From the Case Study: Kleinrivier Farm - Possibilities and Constraints in the Operation Management: Global and Southern African perspectives (pages. 287 - 289), please could you help answer the following three questions:

(1) Riedwaan and Wilma would like to expand their agrotourism business. What capacity constraints to they have to overcome in order to achieve this?

(2) With their current capacity constraints, identify at least two other ways that Riedwaan and Wilma could increase their agritourism income.

(3) What factors would Wilma need to consider before increasing her flock and diary operation? What other information would she need before she invested large amounts of capital in expanding this side of the business?

Case study Kleinrivier Farm - possibilities and constraints* When Riedwaan and Wilma September took over management of Kleinrivier Farm in 1999, the land had been under annual in order to achieve the production and financial outcomes cereal crops for decades and it was becoming increasingly that the enterprise sets for itself. This means that all factors of expensive to maintain good harvests due to the soil being production - land, capital, labour and management - must be degraded. They made the decision to turn over almost half synchronised to work together seamlessly. of the land to pasture and keep a herd of Hereford cattle for For this to happen the general management skills of beef and to help fertilise the fields. In addition, they changed the farmer or farm manager must include leadership skills, over to a no-till system of farming. At first it was a struggle and organisational and conceptual skills, communication skills, they experienced three very hard years, but gradually the soil production skills, technical skills, financial skills, decision- has recovered and their harvests have improved with fewer making skills, problem-solving skills, crisis-management skills and record-keeping skills. Some of these skills are apparent in inputs in the form of chemical fertilisers and irrigation. With the Septembers' early attempts to diversify production on the careful selective breeding, they have also built up an excellent farm, when in 2005 they invested in some quality Toggenburg Hereford breeding herd. In years when beef and cereal prices goat breeding stock and built a small, but well equipped dairy are high, the farm is very profitable, but any farming venture to process the milk into yoghurt and cheese. Initially, Wilma is at the mercy of nature and the weather and markets are marketed her goats' milk products through farm stalls and unpredictable, which can have a massive impact on the health shops. However, this was a limited market and often bottom line. she had surplus products which these relatively small outlets Wilma and Riedwaan realised that diversifying further could not sell. Selling them to large supermarkets resulted in could help to smooth out the inevitable bad years and give a much lower profit margin, but sometimes she had to accept them more security. They did some research and learned these losses in order to dispose of her products. However, as that there was increasing interest in agritourism. Agritourism Wilma says, 'It's no fun having to take a low price for high quality can be defined as the act of visiting a working farm, or any produce. We soon realised that the only way to get a fair price was agricultural, horticultural or agribusiness operation for the to find a better market or to start selling direct from the farm." purpose of enjoyment, education or active involvement in And from this realisation was born the idea that they should the activities of the farm or operation'. The introduction of introduce agritourism on the farm. agritourism into traditional farming practices is a relatively As far as a mix of attractions on the farm that will entice new concept in South Africa and is based on the premise of people to visit the farm is concerned, the farmer/manager attracting visitors to farms, often with the view to improving needs to have insight into the needs and wants of potential financial sustainability. This premise is based on the fact that visitors. Market research into this sector has shown that in some places abroad, such as in New Jersey in the USA, it entertainment is now high on the public's list of expectations, has been shown that farms that have a truly viable financial and that stand-alone offerings, by and large, just do not future are those that incorporate the principles of agritourism work any more. This has resulted in the formulation of five into their business strategies, making agritourism an essential pillars that currently seem to be critical to the success of an priority for success. agritourism business: Agritourism, however, is not a quick fix for farms that are A 'fun park' component that offers games and activities for under financial pressure, and requires two essential ingredients a broad range of ages and incomes, with at least one new for success. The first is an appropriate range of management offering each year. Some of the activities that are considered skills. And the second is a mix of attractions on the farm that agritourism include: horseback riding, u-pick operations, will entice people to visit the farm, and spend both time and winery tours, farm tours, school visits, fishing, camping, and especially money there. lodging. In terms of management skills, a farm that incorporates A market for selling items related to the business for all agritourism requires planning how agricultural production will incomes. be organised and co-ordinated with the agritourism attractions Food for the visitors to eat while visiting.288 Part Three Deliver - planning and controlling operations annual profits. They're as proud as we are to show off our A courtyard for people to rest while visiting to extend their form.' Nonetheless, staff management is a growing concern stay. for Wilma and Riedwaan. aan. This is mainly the result of the fact A seasonal focus that leads to an easy marketing and that the majority of their staff are part-time and seasonal giveaway campaign. employees. This concerns Wilma and Riedwaan because In addition, the agritourism destination - especially if it is they realise that although they are providing much-needed primarily catering for urban families - must be easily accessible employment in the area, it is not sustainable employment and offers no job security. Thus, although they would to expand the agritourism side of their enterprise, they are Agritourism answers some of Kleinrivier's needs With these five pillars in mind, Riedwaan and Wilma felt that worried about the impact this will have on the workforce. Kleinrivier Farm was quite ideally positioned to venture into Future plans for Kleinrivier agritourism. As far as accessibility is concerned, the farm borders on a main road just off the N2 in the Western Cape. As At present, the farm is only open from Friday midday to this is the main access to a number of popular weekend and Sunday evening from April to May and from October to holiday destinations like Betty's Bay and Hermanus and the January. 