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Benchmarking drives success for interstate expansion
Publication date: September 3, 2024
4 Ways Fresh Produce, started by Vietnamese-born brothers Duy and Tam Ly in 2001, began as a means of selling their produce through the South Australian Produce Market at Pooraka.
Initially, they sold through other merchants, but since 2001 have had their own stall at the market and operate as wholesaler, packing and selling their own fruit and vegetables as well as that produced by hundreds of growers across the country.
4 Ways Fresh Produce, which specialises in cucumbers, eggplant, zucchini, capsicums and tomatoes, also sells directly to major retailers including Coles, Woolworths, Aldi, Foodland, IGA and Costco.
Even though the business has mostly focused on wholesaling, it has expanded its growing facilities into Western Australia, and in 2022 became involved in a $15 million joint venture at Geraldton with Indigenous Business Australia (IBA) and Yamatji Southern Regional Corporation.
The plan is for the new company, Yamatji Fresh Produce, to develop 300 greenhouses for growing cucumbers on land adjacent to 300 greenhouses already operated by 4 Ways Fresh Produce.
4 Ways Fresh Produce general manager Kingsley Songer, who has overseen the project, said expansion into WA had been “very advantageous” for the business, which now operates a stall at the Perth Market.
“It’s an ideal climate for growing cucumbers in particular, which is what we were buying there during our winter,” he said.
“Summer is hot but from the end of March right through until the end of November, we can grow very good quality cucumbers, which is exactly what’s happened over the eight crops that we’ve grown there.”
Mr Songer said the joint venture was an opportunity for the business to increase production as well as providing jobs close to Geraldton for local First Nations people.
Production in the first 100 new greenhouses began in July, with continental, Lebanese and green cucumbers. The extra space also will allow for crops of tomatoes and eggplants this year, with capsicums and some other crops likely to be added in coming years.
Mr Songer said access to benchmarking data had been key to successfully obtaining funds for the joint venture through IBA, and other projects.
When WA-based farm business consultants Planfarm began offering its benchmarking and consulting services to horticulture businesses in partnership with vegetablesWA seven years ago, 4 Ways Fresh Produce was among the first vegetable growers in the state to sign up.
Mr Songer said benchmarking was essential for fully understanding things such as return on investment, costs as a percentage of turnover, yield per hectare and the viability of particular crop types, as well as comparing a business’s performance against others.
Without access to that data, growers were effectively asking investors and lenders to trust in their “gut feel”.
As an example, when 4 Ways Fresh Produce first considered establishing its own greenhouses at Geraldton a decade ago, it only had information about what had and had not worked in South Australia and what it was able to glean from established WA growers on which to base the decision.
“But in this venture with the IBA and Yamatji, one of the first things I sent them was the benchmarking study that we’d done on our Geraldton property for the last five years, because that showed an independent view of how we were performing against the industry,” Mr Songer said.
Mr Songer said the benchmarking reports had shown the Geraldton operation paid for itself in a little over three years and was in the top 25 per cent of WA vegetable producers in the data set.
Yield per hectare, return per hectare and cost per hectare were better than average.
“When you get down to those levels and you see how you look against the industry, that’s when you really can figure out what an extraordinary project we’ve actually finished up with over there,” he said.
“That to me was the real benefit we got out of doing a benchmarking study, and had we not done it, to this day we wouldn’t have been any the wiser, whether we were any better or any worse than anybody else.”
Last year Planfarm was awarded a contract to extend its benchmarking to vegetable and onion growers with experienced project partners RMCG across Australia as part of a five-year initiative fully funded through Hort Innovation.
Called Level Up Hort, the program provides specialised business reviews, with a business consultant from Planfarm or RMCG, valued at up to $10,000 per year.
Participants receive two reports – a full business analysis and a benchmarking report, both private and confidential, comparing their figures against others. Each year the participant data is de‑identified, aggregated and reported on a per hectare basis or as ratios for a national report which completely anonymises growers.
The first national report released by Planfarm director of horticulture and agronomy Paul Omodei at Hort Connections in June represented 3,162 hectares of vegetables and onions across six states.
Its major finding was that the most profitable 25 per cent of businesses recorded greater profit per hectare – also known as earnings before interest and tax – even though they spent more money per hectare of production in 2023 or 2022-2023.
The top 25 per cent generated profit of $22,567/ha compared to $2,906/ha for the average, and a loss of $16,827 for the least profitable 25 per cent.
Mr Songer said the one-on-one sessions were a valuable tool for getting a different perspective and identifying those parts of the business that were underperforming, regardless of whether it was making an overall profit.
“Normally, it won’t be the whole business in the bottom 25 per cent,” he said.
“There may be certain parts of the business that are out of kilter. People can question why they’re growing tomatoes for example if the yields per hectare, costs per hectare or return per hectare are below the benchmark.”
While Mr Songer retired in July, future plans for 4 Ways Fresh Produce include adding to its three Virginia farms with more greenhouses on land nearby, as well as developing a new 48ha block leased at Carnarvon, in north west Western Australia, for production of Asian vegetables, melons and pumpkins.
To enquire or enrol in the Level Up Hort program, contact project manager Steff Carstairs on 0428 712 852, email steff@planfarm.com.au or go to the website leveluphort.com.au for more information and FAQs on who to contact in your region.