29A – Venture Concept No. 2

Robert Rodriguez

ENT3003

July 30, 2019

Opportunity

North Point Straw

The opportunity for my venture concept is the degradation of pine straw in north Florida due to changing environmental condition. This degradation was first capture many years ago by examine the decline of Aces planted in north Florida year over year by Pine tree planters. This is the first sign that pine trees are becoming less effective at creating pine needles due to the slow degradation of climate conditions in Florida. Pine trees are to be planted under specific climate conditions for optimal growth. This has become increasingly difficult because the climate in Florida has been moving its temperature patters forward which creates a decreasing window for tree planting to be done. Trees are to be planted at below 45 degrees in order to ensure that the trees do not begin to decompose throughout the planting process.  Growers invest in refrigerated trucks, and nurseries in order to develop the proper temperatures when out of the ground. However, growers have had difficulties continuing to grow pine trees because they must invest more and more in pine tree temperature controls in order to grow the saplings. Planting season for pine trees began in October- February in the past, but due to climate conditions, the planting season has shrunk from December 15^th -February 15^th. This has created a lot of pressure on planters and paper companies to push production during these months. However, large areas in central and southern Florida are already becoming unplantable. This ripple effect with creating massive shortages when the next generation of trees are at production age for pine straw as many of these trees will be below average production or will perish before they reach 6-8 years.

The innovation in this venture comes from the foresight to see the writing on the wall and move north before the eventual complete degradation in the market before it happens. Pine Straw is a 100 million dollar industry in Florida and 87% of the straw comes from inside the state. If we are able to open new sources of resources outside of the state before another investor we can capitalize on a market in crisis. The development of land contracts and potential tree planting contracts are time-consuming and it is in our best interest to pursue these ventures earlier than expected because then we can be in the proper condition when markets begin to fall here. Pine straw supply will begin to fall in some time between 2023-2027 and this will greatly increase the price of straw. As a supplier, this would be an incredibly profitable time in order to create a powerful position as a market leader in the industry.  Current wholesale prices for bales are 2.30-2.50 a bale. I expect that prices would rise to almost 3$ a bale. This would be sold to large scale developers of straw but it would also allow us to spread straw at a much-discounted rate using vertical integration.

Another asset that I have is the ability to transport my product with out relying on other companies for pick up of delivery. This also means that we don’t pay a pickup fee or “Bob tailing” fee for return trips. A typical trip of 100-200 miles costs about $500.00 and that still leaves considerable room for profit per trailer.

The venture’s success depends on our ability to create these connections with suppliers and create value for our producers by providing a scale of economic growth that our other competitors wouldn’t be able to match. The importance of connection suppliers and clients cannot be understated to the overall success as a lack of suppliers or clients would result in stalling merchandise as bales are a product that rots. The other competitor's int his market are other developers of straw in the area and others who would come to Georgia after the degradation of straw. These wouldn’t be large threats as they would have a noticeable disadvantage to use when compared to our date of entry. Another important point of opportunity would be in the transportation of straw south from Georgia. This would be much easier with the current infrastructure.

I received much feedback on my assignment about what I could do better and include, such as, a section detailing the transportation prices and rates and how that was built into my price structure. This I decided to include because that is a valuable section of my cost structure and does create an asset in the development of my business venture.