Coit20252 | Management | A Assessment Answers

• Identify a Fibre focused Agribusiness operating in Australia.
• Identify its business units and products and services lines.
• Identify its business revenue units and discuss the importance of the largest of these revenue units.

Introduction

The agricultural sector in Australia is booming at present with Australia concluding a Free Trade Agreement with China in the year 2014 which has invariably paved the way for vast business and trade opportunities for Australian agricultural products in the Asia-Pacific markets. Agricultural experts have indicated that the agricultural sector has the potential to be highly competitive but lack of a strong leadership is a major hurdle that is preventing the Australian agricultural sector from realising its true potential. The Agricultural produce in Australia accounted for 93% of the total domestic food supply and the agricultural exports contributed about $49.9 billion in the year 2017 in the form of exports showing a growth of almost 8.5% (Ruralbank.com.au, 2018). The agri-exports in Australia is expected to touch almost $60 billion in the current financial year and this would be mainly due to the surging cotton and dairy exports (Gray, 2018).

Cotton Industry in Australia

Cotton is one of the key components of the overall Australian agri-exports which contribute tremendously to the Australian economy. The majority of the cotton farms in Australia are family owned and operated and this directly creates employment opportunities for around 6 to 7 people. The average age of farmers involved with cotton cultivation in Australia is 39 years (Cottonaustralia.com.au, 2018).The cotton industry in Australia forms an integral part of the Australian economy with more than $2 billion in annual exports. Australia presently produces roughly 3% of the world’s total cotton production output and it is the third largest global exporter of cotton behind US and India. Carroll Cotton Company is one such successful Australian cotton company which was established in the year 1995 and the company has never looked back since its inception.

Organisational Background

Carroll Cotton Company has been operating their business for the last 20 years and the organisation has maintained a reputation for delivering the highest quality in cotton ginning and customer service right from the time of their inception. Carroll Cotton Company is situated in the Upper Namoi Valley of New South Wales. The organisation functions as a family owned business entity and at present they are only one of the few remaining family owned cotton gins operating in Australia (Carrollcotton.com.au, 2018) The location of Carroll Cotton Company in close proximity to Sydney and Newcastle ports provides it with a locational advantage which the organisation has been able to successfully capitalise on in order to create a competitive advantage over their business rivals. The organisational mission of Carroll Cotton Company is to work closely with the cotton growers in order to deliver a more thorough and customise cotton ginning service by incorporating and adopting the global best practices and market expertise (Carrollcotton.com.au, 2018). The organisation continuously works to maximise the earnings and profits for the cotton growers in NSW. Each grower working under the Carroll Cotton Company maintains a valued personal relationship with the owner and this has played a vital role in creating an environment where there is a high level of trust and understanding between the growers and the gin owner which has resulted in improved business productivity and performance of Carroll Cotton Company (Carrollcotton.com.au, 2018). The organisation has been able to deliver a personalised ginning service that is tailor made to suit the specific needs and requirements of their different clients. The company has a proud and fierce history of innovation and determination which eventually helped them to tide over difficult times. The organisation has adopted a very hands-on approach in their daily business operations while providing complete flexibility to their different cotton merchants who have the freedom of purchasing the processed cotton bales straight out of their cotton ginning facilities without any limitation (Carrollcotton.com.au, 2018). This is what has enabled Carroll Cotton Company to ensure that their cotton growers are able to secure the most competitive and desirable pricing from all the cotton merchants.

Carroll Cotton was started by an entrepreneurial farmer named John Samuel Davies (popularly called “Sam”) who was considered to be a man of big ideas. In the year 1995 Sam travelled to Texas (considered to be the cotton heartland of the US) and purchased ginning equipments which he later utilised to manufacture his first batch of cotton bale in the April of 1996. However, the untimely demise of Sam following his return from the US meant that he was unable to realise his dream (Carrollcotton.com.au, 2018). The business was later carried on by Sam’s Wife Catherine who shared the same vision as Sam and under her guidance and leadership; Carroll Cotton Company achieved greater heights in their business operations. Presently the business is continuing under the capable leadership of Scott Davies (the son of John) who has continued the family tradition by following the highest levels of integrity and reliability (Carrollcotton.com.au, 2018).

The organisation maintains a highly experienced and skilled team of ginners and maintenance crew who are given the status of a permanent work force within their business. They are responsible for ensuring that the organisation is able to continue their business operations in a smooth and efficient manner. Apart from the permanent workforce, the organisation also employs a temporary and seasonal workforce from April to August (Carrollcotton.com.au, 2018). This flexible manpower arrangement allows them to triple their workforce during peak production season. The team at Carroll Cotton has an in-depth knowledge and understanding about cotton cultivation and they are always willing to share their knowledge and expertise with the existing cotton growers in the Upper Namoi Valley while providing them with a friendly, professional and reliable solution to their cotton growers (Carrollcotton.com.au, 2018). Carroll Cotton Company thoroughly adheres to Cotton Australia’s ‘myBMP’ (Best Management Practices) program which enables them to deliver the highest quality standards of cotton to the Australian cotton industry.