'Our really busy times are when we're preparing the scenic Garden Route, Kleinrivier is well placed for agritourism. fields in autumn, during planting and harvesting. I need all the Wilma and Riedwaan also realised that the diversity on their workers full time at those times, " Riedwaan says. 'It's already a farm could be an attraction. They drew up a budget and a list bit of a stretch when we open the tourism side in April, because of priorities, Now, seven years later, they not only have two our planting depends on the first rains in autumn.' Because of popular cottages, sleeping 10 people in total, but they also these constraints, although they would like to expand their have a thriving tourism business in which their staff have a agritourism business, the Septembers aren't keen to extend small share. For a small entrance fee of R10 per person (there their opening times. However, Wilma would like to expand her is no charge for children under 12) visitors can enjoy the side of the business. beautiful gardens around the homestead, which are open to 'Next year I'm going to run Saturday afternoon workshops the public, and buy fresh produce from the small farm shop. every month except for December and er and January. We have so many Children are kept busy in the 'petting farm', where they can skills here on the farm: cheese making, bread baking, preserving, interact with all kinds of farm animals, and in a well equipped gardening, fruit tree pruning, you name it! I think city people outdoor play area. For an additional fee, visitors can enjoy would be happy to pay for an entertaining and informative day tractor rides around the farm, pre-ordered picnic baskets, out. I'm also thinking of running a mid-winter sustainability course and a daily cheese tasting and guided tour of the dairy and over a week in July for a maximum of 10 people,' Wilma explains. milk processing area. The farm shop is open all year round, In addition, Wilma would like to expand her dairy although out of season most of the sales are to local people operation by adding a small flock of Saanen milk goats, which from the nearby towns. produce more milk on average than Toggenburgs. 'I love my "I'm no longer forced to sell surplus products at low prices," Toggenburgs, but my flock is too small. With the Saanens, I can Wilma says. "In fact, even though tourism is seasonal and we're double my flock. This will enable me to make hard cheeses as closed for more than a third of the year, we make more per year well, because you need a lot of milk for that. It'll also help tide from our own shop than we do from the other outlets which sell us over when there's no milk in mid-summer while the goats our products all year round.' are breeding.' Wilma adds, 'Together with the workshops and Riedwaan agrees, 'It's made all the difference. We used to feed courses, I should be able to increase product sales by 50 per cent most of the fruit from the old orchard to our animals because within five years." there wasn't enough to make it worthwhile to take it to the Wilma does admit, however, that increasing attractions market in Cape Town. Now our surplus fruit and vegetables are and activities does have its down side. As she says, 'There is turned into fruit butters, chutneys and pickles for the shop or to be also the problem of complexity. Every time we introduce a new used in our picnic baskets. Many of our neighbours are now using attraction, the whole business gets that little bit more complex to us to market their products too. We put a very small mark-up on manage. Although we enjoy it tremendously, both Riedwaan and their products. It's not so much about the money, but about giving I are spreading ourselves thinly over an ever-widening range of the visitors a bigger and more diverse range to choose from." activities and I'm starting to feel that my time is being taken up in Wilma says, "It's given all our staff an incentive to do more managing the day-to-day problems of the business. This does not around the farm and they're only too happy to contribute to the tourism side of things because they get to share in the leave enough time for thinking about the overall direction in which we should be going."TABLE 11.3 Dairy product sales (ROOOs) - 2009-2013 2009 2010 2011 2012 2013 2014 33.7 forecast Retail outlets 25.1 48.5 52.8 23.2 55.5 38.9 42 Farm shop 62.1 78.0 86.7 110 TABLE 11.4 Income from agritourism and shop sales (ROOOs) - 2013 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total Day visitors 12.2 0.0 0.0 15.2 12.1 7.5 0.0 0.0 0.0 8.5 10.3 20.1 89.9 Cottages 11.6 10.1 14.1 13.0 10.1 8.7 8.0 3.4 7.2 10.1 10.0 21.7 128 Picnic 13.4 0.0 0.0 15.6 13.2 10.2 0.0 0.0 17.5 83.8 baskets 0.0 5.1 8.8 Tractor rides 6.6 0.0 0.0 3.8 6.2 4.1 0.0 0.0 0.0 3.2 4.3 7.9 36.1 Dairy tours 1.7 0.0 0.0 1.9 1.0 0.7 0.0 0.0 0.0 1.3 1.4 2.3 10.3 Farm shop 13.1 5.3 3.6 5.8 13.0 8.4 5.0 4.8 5.1 5.6 4.8 12.2 86.7 sales Questions 3. What factors would Wilma need to consider before 1. Riedwaan and Wilma would like to expand their increasing her flock and dairy operation? What other agritourism business. What capacity constraints do they information would she need before she invested large have to overcome in order to achieve this? amounts of capital in expanding this side of the business? 2. With their current capacity constraints, identify at least two other ways that Riedwaan and Wilma could increase their agritourism income