Direct Marketing

[mgh]

I have a few neighbors who are interested in the steers we held over from last year..... What is a decent price for a side of beef? (I don't want to market 1 cut at a time) Is $3/lb anywhere in the ballpark. I've only been in the cow/calf business, so this is all very new to me.

[cakadu]

Doing market research is the biggest piece of the puzzle. Time-consuming, but well worth the information that you get from it.

Some of the things that you should consider doing before setting out on this venture are:

1. Find out what the regulations are for handling your product. While there is an overriding act in the province, depending on where you are at, the municipality can have it's own set of rules for you to follow in addition to the major rules.

You might want to contact the Farm Direct Marketing people for help and assistance there. There is also the protein team at AAFRD and Karen Goad is one of the contacts - she also does the farm direct marketing. She can be reached at (780) 538-5629. If you dial the RITE no. first 310-0000, it won't cost you anything.

2. Decide who your target customers are going to be and find out what they want and what they are willing to pay for it. How much do they want to buy. One thing to bear in mind is that urban folks don't think in terms of buying sides of beef, whereas rural folks tend to - as a rule.

3. Find out who your competition is going to be - both direct and indirect. Direct competition would be those other people that are selling beef (and/or other meats) directly to the customer. Indirect competition would be the supermarkets, off-shore meat etc.

4. What makes your product unique and why should people buy from you and not from someone else? Remember that what you say has to be deliverable each and every time as quality and consistency are critical in the direct marketing game.

5. How long are you willing to supply for and what are you willing to supply? You state that you don't really want to piece it out, so you'll have to find those customers that are willing to buy what you have to sell.

These are just some suggestions. If you have any other questions, please feel free to ask.

[cakadu]

Doing market research is the biggest piece of the puzzle. Time-consuming, but well worth the information that you get from it.

Some of the things that you should consider doing before setting out on this venture are:

1. Find out what the regulations are for handling your product. While there is an overriding act in the province, depending on where you are at, the municipality can have it's own set of rules for you to follow in addition to the major rules.

You might want to contact the Farm Direct Marketing people for help and assistance there. There is also the protein team at AAFRD and Karen Goad is one of the contacts - she also does the farm direct marketing. She can be reached at (780) 538-5629. If you dial the RITE no. first 310-0000, it won't cost you anything.

2. Decide who your target customers are going to be and find out what they want and what they are willing to pay for it. How much do they want to buy. One thing to bear in mind is that urban folks don't think in terms of buying sides of beef, whereas rural folks tend to - as a rule.

3. Find out who your competition is going to be - both direct and indirect. Direct competition would be those other people that are selling beef (and/or other meats) directly to the customer. Indirect competition would be the supermarkets, off-shore meat etc.

4. What makes your product unique and why should people buy from you and not from someone else? Remember that what you say has to be deliverable each and every time as quality and consistency are critical in the direct marketing game.

5. How long are you willing to supply for and what are you willing to supply? You state that you don't really want to piece it out, so you'll have to find those customers that are willing to buy what you have to sell.

These are just some suggestions. If you have any other questions, please feel free to ask.

[cakadu]

Here is an article that I ran across that gives you a little more to ponder.

Location of Your Direct Marketing Enterprise

Poor location is one of the major causes of direct farm marketing
failure...

Please click on the link below to view the full article!
http://www.farmcentre.com/english/articles/master_article.htm?id=114

Brought to you by www.farmcentre.com.

[cakadu]

You'll have to cut and paste the link into your browser to read it!

[whiteface]

Three dollars is in the ballpark. Depends on whether you're paying cut and wrap or they are, I assume we're talking hanging weight (warm weight) or were you thinking that price for the packages of beef cut/wrapped and then they take half the animal. Easier yet, sell them live a dollar a pound, you're paid, then they do what they would like after that. Lots of options, Cakadu's research links should be helpful. Good luck!

[whiteface]

Maybe I should mention that my biggest hurdle lately has been kill space and honest packers. They won't get you in and when they do, it's fast furious, dark cutters, stolen meat if your animal is any good or hacked to pieces, cut wrong and my customers have complained a little lately. A challenge for me for sure, which is why I suggested maybe your neighbors might be interested in buying the animal whole. If you have a good local proceesor please let me know. Nerves suggested I try Penhold and I plan to sometime during my lifetime, they're booked solid for months ( literally) they must be good.

[grassfarmer]

Yes, good local packers are a challenge. The Ponoka outfit we mentioned previously have bounced my latest kill spot back three weeks - they are having "mechanical difficulties" otherwise known as fighting off the health people on a daily basis - not the place I want to be using to process my meat. Good job I had my fall beefs booked in at another place as reserve.YB certainly have the best reputation.

[cowman]

I would think $3 might be a little high? Seems there were guys in that $2.25 range not too long ago?
Why would anyone buy an animal on the hoof for $1/lb.? I believe the fat market is still under 70 cents?
So lets say 70 cents...1200 lb. animal $840? Cut and wrap? Say $450? That comes to $1290 processed? Now supposedly the animal yields around 60% butchered and you are selling sides?
60% of 1200 lb. is 720 lb.....so the price should be.... $1.79/lb.!
As in all good business dealings give yourself a 15% profit and voila you arrive at your price.... $2.06/lb.!
Now I understand these are pretty ballpark figures and you might need to move numbers around, but the fact is at $3/lb. you are ripping the consumer off! He'd be much better off going to the auction mart and buying his own.
Hmmm maybe Cargill/IBP aren't the only rip off artists in town?

