Podcast 2: AGRICULTURE UPDATE
ProGreen founder, Chairman and CEO, Jan Telander, provides an update on the Company’s agriculture operations in Baja California.
THIS PODCAST CONTAINS FORWARD LOOKING STATEMENTS, ESTIMATIONS AND IDEAS THAT ARE ACCURATE AT THIS TIME BUT MAY CHANGE IN THE FUTURE. THE COMPANY RESERVES THE RIGHT TO MAKE THOSE CHANGES WITHOUT ANY PRIOR NOTICE.
Statements made within this podcast may constitute ‘forward-looking statements’ within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995. ‘Forward-looking statements’ are based upon expectations, estimates and projections at the time the statements are made that involve a number of risks, uncertainties and other factors that could cause actual results or events to differ materially from those anticipated.
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THIS IS THE SECOND PROGREEN PODCAST AND I WILL TODAY BE FOCUSING ON THE AGRICULTURE DEVELOPMENT IN BAJA CALIFORNIA.
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WHILE THE INTERESTS OF SHORT-TERM AND LONG-TERM SHAREHOLDERS MAY DIFFER, WE ARE FOCUSING ON MAXIMIZING SHAREHOLDER VALUE FOR THE LONG TERM. BY LONG TERM I AM REFERRING TO A TIME HORIZON OF A YEAR OR LONGER.
IN KEEPING WITH THIS – WHAT HAS BEEN MOST IMPORTANT FOR THE COMPANY FOR THIS FIRST GROWING SEASON, HAS BEEN TO DEMONSTRATE TO OURSELVES AS WELL AS TO THE INDUSTRY, THAT WE NOW HAVE A FULLY FUNCTIONING, OPERATING FARM, PRODUCING GOOD CROP.
BOTTOM LINE RESULTS FROM THE FIRST YEAR WILL NOT BE AS POSITIVE AS WE HAD ORIGINALLY PLANNED AND THE REASONS ARE MANY.
THE UNUSUAL COOL TEMPERATURE IN SPRING DELAYED THE CROP – INEFFECTIVE PLANTING THAT WERE SPREAD OUT OVER TOO LONG TIME – DELAYS IN THE DELIVERY OF NECESSARY PRODUCTS NEEDED AS OUR SUPPLY CHAIN FROM PROVIDERS WAS TOO THIN INITIALLY – PACKING OF THE HARVESTED PEPPERS FOR TRANSPORTATION WAS NOT PLANNED ADEQUATELY, CAUSING SOME OF THE PRODUCT TO BE DAMAGED – JUST SUMS UP SOME EARLY PROBLEMS IN A NEW BUSINESS.
HAVING SAID THAT, WE HAVE ACCOMPLISHED OUR PRIMARY GOAL OF ESTABLISHING – AND SHOWCASING – A FUNCTIONAL AND PRODUCTIVE FARMING OPERATION. THIS IS – IN FACT – QUITE AN ACCOMPLISHMENT, AND I WANT TO BE SURE NOT TO MINIMIZE THE RESULTS. RATHER, I SHOULD EMPHASIZE THAT CONTEL, REPRESENTED BY FLAVIO AND HIS FAMILY – AS WELL AS MIGUEL AND MANY OTHERS DIRECTLY INVOLVED IN THE FARMING OPERATION, HAVE SHOWN GREAT MOTIVATION AND DEDICATION INTO MAKING THE FIRST YEAR’S OPERATION A SUCCESS.
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OVER A VERY SHORT TIME EARLIER IN THE YEAR, WE DEVELOPED ARENOSO FROM JUST BEING CLEARED LAND INTO A PRODUCING FARM. THIS ENTAILED TURNING THE VIRGIN SOIL OVER SEVERAL TIMES, REMOVING HUNDREDS OF TONS OF ROCK, – FENCING THE FARM TO PROTECT THE GROWING AREA – INSTALLING A COMPLETE IRRIGATION SYSTEM WITH THOUSANDS OF FEET OF UNDERGROUND PIPING, VALVES AND FERTILIZATION POINTS, TO SERVE THE ABOVE GROUND DRIP IRRIGATION – LET ALONE INSTALLING THE HEAVY DUTY PUMPS AND GENERATORS NEEDED TO GET THE WATER OUT OF THE GROUND.
WE HAVE PLANTED HUNDREDS OF THOUSANDS OF PLANTS THAT HAVE BEEN FERTILIZED, IRRIGATED AND OTHERWISE CARED FOR AND WE ARE NOW IN THE MIDDLE OF THE ONGOING HARVEST. WE HAVE IN EFFECT BECOME A NEW FORCE IN THE AGRICULTURE INDUSTRY IN BAJA CALIFORNIA. THIS HAS LED TO THAT MANY NEW PRODUCE BUYERS, HAVE NOW CONTACTED US FOR THE COMING YEAR’S CROP.
