Pork: Marketing Alternatives


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Pork: Marketing Alternatives

  1. 1. PORK: MARKETING ALTERNATIVES TERNATIVES MARKETING AND BUSINESS GUIDENational Sustainable Agriculture Information Service www.attra.ncat.org Abstract: This publication suggests that sustainable hog producers consider alternative marketing approaches for their pork. Sustainable hog producers are creating products that many consumers can’t find in their grocery stores, but want to buy. Consumers perceive sustainably raised pork to be healthier to eat. They are willing to pay hog producers more for raising pigs in a manner that is humane, helps sustain family farms, and is more environmentally friendly than conventional production methods. Direct marketing and niche markets are among the alternative marketing strategies discussed. Legal considerations, labels, trademarks, processing regulations, and obstacles are addressed. Sources of additional information are also provided.By Lance GegnerNCAT Agriculture Specialist Related ATTRA publicationsApril 2004©2004 NCAT • Considerations in Organic Hog Production Table of Contents • Sustainable Hog Production Overview • Profitable Pork: Strategies for Pork Introduction ................................. 1 Producers (SAN publication) Commodity vs. Niche • Alternative Meat Marketing Marketing ................................. 2 • Direct Marketing • Farmers’ Markets What Is Direct Marketing? ....... 2 Where Are the Niche Markets? .................................... 3 Niche Marketing Introduction Opportunities ........................... 4 Successful marketing is a necessary part of any Niche Marketing With profitable enterprise, and alternative marketing Others ........................................ 6 is often necessary for sustainable hog produc- Individual Direct Marketing ers to survive. Unfortunately, farmers who prac- tice sustainable and humane hog production Opportunities ........................... 9 often neglect marketing. Sustainable hog pro- Developing a Clientele ducers need to realize that successful market- Base .......................................... 14 ing efforts will likely be as management-inten- sive as their production systems and that those Marketing Channels ................ 14 efforts will be directed toward specialty and Carcass Cutout and Pricing .... 17 niche markets, not the conventional commod- Failure ........................................ 21 ity market and distribution network. There is Summary ................................... 21 an opportunity for producers of value-added and premium pork products to realize sustain- References .................................. 22 able profits, but only if they are willing to de- Further Resources .................... 23 velop the necessary marketing skills.ATTRA is the national sustainable agriculture information service operated by the National Centerfor Appropriate Technology, through a grant from the Rural Business-Cooperative Service, U.S.Department of Agriculture. These organizations do not recommend or endorse products,companies, or individuals. NCAT has offices in Fayetteville, Arkansas (P.O. Box 3657, Fayetteville,AR 72702), Butte, Montana, and Davis, California.
  2. 2. Kelly Klober, author of Storey’s Guide to Raising In the U.S., consumers expect an attitude of defer-Pigs and himself a farmer and value-added ence and responsiveness to their wants and needs.marketer, believes that farmers in the future If you are unable or unwilling to develop—or con-should not expect to support a farming opera- vincingly fake—such an attitude, stay in commod- ity-priced agriculture. However, if you see servicetion with a 100 to 200 sow herd. Klober says, to others as a noble calling, don’t let the lack of“A lot of folks are seeing a time and means to fit specific marketing or production skills deter you.a few hogs into their farming mix. Hogs will be Aptitudes are rather easily learned. It is our atti-taken up by producers wanting to work with tudes that are difficult to change and that mostmodest numbers and also wanting to market often determine our fate (Nation, 1999).them all across the swine production spec-trum…. To succeed on the small farm, a sowherd will have to be quite small, fewer than 25— What Is Direct Marketing?and perhaps as few as 3-5. Even from smallnumbers, however, you will have to pursue asmany marketing opportunities as possible.” Direct marketing involves selling products di-(Klober, 2000) rectly to consumers, thus allowing the producer the chance to receive a better price. This in- volves making a direct connection with consum- In an article in the Milwaukee Journal Senti- ers, determining their wants or needs, and pro- nel, Mike Marr—who raises and markets ducing the products that meet these needs. beef