[whiteface]

Here's the deal cowman... If a consumer can go to the auction and "pick one up himself" they are more than welcome! I sure don't stand there with a gun and tell them to buy mine instead of auction cattle. Its free enterprise, period and if your beef is better than mine at $1.79 a pound, you go right ahead and sell it, fact is my beef IS a little better than the average Joe ( no pun here Joe-2), it's raised right, fed right, no crap in it including hormones, pesticides, even medication of any sort and when we can get the right honest people working for us to process, the meat quality is better than anything you buy out there and by the way I GUARANTEE the meat. Incidentally, I charge more than 3 a pound and can't keep up with the demand although recently the packers are becomeing a problem and kill space and quality may lose a couple of my customers, but it's not the price of the meat that concerns them. Not only that, I do all the "work" including feeding, trucking, finding kill space, refrigeration, the hassels with the packers ( grassfarmer, I got that too with Ponoka, sent home, they were overbooked, I live in Olds...that translates into $200 worth of gas at todays prices for your math cowman), advertizing, phone calls, leg work, time and my personal guarantee for all the cattle we sell live or packaged and that the number I came to in order for it to financially worthwhile - for me. Otherwise, like I said cowman you and anyone out there are welcome to underbid me just like with the live cattle I sell and the customer has a choice. It's all abut choice but its also about quality. You pay more for a Ferrari than a Volkswagon and all of you would take a Ferrari anyday if you could afford one and if you knew that's the car you were getting instead of one wrapped like it and then found out it was really a duck! Maybe don't sell those yearings just yet cowman, maybe suddenly they're worth more than you thought...if you were willing to put a little more work into them!

[whiteface]

I should add that one of my customers most regular and greatest compliments to me are my honesty. You simply will not be in any business very long without it. They are all definatly aware of the price of the meat in the store and the price of the beef on the hoof. They are also all very acutely aware of the amount of pains I go through to make their meat of surperior quality including the regular "pampering" of the animals to keep them "happy" and medication free. My customers are reminded on a regular basis they have a choice and are welcome to shop anywhere including buy the animals live ( yes a little more than the going rate!) and figure out the process from there... they choose not to. Just like even so many direct marketers on Agri-ville, they know its a little bit like work and most would rather just sell (their animals throught the auction ) or buy (right at the meat counter) rather than have to think too hard or take away precious time that to many people could be better spent on vacation, who wants to "work" forever??? Not you cowman, you're on your way to Thailand to see if you can pick up Malaria. Hope you have a good time and by the way, I'm not pissy here at all, I like you enough to feel that you did deserve an explantion instead of me snubbing your post!

[cakadu]

You're quite right whiteface - direct marketing is not for the faint of heart and it takes a lot more than what meets the eye at first glance. When pricing your product - any product - you have to factor in all the things that go into making up that product, including your time and labor.

What many people do like is the contact with the person who has produced it for them and if they feel they are being treated well and honestly, they will pay more because they are paying for something that has value for them.

We've been doing this a long time now and one of the things that becomes readily apparent in this type of business is the need to stay one step ahead of who your competition is. In less than 2 years we have seen dramatic changes in direct marketing - more people getting involved and many of these are out of necessity and/or circumstances - far more competition for decent, consistent processing, more varieties of meats being offered on a direct marketing basis etc.

Even if you've been doing it for a few years, it requires you to stay sharp and on top of things. It doesn't get any better than to know that you are providing what customers want, doing it at a price that will mean money in your pocket is a totally different story.

I applaud those getting into the direct marketing business and I suspect before too long people will have to start working together because working against one another will not do anyone any good.

The most important things to remember are to know your customers and to know your costs.

[cakadu]

MGH - it has also been alluded to about cuts - with your wanting to sell just sides - your customers will have to understand what they are paying for. If it is the side "on the rail" or "hot weight", then they need to be made aware that if the side weighs 500 lbs - they won't end up with 500 lbs of meat, they will likely end up with about 60 to 70% of that (maybe even less depending on the cuts they want and the amount of trimming that has to be done.)

Many of the people that you may be dealing with do not understand the concept of hot weight and will want to buy on what ends up in the freezer.

(Incidentally whiteface, I really wouldn't want to be driving a Ferrari, even if I could afford one. Seems to me that is an awful lot of money to pay for the same view of the road that everyone else gets.)

[whiteface]

Beauty and practicality cakadu, I like you!

[cowman]

Whiteface: If you have those added expenses of course you need to add them to the bottom line. And if you have a clientele that is willing and able to pay more for the "sizzle' than actual meat then that is a good thing. I guess it's all how people view it? If you look at it like a commodity or like a "specialty" type of food.
I do agree with your assessment of the majority of consumers, however. Most people don't want to be bothered with having to run around shopping? They prefer to just buy at Safeway and they expect a level of quality and safety they can live with? I suspect a good portion of the people who have time to run around to the farmers markets and specialty shops are boomer/yuppies with way too much money and time on their hands! But that is just my personal opinion(And yea, I like farmers markets!)
You see lots of ads(or at least you did!) for homeraised, no anti-biotics, no hormones etc.etc., in the papers in that $2.25/lb. range? Now maybe they never sold any or something because you don't see them as much now? There is a guy who sells beef every Saturday at Canadian Tire. I never checked him out, or his prices, because I'm one of those Safeway types right now! Actually come to think of it, I hardly ever bother with Safeway! Mostly just eat at the restaurant! No time.
Hey I wasn't ripping you! If it works for you, you go for it! I was just trying to point out the bottom line for the new guy.