The Future in Agribusiness
The source of highest quality stock feed!
A quality company to grow produce for!
Protecting the environment!
A company to invest in!
General disclaimer: these web pages are for general information
purposes only. Investment decisions can only be made with our Prospectus
in consultation with your financial adviser. Fodder King will accept no
liability from decisions made on the basis of these web pages.
Summary Information from the Prospectus
Using patented technologies, Fodder King produces high quality fodder products,
which are marketed for supplementary and intensive livestock production.
Applying these technologies to harvesting and processing lucerne, clover,
cereal and other fodder crops, enables Fodder King to produce consistently
higher average quality fodder under a wider range of weather conditions
than previously possible. This represents a world first for Australia
and results in graded, branded and differentiated fodder products that
meet stringent quality specifications.
These specialised hay making processes yield much greater productivity
of capital and labour, enabling the company to be more competitive
in satisfying its customers needs. As a result demand outstrips the
Companys ability to supply by a large margin.
Fodder King contracts farmers to supply it with various fodder crops to
a specified standard, ready to harvest. It purchases the crops then carries out the harvesting, processing, marketing and product distribution. The grower is paid a guaranteed price with a bonus depending upon yield and market conditions.
The economies of scale, made possible
by the new technologies, will boost the profitability of the Company as
production volume grows. In the meantime, its own production is supplemented
by a product broking service.
Fodder King has met the challenge to overcome the limitation of weather, which normally restricts production to a small portion of the day and only under ideal conditions. Fodder King has successfully broken this barrier, producing high quality hay consistently throughout the day.
Fodder King's products consist of legume, cereal and pasture hays in different bale sizes. Further processing yields products such as cubes, super-compressed bales, chaff, meal, mats and pellets. To date Fodder King has contracted other companies to further process its hay to a specification. In the future Fodder King expects to undertake these value adding activities as part of its own production operations.
Fodder King's customers participate in all the major livestock industries in Australia. Fodder products are essential for production feeding of beef and dairy cattle, deer, goats and horses. Some of Australia's leading thoroughbred studs are Fodder King customers.
Fodder King has made it easier and less expensive for customers to buy fodder. Only Fodder King customers can be confident of delivery when specifying the type, quality and packaging format of fodder they require.
Fodder King hay and value added products are marketed and distributed under the Fodder King label to local and export markets. The Company's goal is to become the leading supplier of fodder products in Australia and the country's leading exporter.
The market for fodder products in Australia is valued at more than A$750 million per annum ex-farm. The Australian fodder industry is fragmented, with numerous small producers, traders and distributors. Fodder King has the potential to capture a large percentage of the market by utilising its unique competitive advantages, including customer preference for the Company's products relative to its competitors.
Asian countries import in excess of A$900 million of forage products per annum. Little of this is presently sourced from Australia. Fodder King plans to expand into these export markets. Already, regular orders are being received from South East Asia. Trial shipments of lucerne hay have been successfully delivered to the Middle East and Japan. As Fodder King is now receiving regular overseas enquiries, sourcing a sufficient supply of fodder crops is all that is retarding a rapid growth in exports.
Demand for Fodder King's products, both domestically and overseas, continues to exceed the Company's current production capacity.
Through the use of superior patented technologies, Fodder King's methods
enjoy a number of sustainable strategic advantages over those of its competitors:
higher average nutrient content hay, gives
customers better value;
higher average quality, means higher average
lower costs of production from greater productivity, when at full equipment
capacity, without loss of quality;
lower risks for Fodder King, for growers, and for customers;
lower delivery costs with a denser product;
improved profit margins, when at full equipment capacity, which are expected
to gradually improve with increasing scale of operations;
brand loyalty and price premiums are expected because customers get a better
deal with consistency, quality, reliability and service.
By working with Fodder King, individual farmers can effectively
manage 600 hectares of irrigated fodder crops, whereas using conventional
harvesting methods the individual farmer is often restricted to about 60
hectares. This is a major advance in production
capability, and presents opportunities for large scale irrigation farmers
to become Fodder King growers.
Securing sufficient supply of crops to ensure Fodder King's growth, requires
successfully introducing change to the established methods of operation
currently employed by farmers in Australia.
Leading by example has been found to be the best way to introduce change to the Australian cotton, sugar cane, rice, wine and vegetable growing and processing industries, and so it must be for Fodder King and the fodder industry. Fodder King has therefore established and is operating a fodder farm to demonstrate to farmers the benefits of growing at a larger scale and supplying Fodder King on a contract basis.
RISKS AND REWARDS
Typical of agribusinesses, the Company faces a number of uncertainties due to mother nature, such as fire, flood, drought and pestilence.
When the livestock industries experience feed shortages, demand for fodder increases, as do prices.
As the Company becomes larger, it will operate in different regions of Australia. This geographic diversity is expected to increasingly shield it from regional risks and climatic variations.
List of Charts and Pictures
These pages were prepared by Victor Bien a shareholder.