts |
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Judith
2682 Posts |
Posted - 11/02/2009 : 11:45:28 AM
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Hi Brian - yes, in this instance, "John" refers to John Merrell of Gateway Farms and formerly a very active director and extremely vocal advocate for AFCNA.
Judith Korff
AlpacaNation Forum Co-Moderator
LadySong Suris
Randolph, NY 14772
Cell: (716) 499-0383
www.alpacanation.com/ladysong.asp |
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alpacastarr
560 Posts |
Posted - 11/02/2009 : 2:13:31 PM
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quote:
Originally posted by Ice Pond Farm
snip
My vision of a co-op (if I were king  ) would be one that owns and operates everything from fiber collection, sorting, primary and final processing, product design, manufacturing and marketing right up through large scale distribution to retail. Most likely with identical regional collection and primary processing facilities. Probably not the type of business most alpaca owners envisioned when they first bought their animals, but there you have it.
snip
Hey hey everyone - Jeff for King!!!
Actually, everyone seems to think this way. Everyone I've talked to seems to want each entity to be the whole kit & kaboodle from farm to fashion. It's neat. It's cool. Dare I say... Sexy!
But it's not really a good business model. I used to work for a top tier multi-national company. We made some seriously gee-whiz stuff. But we didn't mine the copper we used for wiring, we didn't start from silicon to make our own chips. It was a constant balance between where our own unique "value add" belonged and where it made more sense to hire an expert to do some or all of the subassembly.
To my mind, collecting, grading and sorting are definitely "core business" for our cooperative AFCNA. We used to use a contractor for that function, now it's been brought "in-house". If I ruled the world and had all it's money, scouring would be the next step we ought to bring in-house. And then processing tops.
But, I'd draw the line at spinning, weaving or felting. There are existing businesses who will do that far better - using much higher state of the art equipment and highly skilled labor providing higher quality and lower costs because they can continually invest in that. If the co-op tried to build/own their own mill or processing equipment, they would never be able to match or keep up with dedicated manufacturers.
I'm on the fence about where distribution of products (and selling to the final consumer) should fall. Currently, the co-op is doing it themselves for the most part now. Member farmstores are key purchasers of the co-op's current product line up and at current rates of production just keeping them supplied dependably and reliably is sufficiently challenging without trying to branch out into more mainstream distribution channels. But in the future when volumes exceed the capacity of our network of member farmstores, then absolutely we need to be in those mainstream channels. Directly with our own "herd" of salepersons, indirectly via contracted sales representatives... or do we just sell the graded/scoured bales (or tops when we get to that point) and let some of the risk/reward pass up the chain.
But design? And manufacturing high fit fashion garments for retail sale?!?!? And then marketing them?? Ay yai yai - It's going to be cold day in heck before I ever hope to see AFCNA attempting to bring that function in-house (again), King Jeff!!! I'd be rousing the rabble to remove the head under the crown.
Starr
Starr
Venezia Dream Farm
Asheville, NC
http://alpacanation.com/farmsandbreeders/03_viewfarm.asp?name=11404
http://www.veneziadream.com/
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Edited by - alpacastarr on 11/02/2009 2:16:06 PM |
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gatewayfarm
1104 Posts |
Posted - 11/02/2009 : 3:47:29 PM
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quote:
Originally posted by alpacastarrIf I ruled the world and had all it's money, scouring would be the next step we ought to bring in-house. And then processing tops.
The great thing about this idea (bringing scouring in-house) is that given the shortage of mid-scale (actually, the utter lack of) scouring facilities, this would become a secondary source of income for the Co-op, since it could provide contracted services to other specialty fiber producers.
Current scouring options are in the tens of pounds, or tens of thousands of pounds.
Something in the few hundred to few thousand pound range is sorely needed - and not just in the US. This same problem exists in Australia, Canada, the UK and Europe.
Bring it on Starr!!