WE HAVE NO DOUBT LEARNED A LOT DURING THE YEAR AND NOW FEEL MORE PREPARED TO BETTER MAXIMIZE THE OUTPUT FOR NEXT SEASON.
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WE PARTICIPATED WITH OUR FIRST CONTRACTED CLIENT/BUYER, TO GROW 6 VARIETIES OF CHILI PEPPERS, WITH THE EXPECTATION THAT SOME WOULD GIVE BETTER RESULTS THAN OTHERS, GIVEN THAT WE HAD TO FIND OUT WHICH WOULD BE THE MOST PRODUCTIVE WITH THE SOIL AND CLIMATE OF ARENOSO, WITH THE IDEA THAT WE COULD BE MORE SURE OF HOW TO BE ABLE TO MAXIMIZE RESULTS FOR NEXT SEASON.
AS IT TURNED OUT, WE CAN SEE THAT ONE PARTICULAR TYPE HAS PROVEN VERY PRODUCTIVE. ONE OF THE FIRST WE PLANTED AND THAT GAVE US THE INITIAL HARVEST, LEADING TO THE IMPRESSION THAT THE TOTAL HARVEST COULD END UP EVEN BETTER THAN INITIALLY EXPECTED.
FROM THE 10 ACRES WHERE THIS TYPE WAS PLANTED, WE HARVESTED QUICKLY WHAT CAME TO BE 16 TRUCKLOADS OR SOME 400 TONS. IF WE WOULD HAVE PLANTED THIS TYPE ONLY, WE WOULD PROBABLY NOW BE CONFIRMING THAT THE TOTAL HARVEST WOULD EXCEED THE INITIAL ESTIMATE.
UNFORTUNATELY, SOME OF THE OTHER VARIETIES PROVED TO BE PRODUCING MUCH SMALLER PEPPERS AND IN A LOT LESS QUANTITY. SOME SIMPLY DID NOT PRODUCE MUCH AT ALL AND HAVE BEEN HARDLY WORTH HARVESTING. THE OTHERS WE ARE HARVESTING NOW AND THAT WILL CONTINUE FOR SOME TIME, SO WE WILL SEE WHERE WE END UP – THERE IS STILL SOME WAY TO GO.
SINCE THE MOST PRODUCTIVE VARIETY ONLY REPRESENTED A SMALL PART OF THE TOTAL PLANTS, WE CAN NOW SEE CLEARLY THAT PROGREEN WILL NOT BE ABLE TO RECOVER ALL OF ITS INVESTMENT IN THE ARENOSO FARM FROM THE FIRST YEARS PRODUCTION.
THE RESULT FOR THIS FALL WILL BE LESS THAN EXPECTED, BUT I WILL NOT SPECULATE AT THIS TIME WHAT THE FINAL FIGURE WILL BE. WE WILL KNOW WHEN THE CYCLE IS COMPLETED.
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WE ARE HOWEVER, ABLE TO SEE THAT WITH THE TIME NOW AVAILABLE FOR ADVANCE PLANNING FOR THE NEXT GROWING CYCLE, WE WILL HAVE MUCH BETTER CONTROL OVER DIRECT COSTS – WE HAVE MANAGED TO CUT COSTS CONSIDERABLY DURING THE LAST MONTHS FROM ESTABLISHING BETTER AGREEMENTS AND CONTRACTS FOR LABOR, TRANSPORTATION, FERTILIZERS, PESTICIDES ETC., RESULTING IN AN APPROX SAVING OF 40% FROM EARLIER.
WE NOW HAVE FUNCTIONING TELEPHONE AND INTERNET ON THE FARM WITH A COMPUTERIZED DAILY REPORTING SYSTEM FOR COSTS BEING ACCESSED BY OUR OFFICE IN ENSENADA.
WE ARE ALSO PREPARING FOR IMPROVED EFFICIENCY IN EVERYTHING FROM OUR INVESTMENT FINANCING, COST CONTROL OF EXPANSION AS WELL AS FOR THE OVERALL OPERATIONS. WITH THE RIGHT CROP WITH THE RIGHT CLIENTS FOR THE NEXT GROWTH CYCLE , WE FEEL COMFORTABLE TO BE ABLE TO ACHIEVE MARGINS FROM OPERATIONS AS PREVIOUSLY EXPECTED OF 55-60%.
