Sarah Sivyer always knew she wanted to come back to farming.
She grew up on a beef and dairy farm in Australia’s Hunter Valley region in New South Wales, before becoming a chemical engineer and embarking on a corporate career, working for companies such as BHP, Rabobank and Syngenta.
When she returned to the farm, she wanted to apply her knowledge of business models to agriculture. So, without ever having even owned a hen house, she decided to start an egg business.
And when her first 450 birds arrived, it nearly went horribly wrong.
“I got the shock of my life,” she said.
“This day was a 47C degree day, in the middle of January, and I was like: oh my gosh, these birds are literally all going to die the first day they get here.”
Fortunately, she kept them going by feeding them frozen vegetables in ice water. Sarah even ended up sleeping in a swag (sleeping bag), so she could check on the chickens, every 20 minutes.
Since that very stressful first day, Sarah has been able to grow her flock to 2500 and develop a subscription model business, which she has cheekily called “Just Been Laid”.
“When I looked it up, I totally thought ‘just been laid’ would have been used by someone else… but when I typed it into the business register… I was like, ‘really’?”
“And it’s 100 percent to do with the freshness of the eggs,” Sarah said.
“That’s our competitive advantage- the piece that differentiates us. So it seemed quite fitting.”
The promise of her business is that the eggs are never more than 72 hours old. Customers subscribe online, pay ahead of time, nominate a pick up location, and collect their eggs once a week - on the day they nominate.
For agriculture, this isn’t a traditional business model at all. Not only does the farm have a direct connection with consumers, but also people are buying the eggs before they’re even laid.
Sarah said the business model is similar to a gym membership. But while the model isn’t entirely unfamiliar, Sarah was worried about requiring customers to change their behavior- people are used to going to a supermarket to buy eggs.
To overcome this, Sarah partnered with cafes in the region, creating ‘hubs’ where people already go for their morning coffee and can now also pick up their eggs. Minimizing the behavior change by fitting into existing routines is just one example of Sarah’s laser focus on her customers.
Another key pillar of her business is meeting the customer expectation that the chickens are well-treated and the eggs are produced sustainably.
The chickens come from a barn when they’re about 15 weeks old, and need to gradually adjust to being on a perch at night in a specially-designed, mobile hen house (“chicken caravan”).
Sarah said It generally takes three to four days of someone coming in at night to pick up each bird off the ground and put it back on the perch, before they get used to the new bed.
During the day, the chickens graze and socialize in pastures. Over time, the caravan is moved to different locations, spreading manure that helps improve pastures and benefits their cattle business.
“The birds will just follow and put themselves to bed at night, which is quite handy,” Sarah said.
The hens and cattle are integrated within the overall farming operation, with the cows acting like a “lawn mower,'' making the grass short enough for the chickens to eat.
Both the cows and the chickens, with their scratching, help to work up and condition the soil.
Sarah said she can already see the benefits of this.
“It’s really obvious, like dark green versus yellow - the boundaries between where the chickens have been.”
So how much do these sustainable practices cost? Picking up hundreds of chickens and putting them back on their perch night after night does have an impact on the bottom line.
Sarah admits the cost of labor is significant.
“If I looked at a dozen eggs, I’d say three or four of those dozen would be in the labor, the cost of production,” she said.
Sarah has analyzed the cost of production in detail.
“Another three of the twelve are feed costs; it’s more costly than other feeds because it’s vegetarian. Then another two or three of those eggs would equate to the cost of the bird themselves. The rest is other expenses.”
But Sarah makes the economics work, meeting the needs of a specific type of consumer who are buying the eggs for a reason, and are willing to pay.
A dozen eggs from “Just Been Laid” costs $12, about double the price of eggs at major Australian supermarkets.
Knowing that the cost of labor would always be relatively high, Sarah turned to business practices she used while working in the corporate world.
For example, Sarah applies the principles of Six Sigma, a continuous improvement methodology, to reduce waste and maximize profits. Six Sigma is a relatively well known concept in business, first developed at Motorola in the 1980s, to reduce variation in manufacturing processes. Now, it’s used across a multitude of industries to discover and eliminate defects and inefficiencies.
Sarah says that the data-driven and customer focused approach is well suited to farming enterprises. She’s constantly finding ways to eliminate unnecessary tasks and run things with more agility. Indeed, it’s easy to draw parallels with the startup world- a relentless focus on the customer, and an iterative, lean approach that constantly tweaks processes.
Sarah investigated this as part of a 2018 Nuffield report, studying farming businesses around the world. She found customer intimacy (or even obsession) and a culture of continuous improvement gave farming businesses a competitive advantage.
And this is precisely the way Sarah intends to continue growing her own egg farming business.
“That’s actually the question we’re asking at the moment, can you scale customer intimacy?’
“We’re not chasing 10,000 birds. For me, it’s more about how to create more customer value with the product we have.”
Enjoyed this article or the episode? Please like and share it! Disagree with what you hear? Let us know in the comments or on twitter @agtechsowhat
And if you haven’t already, make sure you subscribe to the podcast on Apple, Spotify or Google Play.
Tenacious Ventures Management Pty Ltd (CAR 001275760), Tenacious Ventures Management Partnership, LP (CAR 001298484), Tenacious Ventures Fund II Management Partnership, LP (CAR 001298483), and Tenacious Ventures Fund II Staple Co Pty Ltd (CAR 001298487) are Corporate Authorised Representatives of Sandford Capital Pty Ltd (ABN 82 600 590 887), Australian Financial Services Licence No 461981, and are authorised to provide advisory and dealing in connection with investments to wholesale clients only.