Brand Identity

[smcgrath76]

The mineral thread got me thinking, can you see the smoke through the rain?
GF talked about eliminating Ivomec, and a couple of others about eliminating minerals from their programs. We are always trying to cut costs, and further even eliminate inputs. While we are not yet in a position to capitalize on our "brand" with the consumer (we are still in the cattle business, not the food business at home), are we robbing Peter to pay Paul.
I am reading a book called the New Brand World and one of the cases he talks about is a large successful company that had the market cornered and focused totally on cost cutting (accountants in charge). A few years later they had competitors who had focused on product quality and were kicking their hind end. Even the company had to admit the competitors products were better.
We may be headed down the same path with our current cattle mentality (although I am not 100% sure how to get the value of increased cost back out).
For example we know Vit E late in the feeding period extends product shelf life, we know forage fed increases beneficial fatty acid composition, etc.
There are tradeoffs here, and I think we may have been making these tradeoffs for too long in some areas.
The lowest cost producer in the commodity game will win the race, but for us in our operation the finish line of that race is nowhere near where I want to be at the end of the day.

[grassfarmer]

Sean I would agree with your thoughts on this totally. For me being a low cost producer is the way to survive and outlast others in the same commodity business but we are also trying to seek/create new ways to do business by getting more value from our cattle by selling beef direct or into markets that would be prepared to pay more than commodity prices.
I see the two ideas as being complimentary as the things we are cutting costs on can also become marketing points for our value added output. I really feel the best long term future will be in the value added rather than commodity sector.

[Cattleman]

I agree with both of you, and in our situation, the low cost cattle has been created through the left overs of our hay business. I think all ag commodity producers face these same challenges of low-cost vs value. We produce and sell hay and this has been our focus on marketing, presenting quality, service, etc. etc.
The difficulty in the beef/commodity business, is the competition in all the middle man stages, and the amount of knowledge it takes to take a calf and sell it to consumers. There are new production stages to learn about, marketing skills, keen business skills, capital and cash flow requirements etc. For the average producer it is a lot harder to learn all these new skills and pursue these opportunities, than it is to find a way to reduce costs. But even in todays world, these new techniques really have to be cutting edge, to give you much of an advantage. My 2 cents

[rkaiser]

It's hard for me to see that stopping every practice as cost cutting. Some will argue that stopping feeding mineral will cost in the long run - I tend to agree. While others will say that not implanting will cost you money in the long run - on this point I disagree strongly. However, we are always arguing about one thing - money.

The funny part about showing some caring in this industry is like grassfarmer says - there are potential benefits. But only if you either attach yourself to a chain, or offer beef to a consumer.

Is stopping a practice like implanting, or conventional barley finishing a cost cutting measure if it actually means more potential profit? Does it make you a low cost producer or a good marketer? Maybe the best of both worlds.

I see it as not only an opportunity for profit for my family and those who wish to work with us, but as a chance to make a difference and actually feel damn good about what I am doing. I have mentioned this a number of times now to the folks at the Lacombe Research Center where we are working on a ration to combine the positive results of enhanced CLA and good trans fats with a low cost management of the cattle without the yardage etc. involved in conventional feedlotting of cattle. When the boys at the college suggested a potential carbon credit program for feeding oil seeds to ruminant animals, once again I had to remind him that I thought offering a healthy product to folks other than my family members was almost all I needed to move ahead with the project.

Most of you know me well enough to know that I am not overly churchy and have a strong will to compete and profit, however our industry allows us room to live with the dichotomy of profit and morality and that is something somewhat unique to agriculture. Now I may hear from those who will argue that implanting and conventional feeding methods are safe and fine, however we are still able to offer a choice and the consumer is becoming more aware as we speak. I think it is time for us as an industry to keep up to that changing consumer and follow his/her money at the same time as admitting that what we have been doing is following Cargill and Tysons lead and illusive money.

I would more relate some of the cost cutting going on in Organic or Natural beef programs to trimming of unneeded fat. Continuing to ad costs like we have over the past twenty or more years with promises of the trickle down effect has certainly not worked. We need to pay attention to our industry without the influence of those who are simply in it for money. This my friends will be where we do find profit once again and, like I said before, find satisfaction as well.

[cswilson]

Isn't it the highest profitability producer who will survive in any business-though I'm as miserly as the rest it doesn't do you much good if your returns are lower than your low costs.

[grassfarmer]

I maybe missed part of your original intent Sean - If I was offered $1000 more per fat animal if I massaged them and spoke to them in Japanese once a week would I do it? It needn't all be about cost and input cutting but the reward has to be there. Too often with commodity production the value a producer tries to add becomes the accepted standard and anyone not meeting this new higher standard is penalised.

