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Alexander R. Christensen President Southeast Hay Distributors Challenges and Opportunities in Marketing Hay to the U.S.

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Presentation on theme: "Alexander R. Christensen President Southeast Hay Distributors Challenges and Opportunities in Marketing Hay to the U.S."— Presentation transcript:

1 Alexander R. Christensen President Southeast Hay Distributors Challenges and Opportunities in Marketing Hay to the U.S.

2 According to the American Horse Council: The U.S. horse industry contributes $102 billion in economic impact to the U.S. economy and supports 1.4 million full-time jobs. Estimated number of horses in the U.S. : 9.2 million Estimated number of horses in each of the 50 states: Texas (1 million), California (700,000) and Florida (500,000) are the leading horse states. 45 of 50 states have at least 20.000 horses Florida horsemen alone spend more than $1.2 billion in annual maintenance costs, including $185 million on feed and hay.

3 Agenda Popular Types & Grades of Hay in Southeast U.S. Trends in the Equine Marketplace Best Ways to Market to the Florida and the U.S. Risks and Opportunities in Today’s Market

4 Feed Store Grades: 1. Fair Live Stock Grade 2. Good #1 and #2 Horse Grade 3. Premium #1 Grade Race Track Grades: 1. Premium #1 Grade 2. Supreme Grade Popular Types of Hay & Grades

5 Sales Pie Chart

6 Trends in the Equine Hay Market Timothy hay and low-mid alfalfa mixes are at an all time high demand Big influences from S. American veterinarians, transitioning clients away from higher alfalfa mixes and over to little to no alfalfa hay. Low alfalfa mixes have been in practice in the Hunter/Jumper sports for quite some time now and polo is getting there too. Economic Impact on Grades of Hay Purchased Instead of professional consumers stepping down from premium quality grades of hay, the Florida market has become very competitive and vendors have compromised profit margins to maintain sales volume.

7 Best Ways to enter in The U.S. 1. Work with an established distributor who has a great reputation. 2. Marketing and Advertising 3. Make sure you’re prepared. - In order to compete, you need to make sure that you have no less than 100 tons to offer. People want consistent product that they can count on through the winter months.

8 Things to Consider Before Beginning Your Business Venture: Realistic pricing that ACTUALLY reflects the quality of the hay: Pricing is key when entering a market. Be competitive within the market and price accordingly. The Right Product For the Right Region Areas such as Wellington, Ocala, and Homestead Florida are seeking premium grades of hay. With so much competition, it’s imperative to stand out with. Fair to good quality east coast hay will not compare with an “Ellensburg” quality hay, so price appropriately and find the right consumer first. Transportation Costs Can Make or Break Your Sales Transportation expenses, on average, account for 38-45% of the total cost of goods sold when shipping to Florida so researching your options can help keep pricing competitive and may even maximize profit margins. For Lower Volume Producers and Brokers Shipping to the US: Lower volume shipping can make product, otherwise, cost prohibitive when shipping over the road. Working together and putting together cumulative volume SCs’(service contracts) is highly recommended and can positively reduce your landed costs by as much as $100 per ton!

9 Producer: Premium #1 Timothy: $330/TON FOB Exporter/Distributor: $330 + 116 (C&F)+ $40/ton Profit= $506.00/TON Retail Feed Store: $506.00 Cost + $130/TON =$636/TON SALES PRICE Traditional Cost Break Downs

10 1. Wholesale Distributors Low to Moderate Risk. Well established operations usually have a lower chance defaulting on payment. 2. Feed stores Low to High Risk. Majority of feed stores have a small operating budget with little liquid capital readily available. 3. Race Tracks Low to High Risk. Working with race tracks can be a steady and lucrative business but they have been notorious for financial problems, large outstanding balances, and even filing for bankruptcy. 4. End User Moderate to High Risk. Selling direct can be very difficult for a variety of reasons. Collections can be very difficult with distance and there is less legal recourse when dealing with individuals, rather than companies holding fixed assets and solid collateral. Opportunities & Risk Associated

11 Protect your Business at the Point of Sale Firm payment terms are essential when doing business with foreign companies. Do your Homework Reputable clients who may have mutual contacts are usually safer than the new, “Hole In the Wall Feed and Supply” store. Receivables Insurance Through the EDC Export Development Canada has Accounts receivable insurance available that can cover your business up to 90% on all losses accrued by customers who have failed to pay for various reasons. Go to for more information. Risk Vs. Reward : Don’t take Chances

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