Future Direction for BC Tree Fruits Ltd. and Okanagan Tree Fruit Cooperative

2011 marked B.C. Tree Fruits Limited’s (BCTF) 75th anniversary, a significant milestone for any organization. BCTF and the industry it serves have seen much change in the past, and the same is true in the present. In 2008 the four cooperatives that owned (BCTF) amalgamated in order to meet the market demand for consistently high-quality, tree fruit produce and the need for improved efficiencies. In addition to consolidating the industry’s assets, we restructured the management and governance. We have a much more streamlined, integrated, responsive and effective structure today than existed pre amalgamation with BCTF, four cooperatives and an industry association, each with their own Board of Directors and management. BCTF and OTFC have a common Board of Directors, CEO, CFO to effectively integrate the two organizations and more closely connect the growers to our customers.

There is more change to come. The Board of Directors and management of BCTF and OTFC spent considerable time in the spring and summer of 2011 to establish some goals and objectives for BCTF/OTFC and identified several action items that we are moving forward on:

o Increased fruit quality – We are striving to provide a product that meets or exceeds consumers’ expectations and provides a targeted fresh yield for the cooperative. We plan to:
o be more vigilant in monitoring fruit quality at receiving
o focus horticultural advice/recommendations on improving quality and measuring performance (e.g. report cards)
o strive to reduce shrink in operations - packing, storing, & inventory management
o increase the use of technology to more accurately grade our fruit and step up the management of manual sorting
o establish quality benchmarks/criteria that growers will need to achieve

o Consolidation of assets – We have already shut down some packing facilities that were utilized pre-amalgamation and selling off surplus properties is underway in order to reduce the costs associated with our multiple facilities, improve the utilization or our assets, and free up capital to reduce debt and invest in upgrades to our facilities.

o Future Facilities project - We have hired a Project Manager to assist us with our Future Facilities project to upgrade and centralize our facilities. This is a major project, with implementation planned for 2014. The project will be capital intensive and we will seek government assistance in funding. The Future Facilities project will be focused on:
o Fewer packing facilities (one North and one South) and fewer receiving facilities.
o Use of technology to make packing more efficient and effective – high tech/low touch
o Cost reduction, efficiency improvement and increased throughout – enable us to be cost competitive with others in the industry

o Varietal matrix – We will focus our planning and activities around a product mix/varietal matrix that meets our customers’ needs and maximizes profitability for our members. This will be directed primarily at apples where we will target varieties in demand by our customers to ensure proper continuity of supply. Effectively we will work with growers to rationalization and streamline our varietal mix. This initiative will contribute to other objectives such as quality, fresh yield, and the Future Facilities project.

o Brand development - There is a very high recognition of the B.C. brand with consumers and we want to build on that awareness - emphasizing that BCTF is a farmer owned and operated organization that produces top quality fruit in compliance with strict food-safe requirements. In Western Canada we want to strengthen our position as a local supplier that can service the needs of our customers on a scale unmatched by any other B.C. supplier.

o Grower contract enforcement – We will be introducing a new grower contract for the 2012 and will be enforcing contracts to a higher degree than has been past practice. The new contract will also have provisions for specific requirements for growers concerning fruit quality and on-farm food safety. We also plan to take action against the unauthorized use of our bins by growers who either do not belong to the Cooperative or who are breaching their contract, and against any independent competitor who engages in the use of our property.

Gary N. Schieck
Chief Executive Officer