[farmers_son]

Re quality and brands... Rolls Royce built quality cars but the car division was sold to Volkswagen in 1998. I would think that prior to 1998 Volkswagen would have admitted that the Rolls was a better car. Still, to the victor go the spoils.

It is important to position your product to best meet the customer’s needs for both quality and price. I do not know the company you used in your example but certainly cost cutting is a very viable strategy for any for-profit business. The competitors may have had to incur substantial costs in order to enter the market with their “better quality” product and there is no indication from your example that they were able to extract a higher price from the marketplace.

I think it may be missing the point to talk about being the low cost producer in the cattle game. The big packers consider themselves to be in the protein game and I think that is really the only game in town.

It is important to consider that primary agriculture produces goods to meet a derived demand. I think we need to be careful about comparing ourselves to organizations that are producing to a market demand. The relevant strategies would be very different.

The lowest cost producer does not necessarily win. Another way to consider who might win is to consider risk versus reward. The organization or producer who best manages his/her risk versus net profit is most likely to survive long term. I see a couple of very large farm sales every year.. Undoubtedly their cost per unit of production would be lower than mine but something happened to cause their sale. I suspect risk came up to bite them in the behind. As they say, the bigger they are the harder they fall. Large operations leveraged heavily with debt are vulnerable to risk from various sources. The fact that they are lowest cost producers will not guarantee their success.

[cakadu]

Might I be so bold as to suggest reading a book titled "The Omnivores Dilemma" by Michael Pollan. He closes examines 3 types of production - conventional commodity production - corn and cattle, organic and the type of production that Joel Salatin models.

He buys a calf and takes it from the field all the way through to processing and speaks very candidly about the whole process. As organic agriculture grows, it runs into the same logistical and distribution channels that conventionally grown crops and animals do. It also moves away from the locally grown aspect that made organic what it is.

Joel of course doesn't market beyond his own neck of the woods and the amount of production he gets out of 550 acres is phenomenal. Mind you, he can slaughter his chickens at home, which we can't do here.

It's an interesting read and gives plenty of food for thought, pun intended.

It is always a balancing act between the risk/reward aspects of production and the marketing your products.

[grassfarmer]

Cakadu, That is a good read for sure. I've been a fan of Joel Salatin for a while and read all his books. He looks like a bit of a madman sometimes with his very strong views on politics and religion and his amateurish way of doing things - fences tied up with bale strings, electric gate handles homemade out of wood because the $3 ones from a store are too expensive. He has the last laugh though when you see the returns he makes from agriculture - far above those of anyone else I have seen in North America. His biggest advantage is his close proximity to huge populations of affluent consumers in the Washington area - many millions of people within a half day drive. This makes his direct selling a very good proposition on a large scale. I admire the man, he's a genius.

[grassfarmer]

Some figures from Salatins operation for those of you not familiar with it.
550 acre farm with around 450 of that being forest. Only around 100 acres is intensively managed pasture that produces all the meat. They gross $350,000 a year with a net of over $150,000. They produce annually 30,000 dozen eggs, 10,000 to 12,000 broilers, 100 head of cattle, 250 hogs, 800 turkeys and 600 rabbits.

[farmers_son]

I checked out Joel Salatin’s website:

http://polyfacefarms.com/index.html

While I am not sure if this fellow is a genius he does have a flair for marketing. Using the numbers Grassfarmer put up I did a simple spreadsheet with guesses of what the produce would sell for. Hope these numbers line up so they are readable.

Dozen Eggs 30000 $1.50 45,000
Broilers 11000 $10.00 110,000
Cattle 100 $1,000.00 100,000
Hogs 250 $300.00 75,000
Turkeys 800 $25.00 20,000
Rabbits 600 $15.00 9,000
Total 359,000

This fellow’s gross and net are about the same as mine but I do it with a lot fewer people although a lot more land and most years with a lot less rainfall (not counting this year).

This example does point out that primary producers have the option of producing to the retail market with a branded product, if they so choose. Most often the brand identity is closely associated with the actual producer than the product itself. While being close to the city is no doubt an advantage, they charge $300 to $500 for a 2 hour tour of their differentiated farm. Very nice marketing. Reading between the lines I suspect their real genius has been in capturing value, not so much in their production, but in their uniqueness, even eccentricity.

[grassfarmer]

Farmers_son, While I agree with your view that he is a very good marketer and has been successfully able to capture the extra value for his produce, I would disagree when you downplay his genius in production. This output he is achieving is off a little over 100 acres of pasture - he buys in very few inputs and this is genuinely achieved off the pasture. The huge figures of income from the poultry are pasture based not from a confinement based operation. What interests me is much of his model could probably be reproduced in the parklands of Alberta with the exception of the consumer numbers close by. With that kind of soil fertility and output imagine people once again being able to make full time livings off their quarter section farms. Making far above the average returns of producers with 1000 acre places - I think the guy is a genius both in production and marketing.