Gateway Farm
Alpaca, a natural elegance... |
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Ice Pond Farm
90 Posts |
Posted - 11/02/2009 : 5:15:53 PM
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quote:
But design? And manufacturing high fit fashion garments for retail sale?!?!? And then marketing them?? Ay yai yai - It's going to be cold day in heck before I ever hope to see AFCNA attempting to bring that function in-house
Yes, it would be daunting. This mythical co-op would not necessarily have to "own and operate" every bit of the value chain. Out-sourcing is certainly an option for parts of the process. But I sure would like to at least reconsider the functions of design and marketing to retail (not retail sales mind you - but marketing TO retailers). It seems a shame to put all of that work into making the FIBER, and then the TEXTILE, only to leave the most lucrative part of the business to the APPAREL folks.
The analogies to other complex global manufacturing and marketing value chains can be educational. Yes, the company making all of the cell phones doesn't own the chip manufacturer, and the chip manufacturer doesn't own the producer of silicon ingots, who doesn't own the sand used to make the ingots or the oil used to make the plastic case.
But as alpaca owners and makers of bags of hair, we are sitting at the bottom of the supply chain and don't have the luxury to pick and choose which parts of the value added process we want to control. Seems to me it is more of an all-or-nothing option for us.
Jeff
Ice Pond Farm
Fiskeville, RI
www.icepondfarm.com
icepondfarm@cox.net |
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Judith
2682 Posts |
Posted - 11/02/2009 : 5:25:18 PM
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Jeff, I'm a bit confused by your last comment. We can hardly "pick and choose" to start anywhere farther up the chain than we currently are. We have no choice but to start at the bottom because that's where we are, so we MUST start with harvesting, collecting, sorting/grading, scouring, etc. before we can advance up the supply chain. Anything (value added) beyond that point may provide some additional profit, but I don't understand how we are in a position to pick and choose our point of entry. Perhaps I'm missing something here, though.
Judith Korff
AlpacaNation Forum Co-Moderator
LadySong Suris
Randolph, NY 14772
Cell: (716) 499-0383
www.alpacanation.com/ladysong.asp |
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alpacastarr
560 Posts |
Posted - 11/02/2009 : 5:38:52 PM
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quote:
Originally posted by Ice Pond Farm
snip
It seems a shame to put all of that work into making the FIBER, and then the TEXTILE, only to leave the most lucrative part of the business to the APPAREL folks.
snip
But as alpaca owners and makers of bags of hair, we are sitting at the bottom of the supply chain and don't have the luxury to pick and choose which parts of the value added process we want to control. Seems to me it is more of an all-or-nothing option for us.
snip
No doubt the most lucrative return is at the top of the chain, but I guarantee that's also where the highest risk is to be found. Fashion is sooo fickle. And if you pick the wrong color, style, fit, price point; you will be sitting on that inventory - with a massive amount of cash tied up - for a very long time. Been there, done that, and as a matter of fact AFCNA is still paying for it (aka Noteholder debt).
So you'll find folks like me who were involved in the digging out process from that massive (hindsight is always 20/20) error in judgment kind of gun-shy at the mention of fashion!
Not to say it is forever and always going to be wrong. I have always considered OceanSpray or Florida Natural as good role models for the future direction of AFCNA and they certainly do manufacture and market their fully value added products under their own brand. Probably only took them about 100 years to develop that entire chain. So, I would prefer to see the board leading the co-op in steps that are more incremental (baby steps, inch by inch) rather than attempting to leap from here to there in a single bound.
Starr
Venezia Dream Farm
Asheville, NC
http://alpacanation.com/farmsandbreeders/03_viewfarm.asp?name=11404
http://www.veneziadream.com/
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gatewayfarm
1104 Posts |
Posted - 11/02/2009 : 6:26:44 PM
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quote:
Originally posted by alpacastarrI have always considered OceanSpray or Florida Natural as good role models...
But even Ocean Spray has weathered its own times of trouble.
Almost sold in 2001 (upon recommendation of "experts") when prices crashed, it was the faith and loyalty of the membership that kept it in business, voting down the sale 2-1 after a couple of disgruntled members filed suit to force the sale.
