Establishing a successful small horticulture enterprise: Part B - Key things you need to know
All rural domestic and stock (D&S) customers supplied by the Wimmera Mallee Pipeline will receive the D&S product based on a standard water allowance of 2.5 kL per hectare and an additional primary allowance of 730 kL per rural household. Customers with a landholding of less than 40 hectares will receive a minimum standard water allowance of 100 kL (non-tradeable), plus the primary allowance (if applicable).
Growth water may be available, subject to system constraints. Further information can be found in the fact sheets on GWMWater's website or by phoning 1300 659 961.
Varieties and authenticity
When purchasing planting material, authenticity of varieties and whether they are sold under Plant Breeders Rights regulations has to be verified. Selecting the right genotype for a production environment and end use is vital for all crops.
Before establishing new sites, especially for perennial crops it is recommended to conduct a climate review and soil survey to identify any limiting factors, their potential impact on productivity and remedial actions including costs, technical feasibility and longevity of outcomes. Water availability and quality need to be included in the survey.
Site selection also includes the evaluation of the location in regards to labour availability, infrastructure, accessibility, local planning schemes and regulation and distance to suppliers (inputs, advice, R&D etc) and markets.
Given the need for high yields and quality, compromises in site selection must not be made.
Quality planting material is vital. It is recommended to produce quality guidelines for planting material (seed, root pieces or transplants) and work with experienced nurseries or seed producers.
Out of specification material must not be used to plant commercial crops. Trying to resurrect a poorly developing crop is costly and full yield potential and profitability cannot be reached.
For seed, size grading, disease and germination tests are required; an age limit should be set and storage/packaging conditions defined. Seed from new sources should be tested for authenticity and seed borne diseases. It is not advisable to collect seed from commercial crops. Seed should be produced in isolation, away from commercial crops with excellent disease control to avoid seed borne diseases.
Root pieces purchased for propagation should have a required size range, maximum age and be kept under prescribed temperature and humidity conditions between harvest and planting. They must be disease free at harvest.
Transplants should have a minimum age and size. They must not be pot bound or poorly rooted. If produced from hardwood or softwood cuttings, cuttings should be collected from designated, healthy mother plants, grown away from commercial crops. Cuttings should have stem diameter and lengths specifications.
Good crop establishment is a prerequisite for high productivity. It requires adequate timing, well prepared soil with a fine and deep tilth for root crops, good drainage, adequate soil fertility, pH and irrigation. A lead-time of up to 12 months and green manure crops or soil amendments based on soil tests and drainage may be required to prepare a new site for optimum establishment and production conditions. This needs to be reflected in budgets. The need for bed forming, mounding or deep tillage has to be considered, depending on site and crop e.g. for drainage. Local advice from other growers or experienced agronomists should be sought.
Information on optimum planting densities may be required.
Early weed control is essential for good establishment. Pests and diseases need to be monitored diligently and any pest and disease organisms must be identified and controlled. Information gathering on optimum pest, disease and weed control and pest & disease resistance will have to be ongoing. Products must be free from detectable residues. Minor use permits may be required to be able to use effective pesticides.
It is important to keep records of management activities, inputs and yields. Regular crop monitoring for crop health, vigour, soil moisture, and nutrient status is essential. Crop rotation, best with 4-5 year breaks between crops of the same type, should be observed. If this is a not possible, break crops such as mustards, grasses or grains should be used. A reduction in plant vigour, health, yield and quality has to be expected in most crops, if rotation is not practiced. Rotation, especially in root crops is vital for organic production. Drip irrigation is preferable to overhead irrigation, especially for perennial crops to keep crop canopies dry.
One of the essential requirements of good crop management is timing of operations and using the right equipment. Pest, weed and disease management is often ineffective when the correct timing is missed or the equipment is not suited to the task. Good general crop management advice will be available from trained agronomists and input suppliers.
Optimum irrigation and nutrition procedures will have to be established via monitoring and trials.
