Marketing the Farm

[ValueChainFX]

As agriculture producers we all know that marketing is a complex issue. Given the recent challenges we have all faced with BSE in Canada it is clear to see that the farm and overall agriculture community has been hit yet again with a vote of non-confidence. On the other hand we see some folks in the cities supporting the beef industry and in turn agriculture.

Can we all work towards a program that will focus on building a closer partnership with Canadians both rural and urban.

Programs such as "Buy Canadian" or "Support your Canadian Farms" or "From our family to yours".

Any thoughts or suggestions?

By the way it doesn't matter if you are in the beef industry or crops! You are part of Agriculture, how can we make "Canadian Marketing" work?

[charliep]

After a day of frustration, I have to ask the same questions.

I have seen the things you talk about work on a small scale - organic, farmer direct, etc. - to a very successfull value chain/profitable relationship. Satisfying customer needs with success being reflected in profit is the driver.

I mention these things at farmer meetings, however (and to some extent get my theory tested in the real world) only to see my ideas go down in flames.

Picking on beef, the real world is big feedlots selling to big packers selling to big retail stores. Margin is the driver in these businesses with the top of the chain - retail stores - having the most power. I speak a little tongue in cheek on this point as it is really their success at meeting consumer needs that sets up retailer success - even at this level profit is margin times volume.

Perhaps a success on some of the issues you mention will be success stories will be to move potential success stories based on branding up to a mid size business level. If bigger companies are involved, then the process will be to establish business relationships based on customer needs and work towards common goals of branding/achieving higher value based on customer needs.

Frustration - need to move away from margin based businesses. If you are loosing money on everything you produce, volume isn't necessarily a good thing.

[ValueChainFX]

Charlie, I respect your thoughts and opinions you share with us a great deal. I know your frustrations first hand and have been through the fire.

I have worked in the industry for long enough to understand the challenges we face when we deal with production volumes, margins and profits. In retails we based everything on margins and the real profits got lost in the mix. Anyone that has inside knowledge of these systems will tell you the profits at the end of the day are much lower than any of us dream.

In saying that we also know that there are places that costs can be cut, to do this however we need to work closely with others! OH MY!!!

The system we are proposing at this point does coordinate people and products, the needs of the consumer (and their governments)and the needs to establish a sustainable system that is flexible enough to grow.

The big packers deal mostly in a commodity beef product. They need to keep their product lines and specifications relatively simple to accommodate the mass production (if a big packer does 2000 head a shift that is about 250 head an hour, this is an easy day for them) I know the big retails would love to have a more specialized product (Costco runs a 21 day age program with their own specifications, Super Store has a 14 day age program and their own specifications, IGA and Coop has their own specifications). They have been unable to find the supply except from the big guys and with fairly standard specs. Although price is a factor here, they have indicated they would be willing to pay more if they saw the value in the supply. Other countries are willing to pay more for products if they meet their needs. Japan consistently pays premiums, as does Taiwan and the EU if the products meet their requirements.

Smaller markets have a challenge growing due to the limited ability of the producers to kill and fabricate product. If you base a program on provincial kill alone you are limited to sell your product only in the province. Given the fact that the majority of livestock is in Alberta it doesn't take a marketing guru to understand you can only grow your market so big. Plus an individual trying to be a marketer and producer has many hats to wear and can burn out before they reach their goals.

In the system we are proposing here. The producer is part of a group effort working with both internal and external customers. The checks and balances built into the system allow information to be compiled so choices can be made based on past performance and an educated upfront prediction (based on contracts) The marketers want to pre-sell and the producer wants to put money into his jeans. The producer can make a choice based on putting money in his jeans and knowing he does not have to wear every hat in the supply chain to take part in the value added process. The marketer can base his sales on supply knowing that supply is pre-booked into the system based on his sales.

As you know Charlie marketing is complex, each supply chain participant needs to be a part of marketing, but we need the infrastructure to assist each participant in accomplishing the tasks they are able to best perform. Even the big feedlot guys know they need to do something!

The small markets you mention may only be small because that is the way "WE" have made them. Can we build the infrastructure to make these small markets bigger? This is part of our goal.

Charlie thank you for your input, and don't get to frustrated, it is people like yourself that can build an industry. It is also times like these that bring change and we all know we need it. IP

[charliep]

Just a question from a practical standpoint.

I be like the game show (jeopardy?) and provide the answer first and then go the question.

Answer - Politics

With western Canada's ability to track animals and products, why can't we design a trace back system that will meet all the needs of our customers (even the Japanese) that cattle will be BSE free. The issues are tracking and accountability. How many closed herds are out there with not importation of outside cows and a feeding regime that has been followed rigorously to minimize the probability of exposure to potential feed contamination?