near Mineral Point, Wisconsin—com- ments, “Historically, we take what some- Joel Salatin, a Virginia pastured-beef and -poul- one is willing to give us. Business sense tells try producer, who has written several books on you that they’re not going to give you any this subject, suggests some factors to help de- more than they have to.” (Daykin, 2001) termine your sustainable pork pricing. First, don’t underprice your product. Sustainably produced pork products are supe- rior because they are more environmentally Commodity vs. Niche friendly, are humanely produced, and are pro- Marketing duced on family farms. Patronizing local farm- ers ensures that the local economy is stimulated.Before sustainable hog producers decide to pur- Salatin suggests that producers set a rewardingsue alternative marketing, they need to under- and satisfying gross margin and then stick to it.stand the differences between commodity and This will allow the producer to build a customerniche marketing. Commodity marketing is base with clients who appreciate the productmarketing hogs that are undifferentiated from for what it is, not for what it costs. (Salatin, 1994)other hogs in the mass market. Niche market-ing is differentiating your pork product to a Second, don’t try to satisfy all customers’ needs.market that wants a unique or superior prod- Take into account your time and the extra ef-uct. fort that is needed to accommodate their re- quests. Salatin says, “We must appreciate thatAllan Nation, editor of Stockman Grass Farmer, we cannot compete with the big operators athas stated, “A commodity orientation means every level, and learn to stop our production orthat as long as you meet the specs and can stand processing at the point where our quality/pricethe price you pretty much tell everyone else to enhancement can’t compete with the conven-go fly a kite. Such a selfish attitude absolutely tional alternatives.” (Salatin, 1994)will not work in direct marketing.” Nation fur-ther explains that direct niche marketing is more Finally, keep accounts receivable low. Operateabout providing services to others by helping on a cash and carry basis as much as possible.them get what they want. He says: Salatin concludes, “There you have it. Set your prices so that no matter what your volume, your return is both emotionally and financially re-PAGE 2 //PORK: MARKETING ALTERNATIVES
  3. 3. warding; steer clear of the temptation to do ev- the pressures I encounter as a small po-erything the customer wants; and let cash be tato and the pressures encountered byyour business byword. By following these rules, the big potatoes is the amount of controlyour direct marketing endeavor can be satisfy- we have over the situations that causeing.” (Salatin, 1994) pressure. No one can escape from the pressures of life, whether they are finan- cial, emotional, physical, or spiritual. But “You may as well do nothing for nothing as the chances of our affecting those pres- something for nothing.” sures, of dealing with them, of solving —Joel Salatin those problems, make the difference be- tween an enjoyable lifestyle and a ter- rible lifestyle.”Direct marketing has unique characteristics that • Balance This helps to equalize the rela-depend on building relationships with the cus- tionship between producer and con-tomers. In fact, the term “relationship market- sumer. The producer has to remembering” has been used to describe the best methods that the first rule of business is that theof direct marketing for family farmers. In an consumer is always right, but in somearticle in The Stockman Grass Farmer, Salatin cases a sale might actually cause a nega-describes the five advantages of relationship tive gross margin. If the consumer is notmarketing. a good patron, the producer does not need to continue marketing to him or • Consumer Education Producers have her. Salatin says about taking someone to tell the consumers why their sustain- off of his customer list, “This helps to able pork products are different from the balance the producer-consumer relation- pork that can be bought in the grocery ship, so that we concentrate on profit- stores. This will involve explaining that able sales, appreciative customers, the pork comes from hogs raised more people who ‘get with the program.’