A great example of how the member shareholders control a cooperative! They did it again in 2004 when they voted down a joint venture with PepsiCo, ultimately negotiating more favorable deal 2 years later. (PepsiCo was originally offering $100 million and assumption of debt in return for fixed cranberry prices - a real deal with the devil.)
A similar scenario took place when the Tillamook Dairy Association banned rBST in its producer's milk, leading to a very nasty fight with Monsanto. Not only did they prevail against Monsanto's dirty trick within the co-op's membership ranks, but ultimately prevailed in court.
My point here is that through Co-ops the producer has much more mastery over their own fate. An active, informed and participatory membership of even a small Co-op (I think Ocean Spray has about 750 growers, Tillamook far less) can take on some of the most powerful corporations in the world - and win!
Gateway Farm
Alpaca, a natural elegance... |
Edited by - gatewayfarm on 11/02/2009 6:27:29 PM |
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Ice Pond Farm
90 Posts |
Posted - 11/02/2009 : 8:16:59 PM
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Hi Judith. You wrote:
quote:
Jeff, I'm a bit confused by your last comment. We can hardly "pick and choose" to start anywhere farther up the chain than we currently are. We have no choice but to start at the bottom because that's where we are, so we MUST start with harvesting, collecting, sorting/grading, scouring, etc. before we can advance up the supply chain. Anything (value added) beyond that point may provide some additional profit, but I don't understand how we are in a position to pick and choose our point of entry. Perhaps I'm missing something here, though.
Poorly worded on my part, Judith. I said that we DO NOT have the luxury to pick and choose - meaning that we must position ourselves at the top end. My opinion of course and I certainly appreciate the dedication and effort expended making these decisions. But I'm not sure it is advisable to start at the bottom of the process and work our way up without a stretch goal.
I'll try to clarify my reasoning. Players close to the retail end of the process are in a good position to dictate terms. Even if we (alpaca owners and breeders) owned or controlled the process through the textile product (yarns and fabrics by my definition of textiles), apparel designers and manufacturers still buy their textiles on the global market. We (in the U.S) are in no better position to compete with global textile manufacturing than we are with global fiber production.
A co-op that owned the process through distribution to retail would still compete with global wholesalers, but I believe there is room to brand and market high quality made in America products designed for the domestic market and manufactured using innovative technology. Not so much a question of where we start as it is a question of where we want to finish.
Don't get me wrong - I am not naive and would not expect to see this type of organization evolve in my lifetime. But I am concerned that if we don't keep the ultimate goal in mind we won't see or take advantage of opportunities to leverage our strengths. We come from many diverse backgrounds. I believe that relative to the global market those strengths are and will be focused breeding strategies, processing technology game-changers, and marketing.
Starr, I understand your baby steps analogy. I wasn't around to witness AFCNA's first venture into product design, but can easily imagine the pitfalls. Yes, we need to stay alive and take things step-by-step. I just hope that by taking baby steps we don't get killed off before puberty!
Jeff
Ice Pond Farm
Fiskeville, RI
www.icepondfarm.com
icepondfarm@cox.net |
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gatewayfarm
1104 Posts |
Posted - 11/02/2009 : 10:03:23 PM
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Jeff, back around 2000 that Australian alpaca fiber co-op bought half interests in a spinning mill.
Within 3 years they were bankrupt and liquidated.
A traditional corporation bought out the remaining assets and began paying fiber producers right around what the world market prices were - the same thing a Peruvian peasant gets.
This year, that corporation announced that due to the depressed global market for alpaca that they would not be accepting ANY fiber.
It is my undertanding that AFCNA missed a profitable year by just a couple of weeks - it would have been barely profitable, but given the economic events of the past couple of years I think that is saying something.
The collection and value adding of alpaca fiber is an incredibly complex undertaking - almost overwhelming in magnitude. I did not begin to comprehend it until I lived it everyday for 5 years.
In order to be successful we need to take it one step at a time. Each stage needs to be fully developed and firmly put in place in order that the next stage can be built onto it.
