A Report for FIBS by Lee Hazell

General Manager of FIDC, Julian Morris (JM), has so far managed to escape the clutches of the news team until now. I managed to grab some time in his busy schedule to ask him about FIMCO, the Abattoir and some other up and coming projects.

LH: Firstly, I guess we should talk about the Abattoir and FIMCO. What sort of feedback did you get from the meetings at Hope Cottage and on the West?

JM: I think the feedback was realistic. We explained the current position that FIMCO is in and we also outlined some huge scenarios and the farming community, I think, recognised that situation and are particularly involved in getting involved to move the project ahead.

LH: One of the main problems on the West is actually getting the animals into Stanley. Did you talk about that and what sort of plans could be in the future for that?

JM: We touched upon that and based upon what we learned from the last season, what practical improvements we can make for the coming season. But I think also there may be scope for some more radical changes in terms of farming practice i.e. taking cattle from the West over to the East for finishing, so they will be close to the abattoir. This will obviously require farmers to co-operate. And the key element in terms of getting people to co-operate is obviously making it in their financial interest to co-operate. Getting people to co-operate when it’s going to cost them money is obviously not realistic.

LH: But a working group was also formed, wasn’t it?

JM: The working group is a key step in moving the FIMCO project out from FIDC into its own separate entity. In terms of doing this, it isn’t to create yet another talking shop. There are enough talking shops here. The whole purpose of this is to leave the decision making to the people who know the most about the project and they are the farmers and also they are those people who have the most to gain from the eventual success of the project and they, again, are the farmers. Whilst this is very much in line with my own personal thinking that projects are best run by the people themselves, rather than by contract officers – the so called experts like myself – I think people ought to run projects themselves. And, I was really pleased when Rikki vans and Ben Berntsen came to me with exactly the same point of view.

LH: But a bit more positive.

JM: Exactly right. I think there is a lot more scope just outside of FINCO and other projects as well. But at the end of the day, the people who can actually come up with the best solutions are the people who are out there on the farm, who are experts at sheep handling. Myself and other people at FIDC and other people at FIMCO may be able to provide some skills but the practical level, the people here in the Falklands have got a lot more answers than we have got.

LH: there were three options up on the board at the meetings. Did the views differ from West to East?

JM: No. the views were all remarkably similar in that when people looked at the options, now the options currently make very good reading, they are all showing very significant losses with regard to the scale of operation. Frankly, that’s to be expected in the first year of operation. The key thing is where might we get to in five years’ time.

What I did was, I gave to all four of these meetings exactly the same presentation that I gave to SFC and FIDB (Standing Finance Committee and the Falkland Islands Development Board). And, I then asked for their comments and here, Rikki and Ben played a key part in actually handling this part of the session.

And, interestingly, on all four sessions, whilst people were not exactly delighted with our position, at the same time, from the people who were there, there was unanimous support. There were a few caveats with regard to a few points but there was unanimous support for continuing exports, continuing to develop the local market, and continuing to make improvements to our current situation.

And, in total, the people who attended these four meetings accounted for 47 farms. So, that’s a very significant majority in terms of farmers.

LH: So, the general consensus of the people is that they want the abattoir to work and, I think, they would like to see the figures after next year’s presentation.

JM: I think so. People should have the facts to know what’s happening and that includes not only the farming community but people in the Falklands at large. And, I think that the more information people have, generally speaking, the better they are to form their own opinion. Perhaps that’s a much better outcome than people relying upon the rumour mill, which is not the most reliable here in Stanley.

LH: One of the options up on the board was a joint venture and adding value. What more can you tell me about that?

JM: Here we are looking at a number of options. They’re basically divided into two categories. Firstly, it’s finding a much bigger player in the World Beef Market to act as a sales agent for our product. Because it will be alongside a much bigger plan, we will be able to benefit from their contacts, we’ll benefit from their access to markets. In particular, it should enable us to get an increase in terms of the over-all sales added for our product.

The other alternative is to actually change the format of our product which is currently primarily frozen Mutton. This is a commodity product, which means, we are at the bottom of the price scale. If we could change that format – we are in initial discussions with a couple of different organisations – instead of us selling frozen mutton, we may be able to sell a product that would be a lot more interesting to the end consumer. Again, that would mean we could significantly increase what we are achieving for the product.

LH: Cost saving was also brought up as well. Did you come away from the meetings with any new ideas?

JM: In terms of cost savings, there are a number of very practical suggestions with regard to changing the operation particularly with regard to the physical handling of livestock and the movement of livestock. And, going forward I am optimistic that we will be able to, over the coming season and subsequent seasons, to be able to take cost out of our operation.

LH: We will move on to something a bit different and talk about some of the other projects within FIDC. What’s happening on the finance front at the moment?

