Chapter 74 - 73: Limited Quantity Contract
Chapter 74: Chapter 73: Limited Quantity Contract
A single command from the boss had his employees running themselves ragged.
Following Jiang Miao’s directive, everyone in the procurement department was working nonstop.
Thankfully, to keep transportation costs down, the search for Egyptian Catfish farmers was limited to the area around Magong Town. At least the procurement agents wouldn’t have to travel far.
Two procurement agents drove the company-provided pickup truck along a tree-lined country road to Nanfen Village in the neighboring Red Grass Town.
Before heading over, they had used a connection from Old Zhao, the farm’s electrician, to identify a few target farmers and were preparing to visit them one by one.
「The southern part of Nanfen Village.」
Parking the truck in an empty lot by the side of the road, the two got out to walk.
Carrying a briefcase, the sharp-eyed Tiger Teeth Sister pointed to a nearby fishpond. "Big Eye, this pond is pretty big, but look at all the weeds on the bank. It must be an abandoned fishpond."
"Heh, what do you think this says?" the male procurement agent with large eyes said, pointing to a sign hanging on the iron-grille gate.
Turning to look, Tiger Teeth Sister immediately flushed with embarrassment.
The sign read: "Fishpond for Rent. Interested parties, please call 133..."
Big Eye took out his phone and immediately dialed the number.
"Hello, is this Mr. Ye?"
"Uh, yes, it is. Who’s calling?"
"I’m calling about the fishpond. I’m standing at the gate right now. Are you interested in talking?"
"Yes, yes, I’m interested! Just a minute, I’ll be right there."
About ten minutes later, a beat-up motorcycle spewing black smoke roared out of Nanfen Village. The rider was a middle-aged man with a cigarette dangling from his lips, wearing knee-high rain boots, his hair as messy as a bird’s nest.
Big Eye and Tiger Teeth Sister saw him approaching.
PUTT... PUTT... PUTT... The beat-up motorcycle sputtered to a stop in a cloud of black smoke at the fishpond gate. The middle-aged man took the cigarette butt from his mouth, casually tossed it on the ground, and stamped it out. He looked at the two of them with suspicion, then asked in halting Mandarin, "Hah... Are you the ones who wanted to see the fishpond?"
Big Eye, a local himself, replied, "That’s us. Here’s my business card. We’re procurement agents for the Magong Hailufeng Company."
"Magong? Oh... you’re that company that had its secret formula stolen, right?" Old Ye put two and two together. He glanced at the information on the business card, then looked up in confusion. "I’m not raising any fish in my pond, so what are you here to procure? Or do you want to rent the pond? But there are tons of fishponds in Magong Town and over by Cheung Sha Wan. No need to come all the way to Nanfen, is there?"
Big Eye quickly explained, "Mr. Ye, we’re looking for farmers to partner with to raise Egyptian fish."
"What?" Old Ye thought he had misheard. "You said raise what?"
"Raise Egyptian fish," Big Eye said with a straight face.
"Are you kidding me? Who would I sell Egyptian fish to? Are you going to buy them?" Old Ye started to get angry.
Big Eye quickly explained, "We *are* going to buy the Egyptian fish. That’s why we’re looking for people to raise them. As long as you sign a contract, our company will buy all the Egyptian fish from your pond."
"Really? Your boss has more money than he knows what to do with, huh?" Old Ye was half-believing, half-doubting.
"It’s true. Once the contract is signed, our company will buy every Egyptian fish your pond produces."
Seeing Big Eye’s solemn expression, Old Ye asked again, "Are you sure? I don’t want to raise them only for you guys to disappear. Who would I turn to then?"
"We’re a big company. Do we really need to trick a farmer like you? Don’t worry! The price will satisfy you, too. Our standard purchase price is three yuan per kilogram."
"Three yuan?" Old Ye immediately grew suspicious of the pair’s identity and motives. He quickly picked up his phone. "I’m going to make a call to check. You don’t mind, do you?"
"Go ahead!" Big Eye knew the man wanted to ask an acquaintance.
Old Ye quickly ran to a small grove of trees nearby and dialed the electrician, Old Zhao. A moment later, he walked back, all smiles.
"A misunderstanding! All a misunderstanding! I thought you were scammers. Come, come, have a seat inside." Old Ye said as he unlocked the iron gate with a key.