“ humanely on a sustainable family farm, (Salatin, 1992) not by giant corporations, and that the pork is raised in a more environmentally friendly manner. This is not only good Where Are the Niche for business, it is also a small step toward Markets? the development of consumers’ aware- ness about farm, social, and health is- sues that affect their lives. An important part of direct marketing is identi- • Product Quality When the producer fying and targeting a market niche. A market- maintains control of the hogs and raises ing niche occurs when the producer finds cus- them in a sustainable fashion, it is easier tomers who have needs or wants that the pro- to avoid compromising the quality of the ducer can satisfy better than anyone else. A pork. niche may sometimes be found by following a • Customer Loyalty When the consumer simple and effective method of market research: knows the producer personally, the re- asking questions and being observant. Look for lationships built between them—per- special or unique needs of the consumers. Iden- sonal and commercial—are not easily tify the special needs that you can meet, and broken. Good sellers know and use their decide whether the volume is large enough to customers’ names. Loyalty helps bring be profitable. The niche market you identify in repeat customers. The greater the loy- must have clientele who are reachable through alty and satisfaction, the higher the like- clearly identified information and distribution lihood of repeat business, even though a channels. But remember, the very nature of a similar product may be available at the niche market means that it tends to disappear grocery store at a cheaper price. after a while. • Lifestyle As Salatin explains, “I think one of the biggest differences between //PORK: MARKETING ALTERNATIVES PAGE 3
  4. 4. • Consumers shop for food in a variety of “Almost any niche market in North places, but convenience is key to regular America, with its 300 million consumers, visits. can support you handsomely. One third of • Coupons and other incentives lead con- one percent of that market is still a million sumers to try new products. people. If you get 10 percent to buy some- • Consumers buy meat and poultry ac- thing worth ten dollars from you a year, you cording to how it looks. have a million dollars.” • Healthy is important, but not at the ex- —Dr. Marti Skye pense of taste. The complete on-line report is available at <http://www.leopold.iastate.edu/research/ Niche Marketing grants/files/2002-MSP1_pasture.pdf>. Opportunities In 2003, the Iowa Pork Industry Center com- pared five niche pork markets available in IowaNiche market opportunities exist because many and summarized the findings in a chart, Com-consumers are looking for safe, healthy food paring Swine Niche Market Opportunities. Theproducts raised in systems characterized as five markets surveyed were Niman Ranch Porkhumane, organic, earth-friendly, free-range, Company, Organic Valley Pork Pool, Trulineantibiotic-free, etc. Niche marketing can either Premium Pork, 100% Pure Berkshire Pork, andbe done by working though others—a coopera- Five Star Premium Pork Company. The on-linetive, say, or a private label brand—or directly chart is available atto individuals. It can involve freezer meat sales, <http://www.extension.iastate.edu/ipic/in-home delivery, farm meat stores, farmers’ mar- formation/IowaPorkNiche.pdf>.kets, Internet sales, sales to restaurants, grocer-ies and/or specialty food stores, even by cater- In 2001, Paula Schafer completed her thesis, “Aing events and preparing hog roasts. Key to Successful Marketing: Understanding What a Consumer Wants When PurchasingThese approaches have been verified by several Animal Food Products Directly from the Farm.”studies during the past few years. A 1999 re- She surveyed consumers and tried to identifysearch project funded by the Leopold Center in what attracted them to buy directly from theAmes, Iowa, suggests that producers can add farms in rural upstate New York. Her thesisvalue to pork production by marketing meat discusses the findings of the survey and providesproduced in ways that benefit the environment. 11 action steps that producers need to considerIowa State University economics professor when developing a successful direct marketingJames Kliebenstein and graduate student Sean program. (Schafer, 2001)Hurley say that “consumers may be willing topay nearly $1 more for a package of pork chops • Use a variety of outlets, such as farm di-produced under a system that improves air, rect, farmers’ market, and restaurants.groundwater and surface water quality.” • Publicize the farm and animal food prod-(Larson, 1999) ucts through word of mouth, newslet- ters, state agriculture and marketingIn 2002, six Midwestern focus groups were held promotions, on the Internet, and at ato develop key marketing messages for produc- farm open house.ers of pasture-raised products. The result was • Be knowledgeable and able to commu-the report FoodRoutes/Midwest Collaborators Pas- nicate to the consumer.ture Raised Products Message and Strategy Con- • Target the products to appeal to thesumer Focus Group Study. The groups revealed female consumer.a range of consumer attitudes about meat pur- • Offer times convenient to the consumer,chases, and found that, in general, “pasture with set days and hours.raised” is the term the groups favored. Some of • Know the consumer’s household size.the other key findings were:PAGE 4 //PORK: MARKETING ALTERNATIVES