JM: FIDC is continuing to be a source of finance. One of the things we are looking to do is to work more closely with Standard Chartered Bank and so our policy at FIDC is to, when we are approached for a loan, is to ask them also go to Standard Chartered Bank as well. When people are looking for finance, typically they want it very quickly. We have to be mindful of that so, what we don’t want to be doing is adding a layer of bureaucracy and delay into what are very important decisions. We are saying to people if you need money for developing your business or to start a business, to come and see us but at the same time, go and see Standard Chartered Bank as well. Their rates are actually better than FIDCs so there is a real incentive to go and see Standard Chartered first and if they are, for whatever reason, unable to support the loan, come and see us and we should be in a position to give you a decision at the same time as to whether or not you would be able to support it.

LH: You are not trying to put people off?

JM: No. We are not looking to put people off at all but the reason we are doing it is two fold really. One is that going and seeing a bank and the process of making a presentation to the bank is actually very useful for somebody who is starting a business or is about to make a significant investment. If you get your processes right at the start, then you are significantly increasing the chances that your business plan will be successful.

Secondly, we know we have been financing a number of deals that actually the bank would have been able to finance itself. And, I think it’s in everybody’s interest not to be dealing with ultimately what would be regarded as a Government organisation. It’s much better for them to deal with a private or commercial organisation such as Standard Chartered.

LH: Going on to the "E-Shop" that’s due to open soon, isn’t it.

JM: It’s very exciting. James Marsh has done an awful lot of the background work in terms of getting the project where it is. Jo Morrison is now taking the project back on. The E-Shop is an electronic shop window for Stanley retailers on the portal and it will enable those retailers to make their products available for people to see all over the world and for them to order and for those products to be dispatched to them. We are also interested in more retailers and small craft makers to also come onboard as well. That should be going live in the next four weeks. For people who haven’t been able to access the international market, this should be a very exciting opportunity.

LH: People can actually see their work on the web.

JM: There is actually a photograph of people’s projects and a bit about them. It enables retailers and craft makers to access customers other than those who would physically come here to the Falkland Islands. And, we know from looking at the traffic to the site that hundreds and thousands of people are going to have a look at the site. If we can just get a small conversion rate for all those people then it would be incremental sales that otherwise people here wouldn’t be seeing.

LH: If anyone else is wanting to see this, how can they get in contact with you?

JM: The best thing is to contact Jo and to contact her through the FIDC switchboard.

LH: Going on to organics briefly. I know that Charlene has been away at the Royal Show. What else has been happening in organics?

JM: Charlene has been the principal driver behind organics and a couple of months ago I asked her to carry out a review or organics and what was happening. She produced a very good report which really highlighted a number of issues. These were our current regime, whilst it’s based on the European model, hasn’t been inspected by them and we are not actually accredited by the EU.

Secondly, if we were to have an inspection, we would be unlikely to pass an inspection because of issues in regard to animal welfare. Taking a slightly broader prospective, in terms of what’s happening in the marketplace, the organic premium that suppliers, growers, manufacturers used to obtain for organic products has now largely gone from the marketplace. The end retailer may well still be charging the end customer the end premium but they are now paying the farmer or the grower that premium. If we look at this and we are not going to be paid any more for this product, should we be adding cost to our cost base to produce it?

Another key feature was that the Falklands are a very special place especially to farm and perhaps us chasing after European based farming standards is not very productive because we are never going to reach that standard. Along the way we are also losing more site of many issues that make the Falklands a very special place in terms of its disease free status, which is probably unique in terms of the world market. In terms of the lack of pre-medication, the lack of the use of growth promoters and enhancers, so there are all sorts of special things about the Falkland Islands that we are not promoting. So, we are trying to chase somebody else’s standard but at the same time losing sight of those things that make the Falklands special.

LH: So you are not going to spend loads of money getting up to EU standard?

JM: No is the short answer. Charlene is now carrying out another piece of work looking at this and seeing if we can come up with a practical, very easy to administer, Falklands – wide standard and whether or not it would attract the label of clean and green organics or whatever. It would be very cheap to administer and it would promote the features of the Falklands and Falklands farming but actually makes the Falklands a special place. So, looking to our strengths rather than our weaknesses.

LH: So, does this affect on the EU licence at the abattoir and the meat going through it?

JM: No. This will have absolutely no affect on that at all. I think it may help us to sell the product, coming out of Falkland Islands Meat Company, coming out of FIMCO, so it may be am benefit there and, I think on a wider level, if we come up with a scheme that is inclusive for the whole of the Islands, I think there may be benefits in other parts of our activity such as tourism in terms of promoting a good image for the Falkland Islands.

LH: Moving on to lodges and tourist seasons rapidly coming up on us, what’s happening with the Lodges at the moment?

JM: In terms of Pebble, Jaqui Jennings and Alan White are out at Pebble and have been out for some weeks and are working very hard making the lodge ready to open and they are very excited about the prospect of running the lodge for the season. We are also excited – Jaqui did a very good job, we know - running Port Howard Lodge. We will see how that will progress in the future so we have high hopes with regard to Pebble. Port Howard, we’ve got on-going discussions with regard to the lodge opening and I am hopeful that it will be opening and operated this coming season.

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