Well, I think the reality is that producers in this field are constantly bombarded with ideas for improving their cost/output ratios. A lot of these products come with the same pitch: "Your margins are very low, this can decrease your cost, so it'll multiply your profits by a lot. Buy some." I think Wise doesn't have enough respect for the volume of such opportunities that are presented to producers, who are very conservative people. They have a complex system, which works. And they don't take altering it lightly.
I think Animalens probably needs to spend a good deal of money sponsoring extensive, repeated field trials, putting together a database that encourages leading producers to say, "It really is worth doing my own test.'
I think it will be very hard to sustain the 25% pretax margins that are projected. These farmers who work for pennies a bird are people who force their suppliers to work for pennies per bird, or minimum possible profit. And that pressure backs up through the entire system in the poultry industry. If you don't have a real proprietary position -- and you don't if you're not selling anything more than an injection-molded plastic product -- then you can be sure that there will be alternate suppliers.
My guess is that Animalens needs more money to do what it expects to, but I'd probably not invest. If it were a clearly proprietary and protectable product, we might be interested. As it is, it looks like a one-shot nonproprietary technology.
I think Animalens as a product may well succeed -- if it works and if it produces the kinds of benefits to cost outlined in the article. Whether the company will succeed is not necessarily the same question.
OBSERVER
FREDERICK S. NICHOLAS
Executive vice-president, Avian Farms International Ltd., Winslow, Maine, a chicken-breeding company
The best thing Wise could do is live with the people who are testing the product and do whatever he can to help things run smoothly. It will take a lot of hand-holding. The success of any test depends on more than the product -- it's how the rancher is managing the product. So the company needs to have people working for it who can get in the chicken houses and put lenses in and help farmers any way they can. I'd put the money there, not in advertising. If the tests work well, things will happen.
Will the company be successful? I certainly don't see it happening as fast as Wise does, even if the lenses provide all the benefits he says they will. You're up against the standard resistance of a low-margin industry, in which products that don't work can turn you from a profit to a loss.
ACADEMIC
JOHN B. CAREY
Associate professor and extension poultry specialist, North Carolina State University, Raleigh, N.C.
It seems to me that Wise should be talking in greater detail about the way the lenses work. I don't think it's enough to tell egg farmers that the product saves money. They're used to hearing that from folks with suits and briefcases, and they're pretty skeptical. They'll want details about the physiology or they won't believe it.
Wise will also have to provide more detail about the installation. Two people installing 1,200 pair a day may seem fast to him, but it sounds like a snail's pace to me, particularly when you're talking about chicken houses with 100,000 birds. It means you'd need about 20 people doing nothing but putting in lenses for around eight days straight. Even if the labor cost only works out to 10 a chicken, not every rancher has access to that kind of manpower.
Is there a market for these lenses? Assuming they're relatively easy to install and that they stay in place, I imagine there is. Right now, though, it's an awful time to sell anything to chicken farmers. Many of them can't afford new birds -- it's all they can do to cover their losses. Even when the industry recovers, I don't foresee the market penetration Wise does. It will have to be really obvious to the farmers who don't use his lenses that competitors have an advantage over them.
INDUSTRY SPECIALIST
RAY A. GOLDBERG
Professor of agriculture and business at Harvard Business School; a director of several companies, including a poultry-breeding business in Glastonbury, Conn.
The most glaring weakness I see with Animalens is that Wise didn't think through the whole question of how new ideas get adopted.
In every segment of agriculture, you've got leaders. The whole psychology of change is based on example. If you get one well-known and successful farmer doing something new -- and being satisfied with it -- that's 10 times more valuable than getting others who aren't industry leaders. These guys should have looked at the poultry industry and asked, "Who are the three leading university researchers?" And they should have done the same thing with chicken ranchers and convinced one or two of them to try the product. Their mistake was to think purely in economic terms. They said, "Here's an industry that needs our product because cost savings should automatically be embraced." They lost time.
In the best of times, egg production is a high-volume, low-margin business. As a group, farmers have been losing money over the past year. It's very difficult to take on new technology when you're squeezed. Farmers, for example, won't buy fertilizer when they're losing money, even though it's obvious that they should. But the industry should be recovering over the next 12 months. Animalens should be using this period to make sure the tests are done properly so that the credibility is there when the industry improves. If the tests confirm what they've been saying, I think they have a viable shot.
