COVERED BRIDGE PRODUCE SUSPENDS OPERATION
Covered Bridge Produce is no longer able to pick, pack and deliver produce to its shareholders. We have exhausted our funds and can no longer pay our employees. The final blow came on August 30 when we discovered that approximately $8,000 had been stolen from our business checking account by debit card fraud originating in India.
Even without this final misfortune, we were in financial trouble. We used up the funds we received from shareholders around the beginning of August and have been operating on funds borrowed from Angelís family. Ideally, we should be able to operate on funds from shareholders until late October or early November. We are refinancing the farm to obtain cash from our equity, but it seems that these funds will probably not be available much before mid-October.
In addition to our financial woes, the supply of vegetables in our fields is becoming insufficient to support our service. Our workers are dispirited and several have quit out of frustration. We are in sore need of a new beginning.
We are attempting to keep a small crew working at the farm to care for growing crops in hopes that we can reopen in four to six weeks when funds from refinancing become available. Most of our labor has been dedicated to picking and packing our harvest. A small crew should be able to maintain current plantings and finish the planting schedule for the season.REFUNDS
Shareholders will receive prorated refunds for missed service. If we are closed for four weeks, this will amount to 4/23 or 17.4% of their share price. If we are closed for six weeks, we will refund 26.1% of the price. If we are not able to reopen, we will refund 56.6% of the price paid by each shareholder.
These refunds are substantial. In the last case above, we would have to refund well over $100,000. Since we have exhausted our current revenues and have no liquid assets, the only source of these refunds is the equity Angel and I have in the farm. Accordingly, to pay these refunds, we will have to sell the farm which could take anywhere from three months to a year. As soon as we stop farming this season, we will begin preparing our property for sale. Because of the anticipated delay in providing refunds, we will add interest to our refund checks (6% per year simple interest figured from September 2006).WHAT WENT WRONG?
I am still astonished by our failure. We began the season with more than enough money, refined growing plans, new labor saving equipment, better intern facilities and a crew than included our most experienced and most credentialed workers from last season.
After years of losing around $50,000 per season we finally made a modest profit last year (about $3,000). Our only fear was that we would not acquire enough customers. And then our sales took off like a rocket and we had to return checks and start a waiting list for next year.
I canít blame the weather. Other than slowing the ripening of our tomatoes, it posed no more challenges than usual.
I suspect the nature of the interaction between me and our crew this year is what did us in. My nondirective management style results in a farm that is usually long on plans and short on direct orders. In past years, the crew would be frustrated, but sooner of later various individuals would fill the leadership vacuum and our plans would be executed. This year, no one stepped forward and little errors began to compound. The more I talked about what needed to happen, the angrier and less active our crew became. The difference between the interpersonal dynamics at the farm this season and last is subtle, but the results in the fields are not.
I still have faith in the distinctive agricultural model expressed by Covered Bridge Produce. Having lost the capital and perhaps the confidence needed to operate it, I still hope that this distinctive farm may not die. Angel and I will make every attempt to sell our property as a house plus a working business. I may have created Covered Bridge Produce, but another may do a far better job of making it a solid and successful business.APOLOGY
Can you imagine breaking a promise to 600 families? That is what I am doing as I type these words. I promised to deliver vegetables for 23 weeks and I canít do it. I am very sorry to have taken your money into my business and not returned fair value for it. After I have done what I can to resume vegetable production and refunded some of your money, I will still have done you a disservice. Please know that I am truly sorry to have failed to deliver a good seasonís worth of vegetables and fruit.