Products and Service Line offered by the Organisation

The products and services offered by Carroll Cotton Company include customised cotton ginning, mote fibre reclamation, cottonseed collection, on-site storage, mote and seed brokerage and marketing and 24/7 processing facility for conventional and round modules. Carroll Cotton Company has been able to achieve a transition in their business through the adoption and implementation of the modern state-of-the-art ginning technologies. The organisation has made a reputation in the market for accomplishing higher operational and business efficiency and this has enabled them to provide exceptions market returns to their investors (Carrollcotton.com.au, 2018). Being at the forefront of business innovation, Carroll Cotton Company has been able to project itself as a forward thinking business and they have consistently pioneered the utilisation of the BC Supply processing equipments in the Australian ginning industry.

Carroll Cotton Company is a family owned company with a total of 9 employees on their payrolls. The Gunnedah Shire Council has accepted a development application to expand the annual production capacity of Carroll Cotton Company to 100000 tonnes in their December meeting. The organisation was able to successfully obtain permission from the same authority in 1999 for the production of 11350 tonnes of processed lint which set the stage for Carroll Cotton Company’s expansion process (Gardner, 2018). The organisation was able to add their fourth gin which helped them to expand their cotton production output to 28,375 tonnes. The proposed business expansion plans of Carroll Cotton Company are going to cost the company a whopping $19,000,000 and upon successful implementation the organisation would be able to generate revenues to the tune of $65 million to $110 million which would be a significant increase from their existing levels (Gardner, 2018). This proposed expansion plan of Carroll Cotton Company is vital from the context of Gunnedah Shire as this would help in boosting the economic growth and development of the region and this would provide the local cotton growers with the opportunity to generate more revenues and profits from their farming activities.

Cotton production is a challenging and costly business proposition which requires a though idea and understanding about the cotton cultivation. There are various costs that needed to be taken into consideration such as the cost of maintaining irrigation facilities, fertiliser and insecticide costs, fuel costs and cost of machineries associated with cotton processing (Cottonaustralia.com.au, 2018). Cotton being a difficult crop to grow requires a strong level of commitment on the part of the farmers to continue with cotton cultivation and this is one of the major reasons why the costs of growing cotton is higher as compared to the other summer crops. .

The average cotton growing farm in Australia generates gross incomes of $4,800,000 and their operating expenses incurred during the same period is about $3,500,000 which leaves an operating surplus of $1,300,000 to the cotton cultivators. The interest paid on raw materials and inventories would roughly account for $ 600,000. This leaves the cotton growers a net profit of $700,000 every year (Cottonaustralia.com.au, 2018). The miscellaneous expenses would account for another $150,000 and this leaves a total of $ 550,000 as balance to the growers.

Conclusion

This assignment has played a major role in helping us to understand the present situation of the cotton farming in Australia. This assignment has provided detailed information about Carroll Cotton Company and how the organisation conducts their business activities in the Australian market. We have been able to understand how the Carroll Cotton Company is contributing to growth and success of the cotton industry in Australia and how they have been able to ensure their future growth and sustainability in the Australian market.

References

Ruralbank.com.au. (2018). [online] Available at: https://www.ruralbank.com.au/assets/responsive/pdf/publications/trade-report-17.pdf [Accessed 13 Sep. 2018].

Gray, D. (2018). Australian farm production tipped to near $60 billion in 2017-18. [online] The Sydney Morning Herald. Available at: https://www.smh.com.au/business/australian-farm-production-tipped-to-near-60-billion-in-201718-20170620-gwuuez.html [Accessed 13 Sep. 2018].

Cottonaustralia.com.au.(2018).[online]Availableat: https://cottonaustralia.com.au/uploads/resources/CEK_Chap_6_The_Business_Of_Cotton_Farming.pdf [Accessed 13 Sep. 2018].

Gardner, A.(2018). Council gives Carroll Cotton Gin expansion the green light - Gunnedah Shire Council. [online] Gunnedah.nsw.gov.au. Available at: https://www.gunnedah.nsw.gov.au/index.php/council/keep-in-touch/latest-news-media/item/1352-council-gives-carroll-cotton-gin-expansion-the-green-light [Accessed 13 Sep. 2018].

Carrollcotton.com.au. (2018). Abouts Us. [online] Available at: https://www.carrollcotton.com.au/about-us [Accessed 13 Sep. 2018].

Carrollcotton.com.au. (2018). Growers Info. [online] Available at: https://www.carrollcotton.com.au/growers-info [Accessed 13 Sep. 2018].