Polyface: The Farm of Many Faces

Case Analysis by:

Group 10

Pamela Sen

Anshul Ramteke

Shishir Bhoyar

Madhuluck Kumar

Karan Patil

Soumik Reddy
Introduction:

Polyface is an economically and environmentally sustainable farm, owned by Joel Salatin.

Joels approach to farming recognized animals natural inclinations and their physiological
distinctiveness. He enhanced this approach by using techniques of careful grazing schemes,
all-natural composting and mineralization.
Polyface farm are situated in Staunton Valley, Virginia in USA.The firm was an eroded land of
550 acres having 100acres of pasture and 450 acres of woodland, bought by Joel parents,
William and Lucille Salatin. In 1982, Joel took up polyface as a full time event, hoping to turn
it into a profitable enterprise as he loved the challenges and complexity of farming
patience, flexibility and in-depth knowledge of the biological processes and systems.
Polyface is experiencing a growth rate of demand that Salatin would have never have
anticipated. The question which lays before Salatin is how to grow his operations to meet
the demands of the customers without letting go the values he has been holding i.e of an
community-oriented farming.

Polyface Farming Operations:

Acreage:

100 acres of Pasture land + 450 aces of Woodland

Employees:

6 full-time employees (Salatin with his Wife and Son + 3 workers from outside the family).

80% farms labour hours Farming activities

20% farms labour hours Administrative and distribution related task

Produce:

Total Total Gross

S.No Product Quantity
Sales Margin
1 Beef 120 168000 54000
2 Chicken 14000 193375 112000
3 Stewing Hen 800 5500 5500
4 Eggs (Retail) 28000 105000 28000
5 Eggs (Wholesale) 42000 126000 42000
6 Pork 700 472500 70000
7 Rabbit 1200 19800 12000
8 Turkey 1200 58500 24000
9 Vegetables NA 3000 -
*The total sales and total gross margin is exclusive of labour cost

*The total sale of stewing hen is assumed to be equal to total gross margin
Sales and Distribution:

Salatin sold the products to his customers via three different channels-

1. On the Farm

25% of the Polyface goods were directly sold to the customers coming to farm.

2. Metropolitan Buying Club

45% of the Polyface goods were available for bulk- purchasing and food delivery services.

3. Restaurants

30% of the remaining Polyface goods were sold to approximately 50 restaurants, small retail
outlets and some other food service establishments.

Polyface and the Industrial model of food production:

Polyface is a community oriented, small scale farming. Industrial firms whereas were
specialized, had selective breeding techniques and had the efficiency benefit because of the
industrys automated equipment.
The industry firms were dominated by the large chicken producers. The approximate
chickens housed by the industrys chicken producer were 27,000 as compared to 20,000.
The infrastructure cost for the typical industrial farm was about $4 of the annual sales as
compared to the $0.5 of the Polyface farm. (Polyface considered that leveraging the design
of nature is the most effective way to farm.)
The pastured eggs have 50% more folic acid, 70% more vitamin B12 and also 30% less
cholesterol, 60% more vitamin A, 25% less saturated fat, 300% more vitamin E, 700% more
carotene when compared with the factory produced eggs.
The waste from Industrial farming raised the question about the sustainability of the
industrys waste management system. Polyface composted the internal organs for use as
fertilizer. Industrial farms caused damaged to the environment as large amount of waste
polluted the water, threatened the natural species and deteriorated the land.
In Polyface, an orchestrated pattern for grazing of pastures for different animals was
followed which supported more number of cows than what an industrial competitor could
support by allowing the cows to graze freely. Using the management- intensive grazing
system, Polyface was also able to retain the nutrient content of the soil as compared to
Industrial farms.
 Economies of scale and scope of Polyface:

Economies of scope refers to the advantages when a proportionate saving is achieved by

producing two or more distinct goods or services, when the cost incurred in doing so is less
compared to when producing each separately. It is an outcome of related diversification strategy
which is made operational when a firm builds upon or extends existing capabilities, resources, or
areas of expertise for greater competitiveness. Polyface has been using all the natural resources,
starting from the orchestrated grazing pattern to waste management system. Polyface has
achieved a great recognition for its work and due to which it is facing a demand which was not
anticipated.

While dealing with the economies of scale, Polyface should increase the production in order to
nurture the demand of the market without compromising on the policy it had been following.
There is need to maintain a balance between the sustainable farming and the increasing
demandof the consumers. The growing economies scale of operations will demand for increased
economic efficiencies while working on the integrated structure. As Polyface has developed a
local food distribution system with the help of Metropolitan Buying Club, it can create
efficiencies and economies of scale in local food market by developing an interface of online
marketing with community based interaction.

Some of the challenges Polyface firm might face in quest of the expansion of economies of scope
and economies of scale-

1. The new market needs which can be addressed with the existing products/services
2. Level of diversification for the firm. (Possibility of new product)
3. Increasing channel of sales and also scope of optimizing price
4. Scope and need for expansion of the existing land area foe increasing the production

Productivity:

Total Total Gross

S.No Product Quantity Percentage
Sales Margin
1 Beef 120 168000 54000 32.142
2 Chicken 14000 193375 112000 57.918
3 Stewing Hen 800 5500 5500 100
4 Eggs (Retail) 28000 105000 28000 26.67
5 Eggs (Wholesale) 42000 126000 42000 33.33
6 Pork 700 472500 70000 14.814
7 Rabbit 1200 19800 12000 60.606
8 Turkey 1200 58500 24000 41.025
9 Vegetables NA 3000 - -
Total 1143800 347500 30.38
No labour cost included

Calculation of the Labour Lost:

 From the Exhibit 7, the labour cost is calculated to be 1.423% [ (1130/79422)*100] of the total
expenses in any Industrial chicken growing firm. As Polyface is a community farming based, it is
more of labour intensive as compared to the industrial firm. So, we consider the corresponding
labour cost to be 3% of the total expenses.

Total expenses of Polyface = $(1143800-347500) =$796300

Estimated Labour Cost = 3% of $796300 = $23889/annum

The productivity of Polyface is high as the profit margin calculated for it is high. This gives
Polyface a good scope of expansion taking into account that the economies of scale are
constant.

Problems incurred by Polyface:

1. Increasing consumer demand has outpaced the resource factor of Polyface

2. The direct customer base is reducing because of the busy and career oriented life styles of
the people
3. The legal constrain raised due to the some of the policies imposed by the government.
4. Whole some meat ACT increased the burden on polyface farm as they need to pay 450
pounds per head for processing unit.
5. Growth rate of free range chicken is 60 days compared to industrial chicken growth rate of
45 days.
6. Charging less price despite of having advantage of producing safe and organic products.

Recommendation:
1. Proper utilization of existing resources.
.
For ex. 125 cows requires 62.5 % of land He can accommodate 75 more cows in hundred
acres of land.
2. Bringing more land for farming use from the 450 acres of woodland
3. Identifying farms using similar policy as that of Polyface.
4. Encouraging interns to buy land for farming and providing them end to end resources on
contract basis.
5. With increased interns and number of cows from the polyface setting up own processing
unit near major channels will decrease the transport cost and the meat will be freshly
delivered
6. Tying up with more restaurants and taking advance and fixed orders.
7. Increase in price of chicken and eggs as they are safer than industry produced chicken.