I am all to aware of how fragile the basic processes are at this point. Unreliable vendors, poor quality control, poor accounting and materials tracking, all of these need to be corrected before moving on to the next step. What is in place works, but it is in many ways a work of baling twine, duct tape and bandaides. A system just waiting for a catastrophe to bring it all down.
This is not unusual for any start up business, and from what I can make out is the normal course of matters for a young cooperative.
Still, it is extremely important to walk before running, lest we crash our forehead into the coffee table.
Bringing the grading in house was an important step in firming up the processes of the first step of value adding, and I applaud the Board for pulling this off. I have no doubt there will now be a period of review and improvement as the bugs in the new system get worked out, but it was an important step in the right direction.
To be successful we need to be very clear on what we do, and then we need to do that better than anyone else can.
It is my opinion that there is an utter lack of clarity about what AFCNA can or should do. Everytime a new Director comes on Board the direction changes - some times subtly, sometimes drastically.
This, I believe, is the greatest risk to AFCNA's success, and I am not sure what to do about it.
If you have time, you should read the book "Good to Great". I think there is some good insight into what makes a company take off.
Clarity of purpose is right at the top of the list.
AFCNA membership lacks clarity of what they want the co-op to do. I think it is the Board's responsibility to define this (they, after all, are closest to the facts associated with the company). And, I think it is the Board's responsibility to communicate this to the membership in a way that mobilizes their support.
That means constant communication to and with the membership, education of the membership, and a willingness to share both the good and the bad news.
There is no room for ego. If the news is bad, you pass it on, take your lumps, and get on to fixing things. If the news is good you give credit to all involved in making it good and get on with making it even better.
But there really has to be continuity at the top. I suspect, though I have not researched it, that this is a problem many, if not all Cooperatives face. The election of leadership from within the members is as much a liability as it is a benefit.
Interestingly, REI (a co-op) altered their bylaws to eliminate the election of Directors by the general membership. While it led to a lot of grousing within the membership, REI has grown exponentially since making the change.
There might be a lesson there.
Gateway Farm
Alpaca, a natural elegance... |
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richbye
746 Posts |
Posted - 11/13/2009 : 9:28:05 PM
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Here's my take on knowing nothing about business models and such, this is my very basic take on this whole thing:
Co-op: I pay to join, I pay to ship my fleece (if there isn't a collection site near me), I pay to buy products to sell at the store (if I have one. If not, then why bother with buying stuff you're not going to sell), and hopefully make enough in dividends to break even with the cost of just shearing the animal.
Mini-mills: I pay to ship my fleece, I pay to have the fleece processed (cost based on what I want done to the fleece). Then again I'm stuck with products I don't even have an outlet for.
Why isn't there anyplace to sell raw fleece to and be done with it? I'm sure the sheep farmers don't have this much of a headache trying to sell their raw fleece! If I break even with a 5 pound bag of fleece, then I'm a happy camper. Fleece is out of my barn! I even offered to donate raw fleece for the sock thing for soldiers, but no one has gotten back to me. They want money or yarn. They don't want my fleece (for free no less) to make socks?? 
Oh well!
Jeanne
Gemstone Alpacas, Inc.
11300 Savage Rd.
Chaffee, NY 14030
(716) 868-0883
http://www.alpacanation.com/gemstonealpacas.asp
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danimac
514 Posts |
Posted - 11/14/2009 : 12:07:24 AM
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quote:
Why isn't there anyplace to sell raw fleece to and be done with it?
Jeanne -- there are. The Blanket Project, Royal Spinnery and others pay for the fiber and you're done with the transaction (if you want to be). Even the co-ops will "pay" you for your fiber (AFCNA in the form of dividends, NAAFP through their internal trade bank and/or selling to a distributor for you), but none of those activities will result in as large a profit for you as if you act as a reseller of the final product.
Cheers,
Dani
Dani McKenzie
Longbottom Meadows
Roy, WA
360-400-0348
http://www.longbottommeadows.com |
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Always Accoyo
1300 Posts |
Posted - 11/14/2009 : 06:14:02 AM
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So how much per pound do you get back from the Blanket Project and the Royal Spinnery?