  5. 5. • Offer a variety of products, which may ferentiated without damaging conventional encourage larger purchases more fre- pork’s credibility. (Aitchison, 1999) quently. • Produce animal food products that are A study from the University of Minnesota as healthy and natural as possible. Swine Center found that modest producer pre- • Always sell fresh products that look, miums are likely to continue over the long run smell, feel, and taste fresh. for organic and natural pork production. The • Never undersell the animal food prod- reason according to economist W. Parker uct; prices should equal or be higher Wheatley: “Increases in supplies [of organic than those in grocery stores. pork] are unlikely to keep pace with expected • Ask consumers questions and listen to increases in demand that cause higher prices.” their recommendations on how to im- He says that “the demand is driven by the per- prove products. ceived safety of organic and natural products.” Demand is also driven by the perception thatInformation about Schafer’s thesis is available organic products improve environmental qual-on-line at ity. “Consumers view the premiums paid to or-<http://www.cce.cornell.edu/washington/ ganic producers as implicit rewards for reduc-AEDP/Articles/marklivestock.html>. ing the pollution associated with production. An additional source of increased demand is the consumer perception that natural and organic ORGANIC LABELING production provides for improved animal wel- fare.” (Anon., 2001)One of the largest and most widely recognized While the study did not look into actual premi-niche markets is for organically grown products. ums received by producers, Wheatley says thatDespite the fact that “organic” is a process “in the fall of 2000, one processor/marketingclaim, not a product or health claim, the grow- firm paid $6 per hundred over the mean mar-ing demand for organic foods is driven prima- ket price for Iowa/Southern Minnesota with arily by consumers’ belief in the higher quality minimum price of $40 per hundred. The sameand safety of these foods, and their awareness firm will pay $65 per hundred live weight forof the positive environmental, animal welfare, organic pork. Another national cooperative wasand social impacts of organic agriculture prac- paying an average of about $50 per hundredtices. This growth in demand is expected to live weight for organic pork.” He also states,continue in the foreseeable future. (Anon., 2000) “These premiums don’t seem substantial—given that market prices per hundred pounds liveOrganic pork, like all other organic products, weight ranged between $40 and $50 in 2000.has to perform commercially alongside conven- However, the premiums existed even whentional products. Organic pork should not be prices were lower in 1998 and 1999, and pro-considered a threat to conventional production, vided some stability to these producers’ income.”but as a complementary alternative for those The publication is available at <http://who demand choice. Organic pork can be dif- www.misa.umn.edu/programs/altswine/ litreview.html> or by requesting a copy from: Wayne Martin, Coordinator Alternative Swine Production Systems Program 385 Animal Science Building 1988 Fitch Avenue St. Paul, MN 55108 612-625–6224 612-625–1210 FAX marti067@tc.umn.edu USDA Organic Seal //PORK: MARKETING ALTERNATIVES PAGE 5
  6. 6. 1501 State Street ETHNIC MARKETING Marshall, MN 56258 507-537–7440Ethnic markets are a growing and often under-exploited niche market. Many ethnic groups The National Pork Board has produced threeform close-knit communities and can offer con- publications specifically dealing with ethniccentrated and potentially lucrative markets for marketing of pork.farmers. But bridging the cultural gaps betweenthe ethnic consumers and the producer can • 82-page Front End Guidance for Value-present a challenging opportunity. Added Networks—Marketing Pork to the Mexican Consumer in the United StatesThe Hispanic market consumes a lot of pork, (1997) at <http://www.mnpork.com/and sees pork as its meat of choice. This ethnic producer/research/guide.pdf>group is the one of the fastest growing groups • 56-page Guide to Latino Pork Cuts (1998)in the United States, but that growth varies at <http://www.mnpork.com/producer/reamong different states. A project report from search/latino%20meat%20guide.pdf>the Agricultural Utilization Research Institute • 4-page Ethnic Marketing of Pork (2000)(AURI) in Minnesota evaluated the Hispanic at <http://www.meatscience.org/market for chorizo, a traditional type of sau- Pubs/factsheets/q-ethnicmktng.pdf>sage. The Front End Guidance for Value-Added Net- Any marketing directed at the Hispanic