Harvesting and post-harvest management
The optimum harvest maturity for a crop often has to be established. It may vary depending on end use. Herbs for drying will be at their best at a different time as the same herb used for oil extraction. Fruit for fresh markets will most likely need to be harvested at a different maturity from fruit for drying. Roots must not become over mature to avoid loss of quality and rots.
As a rule, product loses quality with each hour delay between harvest and cooling or drying and delays of delivery to the market. Adequate packaging and storage conditions are vital and will vary and change depending on the product and market (dry, frozen or fresh, bulk or retail etc).
Guidance for assessing maturity and post harvest management should be taken from information on similar crops. Visits to packers or processors to investigate their equipment and management systems are recommended.
Not all product harvested will be of the same quality. The marketable yield may fall into two to three quality classes based on market requirements and external and/or internal quality parameters (visual appearance/active compound levels). The genotype and production conditions will have a major impact on marketable yield, which in turn drives profitability to a large extent.
Harvest technologies, efficiencies and timing and post harvest management, as well as achievable marketable yields are an area that often requires R&D for most new crops.
Most equipment for small-scale production will need to be specific. General soil tillage and crop management equipment such as spray units will be an exception. Minimum tillage and controlled traffic should be practiced as much as possible, especially for row crops. It is recommended to get advice from local producers of similar crops on weeders, bed formers, harvesters etc as a starting point. In most cases, equipment will have to be modified or developed specifically for new industries.
Quality Assurance (QA)
Safe Quality Food (SQF) is considered an adequate QA system for food crops, unless markets have different requirements. SQF is based on a Hazard Audit, Critical Control Point approach (HACCP), which is adaptable to all crops. ISO standards will provide guidance on QA procedures in regards to business management.
Talking to a business that has gone through the QA process is recommended.
Monitoring, recording and review
All participants in the emerging industry should keep adequate records on e.g. production and processing details including costs, supply chain and market information, successes and failures, sources of information and physical resources, ideas etc. This information should be compiled in a central database for easy reference if possible.
Planning, timing of operations, monitoring and record keeping, data analysis and critical reviews of reasons for success or failure are essential. The HACCP documents e.g. include monitoring and recording requirements for production.
Monitoring and record keeping is also essential for all business and staff related activities. It is recommended to incorporate appropriate procedures into the QA system.
'Intellectual Property' is used synonymously with the term 'Industrial Property', and means tangible representations of intellect and creativity. It includes patents, industrial designs, trademarks, copyrights, confidential information, trade secrets and protection of plant varieties. Intellectual property protection is critical as it is a specialised type of intangible asset.
There are special Commonwealth intellectual property laws, which can be used by all persons and for all types of business, regardless of size, to protect their investments in their innovation against competitors. In addition, intellectual property rights may be protected by the common law and equity.
IP law in Australia
Commonwealth Statutes Governing IP Law in Australia are:
- Copyright Act 1968
- Patents Act 1990
- Patents Regulations 1991
- Designs Act 2003
- Designs Regulations 2004
- Trade Marks Act 1995
- Trade Marks Regulations 1995
- Trade Practices Act 1974
- Sydney 2000 Games (Indicia and Images)
- Protection Act 1996
- Olympic Insignia Protection Act 1987;
- Olympic Insignia Protection Amendment Act 2001
- Plant Breeders Rights Act 1994
- Plant Breeder's Right's Regulations No.352 of 1994
- Circuit Layouts Act 1989
- Circuit Layouts Regulations 1990
- Scout Association Act 1924
- Advance Australia Logo Protection Act 1984
- Commerce (Trade Descriptions) Act 1905
The Authority in Charge is: IP Australia, Ground floor, Discovery House, 47 Bowes Street, Woden ACT 2606, (PO Box 200, Woden ACT 2606), Phone (02) 6283 2999; Fax (02) 6283 7999, Website: IP Australia.