And how much time and cost does the owner first have to put in to send them that fiber - after they've paid to purchase the alpaca, care for it, and shear it?
That is where every single one of the ideas out there so far, including the co-op, have failed to convince owners to send them fiber. Nothing from nothing may be nothing, but less than nothing from nothing is even worse.
Nancy Wright
Always Accoyo
Oxford, MI
248-236-0115
alpacas@alwaysaccoyo.com
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gatewayfarm
1104 Posts |
Posted - 11/14/2009 : 10:48:46 AM
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quote:
Originally posted by Always Accoyo
So how much per pound do you get back from the Blanket Project and the Royal Spinnery?
Per their respective websites, in the neighborhood of $1-3/lb for fiber that they use. You have to pay to ship it there, and if they don't deem it usable once it gets there you have to pay to have it returned (or they get to keep it). There may be additional costs assessed against it in the case of the blanket project (per the website).
quote:
And how much time and cost does the owner first have to put in to send them that fiber - after they've paid to purchase the alpaca, care for it, and shear it?
Last year it took my wife and I about 1/2 hr to box up a bit over 100 lbs.
quote:
That is where every single one of the ideas out there so far, including the co-op, have failed to convince owners to send them fiber. Nothing from nothing may be nothing, but less than nothing from nothing is even worse.
I would agree that getting a real monetary return is the key to long term success.
I would disagree that owners have not been convinced to participate/invest in establishing a fiber based industry.
Gateway Farm
Alpaca, a natural elegance... |
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danimac
514 Posts |
Posted - 11/14/2009 : 11:05:05 AM
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Hopefully Peter Lundberg will pop in to talk about TBP. If my notes are correct from the Alpaca Fiber Symposium over the next couple of years they're looking to pay $3/lb for the next collection and get to at least $7/lb. I don't have first hand knowledge of what Royal Spinnery pays, I just know he buys fiber.
Nancy wrote:
quote:
And how much time and cost does the owner first have to put in to send them that fiber - after they've paid to purchase the alpaca, care for it, and shear it?
That's a cost of running a business that harvests raw material. Talk to sheep or angora goat owners. They have to do the same thing. The way they reduce their costs is by coating their animals (less debris gets in), breeding for animals that have very dense, consistent micron fleece across the entire blanket, and finding the least expensive shearer who doesn't contaminate the blanket (flip belly fiber away from the blanket, not onto it) and minimizes 2nd cuts, amongst other cost controls.
And it really isn't any different from dairy farmers (who have to spend a lot of money on things like -- keeping the diary barn sterile, chillers for the milk, testing milk prior to transport, etc), or fruit growers (they have to grade the fruit, toss out the bruised/spoiled fruit, chill the fruit, etc).
As with any supply chain (how to go from raw material to finished product), the profit isn't on the raw material*, the profit comes from adding value.
Cheers,
Dani
*even mining diamonds isn't "expensive". DeBeers has billions and billions of dollars worth of diamonds locked up in vaults to keep an artificial scarcity on the market and keep the price up. The "value add" to Diamonds is the marketing cache around how special and precious they are.
Dani McKenzie
Longbottom Meadows
Roy, WA
360-400-0348
http://www.longbottommeadows.com |
Edited by - danimac on 11/14/2009 11:07:49 AM |
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gatewayfarm
1104 Posts |
Posted - 11/14/2009 : 6:31:38 PM
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quote:
Originally posted by danimac
Hopefully Peter Lundberg will pop in to talk about TBP. If my notes are correct from the Alpaca Fiber Symposium over the next couple of years they're looking to pay $3/lb for the next collection and get to at least $7/lb. I don't have first hand knowledge of what Royal Spinnery pays, I just know he buys fiber.
You can go to their respective websites to get the information, as I stated in my previous post.
Gateway Farm
Alpaca, a natural elegance... |
Edited by - gatewayfarm on 11/14/2009 6:52:26 PM |
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New Direction for Fiber Mill Coming to Ohio
