Case Study: Grivan Early Growers

This case study covers the following points:

 

Girvan Early Growers

Introduction to Girvan Early Growers and Cygnet PB

Ayrshire new potatoes are known far and wide as a culinary delight, to be enjoyed by all. However the humble "Ayrshire Tattie" that we all know and love does not appear in our shops and restaurants just by chance. The process of producing potatoes involves a number of carefully thought out and planned steps involving several partners that are involved in each stage of the supply chain. Each participant in the chain contributes to the overall success of the chain and ensures that the product that is presented to the consumer is of the highest quality. Girvan Early Growers Ltd. (GEG), formed in 1990, is a group of farmers, based in Girvan South Ayrshire, who specialise in growing early potatoes. The light land and the proximity to the South West coast of Scotland, that benefits from the warming waters of the Gulf Stream, make this area an ideal location to grow early potatoes.  The group also grow smaller quantities of carrots and swedes destined for the retail market.

The Commercial Drivers for Collaboration in the Chain

GEG produce around 12,000 tonnes of potatoes annually.  The potatoes that are produced are cleaned and graded at their depot before being despatched to the various packers.  GEG supply a number of major packers throughout Scotland who in turn supply the major retailers with potatoes throughout the season.  All their potatoes are grown to order and have to meet their customers’ exacting demands.  The group grows only requested varieties and no crop is planted unless there is a secured advance outlet for the produce.  Emphasising this point, Drew Young, Chairman of GEG commented,  “We do not plant a single seed potato without knowing that we have a dedicated market for the resultant crop.  We discuss with each of our customers the exact varieties that are to be grown and the agronomy regime that is to be used for each field of potatoes.  Only after that has all been agreed do we begin the process of growing potatoes.”  Each potato variety grown is carefully selected based on the characteristics of the variety and is matched to the ultimate use for which it is intended such as boiling, chipping, mashing and baking. 

Cygnet PB is a key partner in the GEG supply chain and are responsible for sourcing all GEG’s seed potatoes. Cygnet PB Ltd is a specialist plant breeder based in Kinross-shire and operates the UK’s largest UK controlled potato breeding programme.  All the production, quality control, transport, sales and marketing and admin support functions are based at their Milnathort office.   Their state of the art facility situated there include refrigerated storage and a sophisticated grading facility that can offer tuber counting and smaller size fractioning of orders.

What are the Key Working Relationships and how are they Maintained?

GEG have a long-standing relationship with Cygnet PB and over the years a considerable amount of trust has been established between the two organisations.  The trust that has been built up means that commercially sensitive information is freely exchanged between the two companies without the fear that either will use the information to their own advantage.  One example of this is that GEG agree to trial new potato varieties on behalf of Cygnet.  Bearing in mind that the process of breeding and developing a new potato variety can take up to 15 years to complete, it makes it a time consuming, costly and highly specialised area of potato production.  The relationship with GEG helps Cygnet PB to investigate whether a particular variety will be successful and at the same time gives GEG the opportunity to benefit from growing new improved varieties and puts them in a position to offer the crop to their customers before anyone else.  As Drew Young pointed out, “We work together to look at opportunities in the market that we would not have access to if we were acting on our own”.

What are the Collaborative Business Propositions and Targets Agreed by the Chain?

A unique feature of the relationship between GEG and Cygnet PB is that, not only do they source the seed for GEG, they also act as their marketing agents. As Drew explained, “Cygnet’s specialised knowledge of the market coupled with their relationships with the main buyers is a major factor.  For us to employ our own dedicated sales and marketing team would not make economic sense, particularly when we receive such a first class service.  I am a great believer in people sticking to doing what they do best and leaving things to others who are the experts in their field.  The business world is full of examples of companies who tried to take on too much and end up doing none of it well,” explained Drew.  Expanding on this theme Drew said, “Finding the right partners to work with is one of the key factors in making collaboration work. We look for people who have a similar mind set to ourselves before becoming involved with them.”

In addition to spending a considerable amount of time developing relationships with their customers GEG also take a great deal of pride in the relationships that they have with their key suppliers.  “All our suppliers understand our business and they give us the same level of service that is demanded from us by our customers.  For example if a particular treatment is required for any of our crop we just have to pick up the ‘phone and we know that we can rely on our supplier to deliver whatever is required promptly and to the exact place where it is needed” said Drew.