Distinct IP laws exist for different countries. A total of 24 International Treaties, Conventions, and Agreements govern the international field of Intellectual Property. Some of these spell out the international basic standards of Intellectual Property Rights (IPR) protection in each Member State. Membership or ascension to International Treaties and Agreements vary for each treaty and agreement. The site www.globinmed.com can be searched for memberships and IP protection laws and requirements in other countries.
IP for horticulture
For most plants and plant products there are two main options of IP protection. These are Plant Breeders Rights (PBR) and Trademarks & Branding. It is an important prerequisite for IP protection that all plant material used for production in Australia has entered the country according to the Australian Quarantine Inspection Service (AQIS) biosecurity regulations and that the relevant documentation is available for audits. For information refer to: www.daff.gov.au/aqis/import/plants-grains-hort.
Plant breeders rights (PBR)
Australia is a member of the International Convention for the Protection of New Varieties of Plants (1 March 1989). Under the Plant Breeder's Rights Act (1994), breeders, whether Australian citizen or not, may seek protection for new plant varieties that:
- Have a breeder
- Are distinct
- Are uniform
- Are stable
- Have not been exploited
The duration of protection is 20 years from grant, or in the case of trees and vines, 25 years from grant. Breeders who have gained protection under PBR legislation are entitled to receive royalties from the commercial exploitation of their protected varieties. It is the responsibility of the producer to ascertain whether the plant they wish to grow is covered under PBR and to whom royalties are due.
Trademark and branding
Australia is a member of the International Trademark Law Treaty (soon to be named Singapore Treaty on the Law of Trademarks) since 21 January 1998. Trademarks can be registered for Australia only, individual other countries or groups of countries.
Trademarks, consisting of a name and logo should be developed or any existing names and logos reviewed for the pilot marketing phase. It is important to investigate whether both, the name and logo can be registered.
For further information about intellectual property in horticulture please consult the Intellectual Property Australia Website.
Commercialisation of new products
The Commercialisation Pathway
It is recommended to evaluate commercial readiness of a new product idea using criteria as shown in the Commercialisation Pathway table below. It has to be remembered that a crop is not a product. Appendix 1 provides more detailed information on commercialisation steps that need to be completed. If a product is not 'ready' the process will identify the gaps that need filling through further investigations.
|Business Name||Commercialisation Steps|
|1. Finding and defining the opportunity||1.1 Capture idea|
|1.2 Concept development|
|1.3 Secure key IP|
|1.4 Proof of product (product definition, pilot sales)|
|2. Proving the opportunity||2.1 Understand market|
2.2 Understand customer
|2.3 Tailor product|
|2.4 Scope & size commercialisation task|
|3. Commercialisation||3.1 Build the team|
|3.2 Market access arrangements (set up and manage)|
|3.3 Implement production plan / distribution|
|3.4 Implement management systems & governance|
|3.5 Growth & value extraction (or exit plan)|
The Commercialisation Pathway graph below shows a graphic example of assessment results for three fictitious products. It highlights that crop 2 has a higher degree of commercial readiness than crops 1 and 3. A similar approach can be used to illustrate the commercialisation status of your service or product. The percentages indicated in the graph give the level of completion of the chores; 100% signifies a high level completion.
It is important for each step/sub-step to go through a plan – do – review cycle to ensure all issues have been attended to for one step prior to embarking on the next.
Scoping the commercialisation task
The commercialisation process requires formulating strategic, business and operational plans (= step 2.4 in the commercialisation pathway table) before embarking on the final commercialisation steps (3.1 – 3.5):
- Strategic plan – defining the vision and long-term goals.
- Business plan – projecting intermediate/tactical activities and finances.
- Operational plan – describing immediate and short-term activities (production plans, technical requirements and annual budget).
The strategic and business plans should identify possible strategic alliances, cooperative production and potential funding options.