Answer - Because they don't want to.

Can't processes put trace back systems in place to monitor boxed beef exports for animals under 24 months that gets product straight to the retail level and eliminates any possibility of this product getting blended with US product destined for Japan.

[TOM4CWB]

Charlie;

Answer...Politics- because we are burying our heads in the sand.

Why won't Canada accept Japanese beef that every Japan animal has been tested for BSE, and is free of BSE.

Premier Klein had it right, yesterday when he met with Japanese officials...

Ottawa doesn't care if the border remains closed for 7 years... Ontario and Quebec will do just fine after Alberta slaughters 30% of our cow herd.

We need to get on with it, before the next batch of calves, and feed is wasted on all those extra cows all winter...

How close are we to this type of decision?

This is truly a disaster, shouldn't the feds pay 90%, and give us a little of the 9somebillion we send east net each year from AB?

[ValueChainFX]

Charlie we believe we have such a trace back system ready to implement. The challenge is at the processing plants and the method of fabrication. It is very difficult to follow a single animal through the manufacturing assembly line in the big plants. An example is when you are processing 250 head an hour on seven tables each table with fifty people you have sides being mixed and matched. This means that a carcass of block ready beef may have two hips, two loins, two flanks, two plates, two briskets, two ribs, two shanks and two chucks but each piece could come from 16 individual animals!!! YIKES !!! The cost to change their system to do trace back not to mention the coordination, well big money talks. They will tell you that they can trace back lots. But this is not good enough.

Our proposal is on the table now and there is a move to implement some trace back / trace forward system into the retail side (which would make our job so much easier). We are meeting later this week with representatives from the federal and provincial governments on how to implement this in a coordinated way. I am also hopeful we will be coordinating this strategy with those pushing the trace back / trace forward at retail level.

As we all know there are going to be challenges with any system we put in place. But we do the best we can and work with the people that want to work with us. Those that don't want to work with us; we can only wish them the best. I always keep in mind an old saying that was told to me years ago, "You can't teach a pig to sing, because it annoys the pig and wastes your time". So you just keep on keeping on.

[melvill]

We wonder why we can't get a trace-back system . . . . I very clearly remember going to a Canadian Cattle Idendification Agency info meeting in an auctionmart here in Brooks. Two people, Julie Stitt and Charley Gracey, were trying to "sell" the idea of a simplified cattle tracing system based on ear tags that are becoming more common place now.

What I very clearly remember from that meeting is how much resistance there was to that proposal and how vociferous it was. Speaker after speaker lined up at the microphone to voice very strong negative reaction to the ear tagging proposal. These were cattlemen mostly with larger herds. It was also interesting that few cattlemen with small herds voiced objections. After the meeting some small operators said they were a little intimidated by the stance taken by the larger operators.

Those taking a stand against the tagging system complained about the extra cost and extra recordkeeping. Some at the meeting said privately afterwards that they didn't want feeders and packers to be able to trace back poorer quality cattle to herds of origin. (Imagine, for a minute how easy the BSE tracing would have been if Canada had had the tagging program in place for 8 or 10 years when it was first suggested.)

What this points out is that, generally, people are afraid of change. However, consumers are king anad if the king wants a change, eventually if will happan.

[cakadu]

As a consumer, it is good to see the tagging system has worked thus far. What I see needs to be improved is the ability to recall products much faster than what is in place right now. I'm thinking specifically of food and/or water borne pathogens like e-coli, salmonella, listeria etc.

Last summer there was a recall of hamburger patties that were made in April, not sold until June and then the recall notice came out in mid-July. What are the chances of those patties being around some 6 weeks later? That is where the improvements have to be made, as far as I can see. E-coli doesn't need to be traced back to the farm because in most instances it happens from the point at which the animal is being processed onward.

I have often heard - and thought myself - that the ability to trace the animal back in some ways also alleviates the burden of liability and "passes the buck" to someone else. Having said that though, watching what has happened during this BSE mess, at least they were able to trace the animals, which although it has helped, has certainly not cleared up the problem either.

[ValueChainFX]

cakadu trace back is an issue that has gone on for years already. Even though we started the program it was far from acceptable in this instance. We have a good start but really if you read how the trace back was done our present CCIA trace back didn't go very far before they had to go back to manifests etc. and I have seen hundreds on manifests and how they traced back from those I will never know.

We really do need to improve our system of trace back and trace forward. In the case of some of the trace back on food recalls it is fairly simple based on production dates and the HACCPs in the plants to do batch recalls. But in reality they are tracing back a product based on a time/date not on a per animal or even a per animal lot basis.

Once a product hits the fabrication floor in a big plant it is basically swallowed by the system, from that point forward trace back is a nightmare.

It can be done but not with the system we are in today!