Hello everyone! Yesterday I shared an article about the environment of DVF Farms. Today I am going with you my assessment of its Management Program
DVF’s management program is into quality production of raw milk. Quality raw milk comes from quality animals that are physically, genetically and psychologically healthy. They are fed with good quality of forage such as Napier grass and well-cared for in the following ways:
a.) provided with comfortable shelters during summer especially for newborns and pregnant ones;
b.) regular checked-up for signs of abnormalities;
c.) consistent schedule of milking and mating schedules;
c.1) milking shall be done very early in the morning when the ambience is quiet and peaceful so as to avoid stress;
c.2) continuous milking for 2-3 days to avoid drying up of milk; and
c.3) assigned with familiar milkmen for milking. Ultimately, produced milk of these healthy carabaos shall have passed the 5 quality tests of DVF. Once their produce passes the 5 quality test steps, DVF would buy, process and sell the pasteurized product to different households and its institutional clients. This program of quality milk production is directed to the farmers with the primary objective to maximize customers’ satisfaction. This objective translates to higher volume of sales. With its earnings, it can sustain its operations and support the firm’s objective.
Some of its Strengths include the following:
Product and Promotion considerations DVF positioned Gatas ng Kalabaw as its premium product. The packaging sells the milk as such. They are available in supermarkets and groceries in Manila because researched showed that milk consumption was greater in Manila. Fausto finds the customers of Manila very welcoming. Other than its premium product, DVF also sells other products such as pastillas and kesong puti. Pastillas was salable and had loyal customers in Manila too which accounted for 90% of its company sales.
Target Market/Channel considerations As mentioned above, DVF has agents. It was initially known for delivering fresh milk to different households in Nueva Ecija. It preserved the same tradition when it opened its market in Manila. Each village has a focal resident who is responsible to taking orders, storage and distribution. The products were also sold in supermarkets and groceries. Refrigeration was provided both for focal village residents and retail outlets to ensure proper storage and maintain quality of the milk. Aside from these, it already has loyal institutional clients such as hotels, restaurants and coffee shops.
Pricing considerations DVF’s high range price was based on the following considerations: customers’ psychological behavior, reliance on the milk produced by TDCI and the local farmers, seasonal demand and motivation of DVF agents/dealers and competitors’ strategies. This was intended to guarantee earnings for its dealers and outlets, at the same time to build loyal customers.
Unfortunately, milk produced by farmers and delivered to Talavera Dairy Cooperative Incorporated (TDC) are not fit for human consumption due to blood or manure contamination. This could not pass the 5 steps requirement of DVF. To be specific, the unhygienic collection of milk by farmers from carabaos which are behavioral related will be presented and elaborated further in the problem analysis.
Now, the objective of this assessment is to discuss the weaknesses of the firm (DVF) and its management and to determine whether these are aligned with the objective of the firm, which is to provide livelihood opportunities to farmers, and the objective of the management which is to produce high quality milk to increase sales and sustain DVF operations. After such, reasonable alternative courses of action and realistic solutions will be presented.
PROBLEMS
Primary Problem: Insufficient quantity of Grade A quality milk.
Symptom/s: There is a 30-50% growth trajectory in demand for fresh milk every year for DVF, but it could only sustain 15%, just enough to ensure quality milk and maintain stable relationship with DVF’s loyal customers.
Cause/s: The animals are stressed with the way the farmers treat them. Thus, they do not cooperate and cannot produce quality milk.
Secondary Problem: Insufficient of supply of milk
Symptom: Pole vaulting
Proof/Fact: Farmers violated their agreement with DVF to only sell their milk produce to the latter. They sold their produce to DVF’s competitors for a higher price.
Assumptions: 1. Milk produced by the pole vaulters were not guaranteed to be of good quality.
- They are doubtful if their milk would pass the 5 quality tests in DVF.
Causes: 1. Farmers need more income.
- Farmers do not welcome introduction of new methods about farming.
RECOMMENDATIONS:
- Consistency with milking schedule- This would increase DVF’s current production, although there is risk of the carabaos getting stressed while they are adjusting with the schedule.
- Buy additional carabaos 150 – This would ensure the quantity of quality milk DVF requires. It could even address the shortage of supply during peak seasons. However, there will be less priority given to the produce of TDCI farmers. Also, this would entail him to invest extra money for the following:
herd of cattle ($1500-2000/carabao) – If he will buy 150 heads, he needs about P15M.
Napier (1 hectare=300-600K kg/yr=20 carabaos) – He would need 7.5 hectares for 150 heads, which can produce about 4.5M kg/yr. Just the same, he needs P4.5M for this forage. Given that 1 carabao can produce 10-19 liters/day with Napier grass, the herd of 150 will produce 2,850/day. This can be sold at P185,250 day, assuming 1 liter is sold @ $1.3 in the Philippine market. So, DVF gets P5, 557,500 a month. This gives him P66, 690, 000.00 a year. With this, DVF ROI for his investment for carabao, land, Napier and manpower will be paid in less than 2 years.
- Formal Contract with TDCI – This will oblige TDCI to work on the deficiencies of its farmer members. Instead, of DVF carrying the burden of their shortcomings, it should be TDCI who should do something about it, after all they also benefit from DVF.
DECISION AND IMPLEMENTATION
Meet DVF farmers about the plan of maximizing produce. Lay down schedule to them so they can prepare.
Coordinate with the Philippine Carabao Center for DVF’s purchase of the additional 150 carabaos.
Coordinate with the following:
TDCI to finally invest on Napier grass and membership disqualification
Central Luzon State University (CLSU), Philippine Carabao Center (PCC) and National Dairy Authority (NDA) for skills training for farmers
This was my proposal before but by now, DVF has probably improved so much after its encounter and assessment of its issues. May it continue to produce quality milk to hopefully compete in the international arena.