Developing a plan
While a strategic plan is important to capture the vision, set long-term goals and thus determine the general direction of development, compiling business, marketing and operational plans are an essential part of the commercialisation processes.
Numerous business and marketing plan templates are available from a range of sources and qualified consultants can assist in the planning process, if required.
The basic contents of a business plan should be:
- General Business Description
- Products and Services Description
- Marketing Plan
- Operational Plan
- Management and Organisation
- Business or Personal Financial Statement
- Start-up Expenses and Capitalisation
- Financial Plan
- R&D plan
A business plan template can be found at: Business Plan Templates and Tools
As part of making a decision on a product for a certain market segment, a competitor analysis should be completed to analyse opportunities and risks. The following table shows the type of factors to consider; others may be added.
|Factor||Importance to Customer||Business||Competitor|
|Stability/fluctuation in supply|
Supply chain considerations
The larger players in an industry usually buy from merchants and wholesalers rather than directly from producers. Try to identify buyers who see an advantage in direct relationships with producers.
Key principles of supply chain management to be considered are:
- Focus on customers (understand their key buying reasons, KBRs, and select customers whose needs can be met in regards to volume, quality and timing).
- Get the product right (for yourself and the customer).
- Develop effective and efficient logistics and distribution (understand how often and how product changes hands, how long and under which conditions do they stay at each distribution point).
- Form, manage and sustain relationships (know everybody involved in person).
- Have an information and communication strategy (keep in touch regularly and communicate up and down the chain, understand which information is required for each part of the chain).
Even though the above points appear 'common sense' producers often neglect them.
For further information about establishing a small business please refer to the Business Victoria website
Key contacts in the region
|Department of Environment and Primary Industries|
Department of Environment and Primary Industries
Private Bag 260
Horsham, VIC 3401
Ph: (03) 5362 2110
Agriculture Victoria - Horticulture
|Horsham Rural City|
Horsham Rural City
Civic Centre, Roberts Ave
PO Box 511
Horsham Vic 3402
Ph: (03) 5382 9717
GWMWater - Regional Administration Centre
11 McLachlan Street
Horsham Vic 3400
Ph: (03) 5382 4611
Northern Grampians Shire Council
52 Longfield Street
P.O. Box 580,
Stawell Vic 3380
Ph: (03) 5358 8700
|Wimmera Development Association|
Wimmera Development Association
62 Darlot Street
Horsham Vic 3400
Ph: (03) 5381 6506
|West Wimmera Shire|
Mary Lu Amos
West Wimmera Shire Council
49 Elizabeth Street
Edenhope Vic 3318
Ph: (03) 5385 9900
|Regional Development Victoria|
Regional Development Victoria
Ph: (03) 5381 2762
Yarriambiack Shire Council
34 Lyle Street
PO Box 243
Warracknabeal VIC 3393
Ph: (03) 5398 0100
Buloke Shire Council
Wycheproof, VIC 3527
Ph: 1300 520 520
Hindmarsh Shire Council
92 Nelson Street,
Nhill, Vic 3418
Ph: (03) 5391 4444
About the small acreage horticultural crops program
Business Victoria – Starting and Managing a Business – Choosing a Business Structure
Cahill, G. (1993) Don't Dream It: Do It! Making money from new farm ideas. AgMedia. Victoria.
Cook, C. (2006) Are You Ignoring These Small Business Marketing Principles?
Finding government statistics
Is it feasible? Should I go into business? A guide for small business operators and those thinking about starting their own business in Tasmania. Department of Economic Development, Tourism and the Arts
Lovatt, J (2009) Tips for a successful business. Department of Employment, Economic Development and Innovation
Karacostas, S. (2009) Building Lessons Learned in 2009: What highly successful small business owners are doing that you can do too
Salvin, S; Bourke, M and Byrne T (2004) New Crop Industries Handbook.
Stockard, N (2008) Basic Small Business Marketing Principles.
Uploader, S. (2009) The core principles of a successful business. Retrieved from the Connexions