ONCE WE HAVE COMPLETED THE HARVEST THIS FALL, WE WILL DECIDE ON WHAT WE FEEL REALISTIC AS EXPANSION GOALS FOR NEXT YEAR AND HOW MUCH WE INSTEAD WILL FOCUS ON IMPROVING EFFICIENCY AND OUTPUT FROM WHAT WE HAVE ALREADY GOT.
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OUR EXPERIENCE FROM THIS FIRST YEARS FARM OPERATIONS, HAS TURNED OUT MANY POSITIVE RESULTS FOR OUR AGRICULTURE BUSINESS, GOING FORWARD:
WE NOW HAVE A FULLY OPERATIONAL FARM; WHERE WE HAVE INVESTED IN THE INFRASTRUCTURE – AN INVESTMENT THAT DOES NOT NEED TO BE REPEATED.
WE HAVE GONE A LONG WAY IN CREATING A STRONG RELATIONSHIP WITH AGRICOLA CONSUELO, AND WE NOW KNOW WHAT WE CAN GROW FOR THEM WITH MAXIMUM RESULT, SHOULD WE CHOOSE TO RENEW OUR AGREEMENT FOR NEXT YEAR.
BUT WE NOW HAVE OTHER BUYERS LINED UP AS WELL, GIVING US THE OPPORTUNITY TO PICK THE MOST SUITABLE PARTNER FOR NEXT YEAR, ONE THAT WILL OFFER THE BEST FINANCIAL CONDITIONS.
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THIS FIRST SEASON, HAS PUT THE ARENOSO FARM ON THE MAP AS THE NEW “KID ON THE BLOCK” PERFECTLY EXPOSED BY OUR LOCATION ON THE MAIN HIGHWAY, NOW KNOWN TO THE AGRICULTURE INDUSTRY WITH NURSERIES, LABOR & TRANSPORTATION, FARM MATERIALS, AS WELL AS WITH LOCAL AS WELL AS US BUYERS, AND EVEN WITH SOME EXPORTERS TO OTHER COUNTRIES.
THIS PUTS OUR AGRICULTURE OPERATIONS IN A VERY GOOD POSITION FOR NEXT YEAR – AND MOST OF WHAT WE HAVE LEARNED COULD NOT HAVE BEEN ACHIEVED WITHOUT ACTUALLY DOING IT OURSELVES.
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WE HAVE ALSO LEARNED A LOT FROM THE NUTRIENTS IN OUR SOIL AND WHERE WE CAN BENEFIT FROM DIFFERENT FERTILIZERS ETC.
TO EXPRESS SOME DETAIL OF WHAT WE SHOULD HAVE DONE, FIRST TIME AROUND: WE HAD A VIRGIN SOIL THAT HAD NOT BEEN WORKED FOR PERHAPS 100 YEARS. WE NOW KNOW THAT IT SHOULD HAVE BEEN WASHED INITIALLY THROUGH WITH HEAVY FLUSHING 2-3 TIMES, CLEANING THE SALTS OUT THAT HAD BUILT UP OVER THE YEARS IN CERTAIN AREAS. THIS ALSO CONTRIBUTED TO REDUCED RESULTS IN CERTAIN GROWING AREAS.
WE SHOULD HAVE TURNED THE SOIL OVER SEVERAL TIMES MORE, TO GET IT BETTER MIXED.. THE RUSH WAS THOUGH ON FROM THE START AND WE JUST WANTED TO GET THE PLANTS IN THE GROUND.
GOING FORWARD WE ARE LOOKING CLOSELY INTO WHAT HERE IS CALLED “MALLA SOMBRA”, WHICH IS A CLOTH TO COVERING THE GROWING AREA MAKING IT PROTECTED. THIS INCREASES THE TEMPERATURE THAT CONSIDERABLY EXTENDS THE GROWING SEASON TO BE YEAR ROUND. IT ALSO BLOCK THE WIND AND PROTECTS THE PLANTS FROM SUN BURN IN THE SUMMER. THE PLANTS CAN BE LEFT TO GROW MUCH HIGHER, AS THEY WILL NOT BLOW OVER, RESULTING IN MUCH MORE FRUIT PER PLANT. THE OUTPUT IS OFTEN UP TO 300% OF WHAT CAN BE ACHIEVED FROM AN OPEN AIR CROP. YOU CAN ALSO PLANT AND HARVEST ALMOST ANYTIME OF THE YEAR AND BE OUT IN THE MARKET WHEN PRODUCTION IS LOW AND PRICES HIGH.
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FURTHER UPDATES ON THE AGRICULTURE OPERATIONS WILL BE PRESENTED WHEN AVAILABLE.
TOMORROW WE WILL FOLLOW UP WITH ANOTHER UPDATE ON THE CIELO MAR PROJECT.