grassfarmer, rkaiser or anyone else who sells beef, retail, could you please advise me what a half would retail for? We've been asked to donate two halves of beef to a worthy cause which I am quite willing to do but need to establish a retail price. Does anyone know what the price to the consumer would be? We've never sold our finished animals straight to the consumer, always just to the slaughterhouse. thanks in advance, kpb.
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You may be interested in this Custom Kill Analysis Spreadsheet from BIC at:
http://www.albertabeef.org/news.asp?newsindex=222
Follow the links.
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kpb, We sell our quarters and halves for $2.60/lb hanging weight. We are selling grassfed - a "healthier" choice so are asking more than many conventional producers but less than the established organic type producers. I see quarters and halves advertised at $2/lb quite often - some as low as $1.80/lb.
By our reckoning we are still selling our beef way, way below what the retail stores are.
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1300 lb. steer at $.85(not sure of current price) equals $1105. Costs about $450 to kill, hang cut and wrap so cost of finished product is $1555?
Hanging weight should be at least 58% of live weight or 754 lbs. so final cost should be around $2.06/lb.!
Add 15% profit and you come up with a price of $2.34/lb.
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Cedar, our price is for the product cut, wrapped and delivered. I know one very successful organic outfit that are selling halves at $2.70/lb hanging weight with an extra 50 cents/lb to cut and wrap. So they are charging $3.20/ lb in total - and they have a waiting list. We are just starting to see the potential of this market compared to the commodity market.
Cowman, I'm not sure what your example was meant to show? If you start with current market price, add costs and then add "profit" to come up with a figure. Shouldn't you start with production cost rather than market price before adding profit?
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Grassfarmer, with you selling your sides by the hanging weight (or the hot weight), have you had any customers query the difference between the hanging weight and what shows up at their door in the box? I would guess that once the cutting is done that you loose about 25 to 35% to waste, trim, bone etc., depending on what cuts are ordered - much the same as we loose on a sheep carcass.
Most of our customers pay us based on what is in the box that shows up at their door. I've even been told that some of them will take the box and weigh it after we've gone to ensure they are getting what they are paying for.
That is one of the biggest challenges in selling direct - getting the customer to understand the different cuts, the loss, and the different terminology that they are quite likely not familiar with. Granted, with a cow you've got a lot more to work with than we do with a lamb, but the principles are basically the same.
There are a great many benefits to direct marketing, but there are a lot of challenges that go with it. Still, we wouldn't do it any other way.
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Yes, explaining that system to a new customer can be a challenge but I think it worked well in our first year. We did give them approximations of the weight they might get from the outset and in fact they generally got slightly less than we had anticipated. The general feeling is they are happy with the product because they are finding it far superior to store bought beef in taste and texture. From our point of view this is the best way to sell it. If a customer doesn't want short ribs, bones for his dog or whatever and you are selling on a delivered weight these things are a dead loss to me.
It's also a tough job explaining to some customers that steers aren't all high quality steaks though. LOL
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Grassfarmer: Yes, I suppose some people would expect 600 pounds (or whatever) of rib steaks, eh?!?!! How long do you hang your carcasses for? You're in Alberta, right? Do you have to have a special refrigerated type truck for delivering the beef to your customers? Have you had any trouble finding an abbatoir that you can work with? Sounds like you're finding lots of interest in your product, how big of a "thing" do you see this grassfed/natural/organic beef becoming in the future? Are you finding customers are concerned about the industry feeding practices, or is it more the quality of the beef that attracts them? What do you suppose is the difference in your beef that sets it apart taste-wise from the store-bought stuff? By the way, where did your website go? Is it still online? If so, where? (If memory serves, you had posted it here a while back, thought I bookmarked it, but can't find it now..grrr) (Sorry for all the questions, quess I'm in "question-mode" tonight!)
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grassfarmer: You add the 15% profit for your time,extra problems, risk. The $1105 would be exactly what you would get if you sold him to a packer. The $450 is what you actually pay out for the processing. What do you get paid for advertizing, delivery, etc.? You need some sort of margin for that type of expense, right? I just took the figure of 15% because I think that would be fairly acceptable? Pretty standard percentage mark up in contracting out services in the oil patch.
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OK Cowman, I see what you were meaning now. I just factor in the processing costs along with production costs at the start.
Cedar,yes we are in Alberta. We aged the beef for 16 days last year - that was what the butcher reckoned was perfect - given their cooler space constraints. We have found a plant that we are happy with - Swiss folk that really know beef.
I think this grassfed market could be huge, you only need to look at where it is in the US. They started it years ago in the rich NE states and it has spread accross the country. It has really taken off in the last five years and they reckon that current production is about 20-25% of what the market wants. People that are good at it have waiting lists and I have seen prices as high as $5 US per lb hanging weight quoted! It frustrates me that mainstream agriculture here isn't interested - even our beef orgaisations can only see mass produced feedlot beef. Yet here is a market that could be huge, high value and domestic and we continue to sell commodity beef to US packers sending all the profits to the US instead of keeping them here in our rural communities.
My comment on grassfed versus grainfed beef is that ours has better texture and taste - it's not the bland mass produced stuff you get in stores. Many of you will disagree with that which is fine - we have customers prepared to put money out for our product which is all I need to know.
Consumers in general are very ignorant of production processes but the fact that we are selling hormone and anti-biotic free beef seems to be a bonus to them. Some customers come to us because of these points.
Our website is "www.luingcattle.com" - we are trying to update it currently. An excellent website that will tell you a lot more about grassfed/organic etc is "www.eatwild.com"
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Cattleman, it's going to appear soon on the website. We do all the website updates ourselves and I am not disciplined enough to get it done as soon as I should. We started to sell to friends and then let them tell their friends about it. We have done some local advertising and farmers markets but we find we don't get too much response out in the country. Most sales are into the urban centres - which is as we expected.
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