Food Value added, specialty markets?

[TOM4CWB]

They were into bison in a big way and now they're out. In a market of oversupply and depressed meat and animal prices, the Quasts are among the first to throw in the towel completely - selling more than 450 animals in a dispersal sale March 18.

"We didn't sell out because we were forced to," Dennis says. "It was a decision we made that it was going nowhere. It was bleeding us to death. I've gone two years with no income and you can't continue that."

Much has been made of value added, yet the gamble is very high in any new specialty industry!

Why have the Canadian and US governments allowed such concentration in the food processing/marketing industries?

In the end by allowing these monopolies to be created, how can the result be anything but lower prices, no matter how integrated farmers become with the value chain?

What can the end result be other than concentration of food production in a few peoples hands as well, if the food producer wants to survive?

Farmers have huge production risk, now we must take on all the marketing risk as well?

[charliep]

Just for clarification Tom4cwb, what is the tie in between concentration in the agricultural industry and the current situation in the bison sector? What could have been done differently? Is the problem with bison on the marketing side (perhaps not finding customers who prefer a natural type of meat and are willing to pay) or cost (too high a cost structure relative to the price the market was willing to pay)? As we move ahead over the next 5 to 10 years, what would success look like in terms of developing new markets/allowing farm managers to move higher up the value chain?

[rodbradshaw]

Bison are in no different position today than the so called exotic cattle (Simmental, Maine Anjou, Limos, etc) were in the early seventies. All of a sudden you had to get them to where they produced meat at a reasonable cost.

This reminds me of Don Bosquet(mind the spelling) talking of $18.00 canola. This was never possible as there is always a substition cost. People will only pay so much and then they will either do with out or use something else. Alberta barley vs US corn is an excellent example that comes to mind. Some feedlots have stuck with barley because they know that when they want high quality barley next year they willhave some supplier loyalty. Others wil just take what they can get an develope that supply chain all over again.

Products must be able to be differentiated and Bison tried to sell the sizzle and was successful until the supply exceeded the demand. The cost put it out of reach for many consumers to make it a regular part of their diet. It also looks like beef and tastes like beef because it is being raised like beef. The only problem with this is it can not be cooked like beef and thus if someone took it home and screwed up in the preparation they blamed it on the fact it was Bison and probably would not buy it again. We have seen the same thing in Ostrich and the like.

It is not the concentration in the food processing business that has been the Bisons price decline but the failure on most of its producers to have a vision of where the ultimate market was and how to service it and what the market would bare.

The CWB was no different when CPS wheats first came out and they sent a delegation to China. They came back and reported that it did not make a bread that the chinese liked. They were then asked by a some producers if they had investigated the possibility of making noodles out of CPS flour. The answer was no because we all know that you can only make bread from wheat flour.

Every product will have a certain market. The secret in making it a successful market is homework and innovation. Some products such as dill and others like it are that the world can only handle so many acres. Bison may be the same and like any other industry that has over capacity and it can not be stored, you either sell it or smell it.

Rod

[TOM4CWB]

Charlie,

On concentration of the foor industry, just see how easy it is to get a new food product into a retail chain!

Shelf space costs millions, and conections in the food industry often means that good food products fail because the "right" alliance was not in place.

Both provincial and federal Ag departments are trying so hard to say conventional agriculture is failing because producers are not innovative enough!

Yet the reason we are failing is because the consumer gets cheaper and cheaper food, while our margins are shaved thinner each day!

Value adding up the food chain is a business all in itself, and is lucky to pay for itself let alone send profits back to the farm.

Yet Charlie, what does the APF seem to be implying, if not that farmers must somehow move up the value chain?

And who takes the economic risk but the farmer, and for what reward, to pay a big tax bill on good years and then go bankrupt when things turn bad?

[charliep]

Tom4cwb

You hit the nail on the head with regards to the problems in the new world. What are the solutions?

A couple of thoughts.

1) Some people have successfully moved up the value/tried new things. What things can be done to help others accomplish this? Is this simply a matter of personal innovation/iniative or are there other things that can be done?

2) You (and others) have mentioned deregulation of primary agriculture and allowing farm managers to move up the chain by finding business partners you feel comfortable with/can trust.

[cakadu]

Part of the problem with the so-called specialty meats is that many of the groups, if they did any type of marketing plan at all, tended to focus on the white table cloth restaurant crowd. That is fine, but restaurants want the primal cuts ie. loin, prime rib etc., which in a case like bison, leaves an awful lot of "trim" that still has to be utilized in some way.

The other problem with the restaurant trade, is that many people will try things once to say that they've had it and that's about as far as it goes. If they do like it and try it at home, it's like Rod has alluded to and they don't know how to cook it, ends up being less than a culinary experience and it ends right there.

Many of these exotics were built on "breeding stock" markets, which someone managed to last for another 10 years, no matter when you got into them - beginning, middle or end.

Things like consistency of supply and of the product itself are very important and many of them did not supply a consistent product, which lost them customers as well. Buyers want to know that what they get this week will be the same as it will be next week and 6 months from now.

I know of a lady out in the Maritimes I think it is, who used to grow apples. She has now changed things so that she buys apples from everyone else, value adds and doesn't grow apple at all anymore. There are probably many more out there like her.

What is needed is the desire to take the risk to go further down the chain.