[rkaiser]

Is marketing the way that Joel does it genius, or is success simply about his will to make a change.

We are living in an industry where we keep telling ourselves - "It is not fair that we need to make such a major change to survive. We are the raisers of livestock and it is only fair that we should be paid a fair price for those livestock so that we can make an honest living."

The problem is - those who buy our livestock have no interest in this little dream world - as fair as it may be.

This little economic nightmare is not unique to our industry as cattle or beef producers, but is certainly made worse when you have a continuous game of control and power going on to keep prices down rather than allow prices at the consumer level to rise.That hunger for power and control by a very few multinational corporations makes it difficult for competition to rise, and volume is the key to profit for these greedy inhuman corporations, rather than a will to see prices rise and allow others a piece of the cake.
Every move made by the packer in our industry is about control and power. They do not want to see competition in any way. The small group in the "Beef Trust" even control our own government and so called industry representation to steer the industry and make it difficult for any and all competition.

We all know these things, but very few will out right admit it.

So how do we remain a viable industry as producers. And by viable - I mean in control of our own destiny and allowed to raise price when it is needed to survive. We have to retain ownership of our product, and not allow our multi billions of dollars in assets to be controlled by two or three companies with a few hundred million in assets. If we as a group for instance, allow "Ranchers Beef" to be purchased by one of the three controlling players in this country we will have no excuse for allowing further demise of our industry. Yes folks - the game plan is set. The brand new and exciting plant at Balzac Alberta is in major trouble and the vultures are circling. Not only are they circling, but they are circling after they sent the hyena's in to pick away until the the victim was in the position it is in.

But - do we, as producers, have the will to change.

We have the will to change like grassfarmer or Cam Ostercamp did. That is to market directly. Or change like Christoph Weder and his gang, Glen Leitch and his gang, or Kaiser and Froeler and Goodrich and a few others in the Celtic beef gang; to join hands and direct market. Rise up from the bottom - invest in marketing rather than a new tractor and truly change our focus.

But do we collectively have any will - or even admit that there is a problem with our current system of supporting these inhuman corporations in their quest to control the ENTIRE industry. My Goodness Kaiser - you're back on that conspiracy shit agin! That is the response from our so called industry leadership.

Not genius folks - just a will to change.

[cakadu]

I believe that Randy has it pegged - there has to be a willingness to change and not get into the mainstream of things. One of the things that hurts many producers is that they are over capitalized and so much money is needed to buy/finance equipment, land, buildings etc.

I would say that Joel runs his operation with a lot less equipment and a lot more labour. If you were at his website farmers_son, you would notice that there is a waiting list of people wanting to work there. Quite a different story with farm labour around here.

The inspection folks down there have tried to shut his chicken operation down many times and stop him from processing right there on the farm. Trouble is that when they do their swabbing etc., he generally comes out cleaner than any facility. He has the advantage over us in that we cannot process on the farm for sale (at least not legally) and we have the chicken supply management folks who would be all over us in a second if we did. When pasture poultry was first brought to Alberta a few years back, the chicken folks were fit to be tied trying to figure out how to charge for quota on the birds because they only operate 5 months of the year.

It seems that whenever one tries to move away from the mainstream, there are always the naysayers and the doubters. One of the other problems that we have here is the lack of willingness to cooperate with one another to gain more of the value of what we produce.

We have been raising and selling our lambs outside of the mainstream for the past 14 years and I have actually given up trying to justify why we do it the way we do to those that are in the "system". They just can't see how we can make any money with the breed we raise and the direct marketing. It hasn't been easy - in fact during the drought and the whole BSE thing it was quite difficult - but we have perservered and are actually now getting somewhere. A success story 14 years in the making, if you will.

Changing mindsets is the hardest thing to do. Think of the possibilities if we could.

[farmers_son]

I did notice there was a waiting list of people to work for basically room and board. And yes he has achieved a lot of production from a small land base. Yes again, there must be a willingness to change. But the reason Joel S. has people paying to visit his farm and to buy his books is he has successfully differentiated his farm to the point where he can market a brand identity. If I achieved notable production on my farm but did it using traditional methods no one would pay me $500 for a 2 hour tour.

Rkaiser: I certainly agree that the present system is unworkable. Cattle producers will need to find ways to capture a fair portion of the consumers food dollar. Marketing direct is one way, retaining ownership of the cattle past the packing level is another. If BSE was not enough to force change then our rising dollar and stronger grain prices may do the trick. It is just a matter of when it happens not if it happens.