What follows is a scenario from which you are required to make a choice for Jane Cortez. While you are required to use the information given to you within the course, please do not focus entirely on one aspect. As a consultant you are required to establish the different options for Jane Cortez and ‘Naranjas’.
Jane Cortez looked out over ‘Naranjas’, her orange groves farms and wondered which direction she should take. She had been offered two different proposals for her fruit, and despite wanting to support both opportunities, only one could be considered and she had to make the decision very soon.
Jane grew both navel and valencias oranges on her property in the Riverina district. This meant that her crops were always in season from June to February. Plus, she had started experimenting with a few different varieties, but navel and valencias were the mainstay. Jane had been very successful over the years, but the drought in the last 10 years had severely impacted the property. She had a substantial mortgage over the property and the amount of money that she was receiving for her crops was not enough to cover the interest payments of her mortgage.
Jane was considering two options:
- Sell all her produce to an overseas broker. This was an attractive option while the currency stayed low, but any appreciation of the Australian dollar upwards might mean that not all her product might be taken. In fact, sometimes it would not sell at all, if the buyers thought the price was too high. This risk made Jane a little nervous, but it did offer her the ability to experiment with different varieties, which may end up more profitable in the future.
- The other option was to sell her crops to the local juice factory. This was a set price for her product and it just covered the mortgage, but it did mean that Jane could not experiment with the oranges, because that cost money.
Jane could hear a car in the distance, Bill and Bob Jones were coming to discuss the alternatives. She went inside to prepare the tea and scones that she knew they enjoyed.
A few minutes later the car pulled up outside the property and Bill and Bob got out. Jane liked Bill and Bob, they didn’t say much, but she valued their opinion.
Jane: Come on up, I have some tea and scones for both of you. Bob: Excellent, we could do with that.
Bill: Definitely, and then we can discuss your dilemma.
After the tea and scones, they all turned their attention to Jane’s problem. What surprised Jane was that Bill and Bob had differing ideas. Bill was far more interested in Jane going with the overseas broker, whereas Bob thought she should go with the juice factory.
Bill: Since the Corona virus, oranges are in high demand as vitamin C is closely associated with a stronger immune system. This demand is across the world and I think you should go with the overseas broker. They are potentially offering a higher price. The last I heard they were offering $550 per ton of fruit and you have around 2000 tons. That would be a substantial revenue for you for this years’ harvest.
Bob: Bill, I think you are ignoring the fact that $550 per tonne is based on two things, one is that the fruit will qualify to be Class 1 fruit, and I am sure your fruit is Jane, but you never know. And second, the Australian exchange rate remaining low. We know that if the currency moves, the KCT market will balk at the prices they would have to pay.
Jane: What is the KCT market?
Bob: It is the biggest market for the area and is made up of Korea, China and Thailand (KCT). And what’s more Bill is that the market could be priced out if the currency keeps shifting. You remember when the Australian dollar was $1.10 to the USD. That was a great time to buy anything in American dollars, but it just about killed our markets here.
Bill: Bob, I think you are being negative, the dollar hasn’t shifted like that for a long time. Plus, the Chinese side of KCT is very big. Austrade have said that the market in China has tripled in a few years. The ChAFTA – China Australia Free Trade Agreement – has mean that the tariff is dropping substantially, and given that we are in a different season to China, Australian producers may be more competitive when compared to other parts of the world….you should look into this!
Bob: Maybe Bill, but I think Jane would be better off going with the juice factory. I know the price is $350 per tonne, but it is solid and she will keep getting paid every year. It is an offer for five years isn’t it Jane?
Jane: Yes, five years, and possibly more, though I would hope the price would increase by then!
Bill: Bob, I heard that juicing of oranges is not a good option, even the major supermarkets are finding that the community is moving away from juicing. Fresh fruit is considered better. Plus, even if the broker’s price was $450 per tonne of fruit, that is $100 better than the juice factory price.
Bob: Bill, fresh fruit is always better, but you are talking about frozen concentrate to make up juice, and a lot of that comes from imports. The market here is supporting using Australian juice, look at Nudie for example, they are supporting local farmers and they are not putting sugar in the fruit. Anyway, you are ignoring the fact that the brokers may not buy any of her fruit, especially if the Brazilians come in to the market. They just have to undercut the price, and the brokers won’t be able to buy Jane’s fruit. Juicing is the way to go.
Bill and Bob just sat and looked at each other.
Bob: Jane, we are never going to agree. I think Bill will agree, that you need to get some professional advice, what do you reckon Bill?
Bill: Couldn’t agree more! Anyway Bob, we had better get going and look to our own crops. I am sorry we didn’t give you much insight, but I am sure that the consultant will be useful. When you have decided, let us know and when can come around for some more tea and scones!
As they stood up to leave, Bill put down some references for Jane to look at to assist choosing a consultant.
After Bill and Bob had left Jane looked at the sites that Bill had left, and she had to laugh, and thought Bill you are pushing the brokers. Nevertheless, she would give these to the consultant, but she knew that they would have to look beyond these to get a better picture of what her options would be.
You are hired as consultant by Jane to examine her situation and then write a short evaluation in essay format. The essay should evaluate both options (see in the brief above) and then conclude with a clear and well-justified recommendation for Jane.
In the essay you must:
1. write a succinct introduction;
2. critically evaluate the two options; and
3. conclude with a well-justified recommendation.
Please note: Jane has provided some initial research on the topic for you – see below, however you are expected to conduct your own research to make your arguments persuasive.
Critical thinking is a key component of the exercise and we are looking for originality of thought. In so doing, you must draw on additional research from other reliable English language sources, especially peer-reviewed academic journal articles and, if applicable, relevant industry, government and non- government publications.
By way of guidance, it is recommended that your essay should spend:
- Roughly 80 words on introduction;
2. 450-600 words on critically evaluating the argument(s); and 3. 80-120 words on a conclusion.
4. Your essay must include a reference list.