The concept of working in collaboration with others helps GEG to supply the market by ensuring that the supply chain can be structured to meet the needs of the ultimate consumer.  Working collaboratively also allows GEG access to markets that they would not be able benefit from if they acted on their own. Economies of scale and scope that are achieved are additional benefits that a more collaborative approach brings to the supply chain as a whole.

Examples of the Results of Collaboration

Working with others in the supply chain means GEG are actively involved in continually looking for ways to reduce the level of waste across the chain while at the same time improving the overall quality of the product.  All parties involved in the supply chain contribute to this process and the financial benefits that accrue can be substantial.  One example of the waste that has been reduced is the improved product quality that has been achieved resulting in fewer rejections and better prices and therefore increased revenue.  This was achieved through the use of better agronomy techniques, better equipment, that could not have been afforded individually, coupled to improved IT systems have all contributed to the improvements in product quality.  All these factors contributed to the improvements in product quality.  There were also additional benefits of reducing the amount of waste, which means that disposal costs have come down and the consequential environmental benefits.

Long Term Thinking and Mutual Support

As with any business, the price received for their products has a huge effect on profitability.  The price GEG receives for their produce is dependent on a number of factors, with one of the most crucial being the ability to meet each customer’s specification in order to gain the maximum price. Therefore a considerable amount of effort is expended to ensure that the potatoes are grown to the size and quality specified by each of the retailers that GEG supply.  Aspects of quality that are taken into consideration include: -

 

 

In order to ensure that quality levels are maintained at the highest-level, GEG work closely with their suppliers to ensure that key inputs are available when they are required.  An example of this in practice is the arrangement GEG have with Yara who supply fertiliser to GEG.  Yara manufacture fertiliser to an exact formula as specified by GEG.  This is based on the soil type and nutrient levels of a particular field and the fertiliser is produced to remedy any deficiencies in the soil that would lead to a reduction in potato yield or quality.

The fact that GEG have more than doubled their throughput since their inception, despite increased competition from elsewhere in the world, is a testament to their ongoing success.  Continuity and the growth of the business would not have been possible without taking a collaborative approach.  As a result long-term supply chain relationships have been developed that has allowed GEG access to knowledge and expertise that would not have been available to them if they were acting in isolation. 

Innovation, Value Add and New Product Development

Working with companies such as Cygnet PB has provided the opportunity for GEG to be innovative and enter new markets.  One example of this is Cygnet PB have developed a potato variety that has been bred specifically for the characteristics best suited to making chips.  This has opened up a completely new market for GEG that has the potential to make a significant contribution to the profitability of the group.  GEG are also members of the British Potato Council (PCB), and they engage with the major retailers to promote home grown produce.

Forecasting has become a vital part of the planning process carried out by GEG.  This process is carried out collectively and involves meeting with the marketing and production teams of their retail customers to discuss the following year’s requirements.  The planning procedure needs to be undertaken at least 6 months in advance to ensure that supply can be matched to demand as accurately as possible.  The procedure involves sharing information and knowledge across the chain so that all the chain participants have a greater level of understanding of what is required.

Conclusion

One feature of collaboration across the supply chain is the joint processes that have been developed to ensure that new crop potatoes produced by GEG are the first to reach the market at the start of the new season and so benefit from the reward of higher prices.  Only by working together can this goal be achieved and involves everyone working together and combining the collective knowledge and resources that are available to them.   Everyone involved, from GEG’s individual farmer members, the hauliers, the packers and the retailers coordinate their activity to in order that the potatoes are delivered as quickly as possible to the stores thereby ensuring that the consumer is presented with a product that is as fresh as possible.

The whole ethos of working with others in the supply chain is fundamental to the GEG operation.  Among the benefits of these collaborative arrangements is the sharing of financial risk.  Without these joint-working arrangements it would mean future investment decisions about the business would involve a greater element of risk that can be offset by taking a more collaborative approach. 

As Drew pointed out, ”I have no doubt that without the commitment and support of our members and partners in the supply chain we would not be producing anything like the quantity and quality of potatoes today that we do.  From the individual farmer members through to our suppliers and customers, everyone involved makes a contribution to our success.”

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