Big Eye didn’t say anything.
Inside the sheet-metal and wood shack by the pond, Big Eye didn’t beat around the bush. He got straight to the point and explained the contract terms to Old Ye.
"This is a three-year contract. But I have to be clear upfront: to prevent you from buying Egyptian fish from others, we will set a quarterly purchase quota based on the size of your pond."
That idea had indeed just crossed Old Ye’s mind. Now that Big Eye had called him out on his little scheme, he asked reluctantly, "It’s all Egyptian fish anyway. Why do you need to set a quota?"
Big Eye smiled and shook his head. "The quota is for the good of you contracted farmers. Otherwise, other non-contracted farmers will soon start raising large quantities of Egyptian fish, too. Our company can’t possibly buy them all, and in the end, you’re the ones who will suffer."
And that was the truth of the matter.
This was a problem the Hailufeng Company had already considered when drafting the contract.
If no purchase limit was set for contracted farmers, some would inevitably buy Egyptian Catfish from non-contracted farmers. This would overwhelm the Hailufeng Company’s feed mill. The mill would then be forced to refuse shipments of Egyptian Catfish, ultimately causing the entire market to crash.
Therefore, a purchase limit had to be imposed on every contracted farmer.
The company set a quarterly purchase quota: 5,000 to 10,000 kilograms per mu per quarter. This was a reasonable amount.
This was because if managed well, Egyptian Catfish could be harvested in three months, with a quarterly yield of around 5,000 kilograms per mu. With better management techniques and sufficient feed, the quarterly yield per mu could even reach ten thousand kilograms.
Such is human greed.
The Hailufeng Company could have chosen not to impose any limits, letting the farmers tear each other apart and drive prices down in a race to the bottom.
The problem was that the consequence of doing so would be many farmers losing their enthusiasm for aquaculture again, turning the whole venture into a one-shot deal.
And the Hailufeng Company’s feed mill needed a stable supply of Egyptian Catfish as raw material, so it certainly couldn’t allow the farmers to lose their passion for raising them.
To keep the farmers enthusiastic, there had to be a reasonable profit margin.
One mu of fishpond yields 5,000 kilograms of Egyptian Catfish in three months. At a purchase price of 3 yuan per kilogram, 5,000 kilograms would be 15,000 yuan, which comes out to around 60,000 yuan a year.
Considering the low management and feed costs for Egyptian Catfish, the gross profit per mu could be around 10,000 yuan.
In comparison, the profit from raising eels was also about ten to twenty thousand yuan per mu.
Eels fetched a high price but yielded low profits because most of the money was eaten up by feed and supporting facilities.
Egyptian Catfish had a low price, but its feed, facility, and management costs were all relatively low.
This is why for any type of aquaculture product, there are always farmers willing to raise it.
It’s not always the case that high-priced aquatic products are suitable for farming. High-priced finished products often come with high technical difficulty, high facility costs, and high feed costs.
Many ordinary farmers simply don’t have the capital to raise those difficult, high-priced aquatic products.
Take a farmer like Old Ye, with just two and a half mu of fishponds, very rudimentary facilities, no real technical skills, and not much education. Asking him to raise eels would be doing him a disservice.
After Big Eye’s explanation, Old Ye understood that even if he were to source Egyptian Catfish from outside, he would have to do it within the quota limit.
Soon, Old Ye cheerfully signed the contract and pressed his fingerprint on it.
Meanwhile, Tiger Teeth Sister wasn’t idle. She had Old Ye hold up the contract and his ID card and state that he was signing it voluntarily.
This was because the contract included a penalty clause. Barring force majeure, if he failed to sell Egyptian Catfish to the Hailufeng Company by the deadline without a valid reason, he would have to pay a penalty of 90,000 yuan to the Hailufeng Company, which was 1.5 times the projected annual contract value.
At the same time, the contract would be terminated, and he would be blacklisted by the Hailufeng Company, with no possibility of future cooperation.
The penalty clause was mainly to prevent competitors from coming over to poach their supply.
Because once the Hailufeng Company’s fish feed hit the market, domestic feed companies would quickly figure things out. They would soon imitate this model, and it was possible that nearby feed mills would come here to buy up the Egyptian Catfish.