popula- works (#04322) and the Guide to Latino Pork Cuts tion must be conducted with the understanding (#04409), as well as the video Latino Meat Cut- that Hispanics differ from non-Hispanics; these ting Video (#08072), are available for $10.00 differences include lifestyle choices, eating habits each for producers or $15.00 each for non-pro- and shopping patterns. Various subgroups within ducers from: the Hispanic population also exhibit specific char- acteristics. National Pork Board Attn: Order Department Hispanics generally shop more often than non- P.O. Box 9114 Hispanics; the places they patronize also differ. Des Moines, IA 50306 The population as a whole spends more on food, 515-223–2600, ext. 621 and will buy different types of food than the gen- 515-223–2646 FAX eral population. Fresh foods and meals made from scratch are extremely important to this population. http://www.porkboard.org/Home/ The tendency to buy packaged or convenience default.asp foods increases as an individual or family becomes acculturated to the “American” society. Marketing With Niche Marketing With Meat purchasing habits differ from the average con- Others sumer. Hispanics purchase more meat and poul- try on average and prefer fresh products, which they can see prepared in front of them (Dahlhoff, Niche marketing with others in an established 2002). market can take several forms. Producers can become members of an established marketingThe Agricultural Utilization Research Institute cooperative, or they may form a new coopera-report is available at <http://www.auri.org/ tive to develop a processing facility and/or aresearch/meatexport/pdfs/meatexport.pdf> distribution system with other producers whoor by contacting: raise pork in a similar, consistent manner. Pro- ducers can also market to a company that al- Dennis Timmerman ready has a private label brand and an estab- Project Development Director for Value- lished customer base for fresh pork produced added Animal Products in a particular manner. Agricultural Utilization Research InstitutePAGE 6 //PORK: MARKETING ALTERNATIVES
  7. 7. Founded in 1985, Cooperative Development Cooperatives Services (CDS), a nonprofit organization, pro- vides a range of innovative, results-oriented, andThe cooperative marketing concept has long cost-effective services to cooperatives and relatedproven useful. Hog farmers with a specialty organizations. CDS has participated in the de-product have organized together, identified velopment, restructuring, and expansion ofmarkets, put together business plans, and built more than 500 cooperative organizations of allsolid cooperatives. However, some cooperatives kinds. CDS provides consulting on a fee-for-have also failed—because they lacked good service basis and is often successful in helpingmarketing or business plans, or because they clients secure grant funding. For additional in-needed good management and clearly defined formation contact:missions. Cooperative Development ServicesFor hog producers wanting to form a market- 30 West Mifflin Street, Suite 401ing cooperative, the best source of information Madison, WI 53703is the USDA Rural Business and Cooperative 608-258–4396Development Service (RBCDS). The RBCDS 608-258–4394 FAXhelps farmers and rural residents form coopera- CDS@co-opdevelopmentservices.comtive businesses and improve the operations of http://www.cdsus.coop/existing cooperatives. It provides technical as-sistance, conducts cooperative–related research, Organic Valley Family of Farms is an organicand provides informational products to promote marketing cooperative in Wisconsin. Startingpublic understanding of cooperatives. For ad- in the spring of 1999, they began marketing cer-ditional information contact: tified organic pork to various retail outlets for about 12 organic hog producers. Their pork USDA/RBCDS Cooperative Services production standards are available at <http:// AG Box 3255 www.organicvalley.com/member/ Washington, DC 20250-3255 requirements_pork.html>. For information on 202-720–7558 organic hog production and marketing with coopinfo@rurdev.usda.gov Organic Valley contact: http://www.rurdev.usda.gov/rbs/ coops/csdir.htm Organic Valley Family of Farms CROPP Cooperative 507 West Main Street La Farge, WI 54639 USDA/RBS Publications 608-625-2602 Available from ATTRA http://www.organicvalley.com (Call 1–800–346–9140 for a free copy) • Cooperative Services: What We Do, How Patchwork Family Farms, composed of 15 in- We Work dependent Missouri family hog farmers, is or- • How to Start a Cooperative ganized as a marketing cooperative supported • Small Fresh Fruit & Vegetable Coopera- by the Missouri Rural Crisis Center. They mar- tive Operations ket pork raised using sustainable and humane • Understanding Cooperatives: Ag growing practices that prohibit growth hor- Marketing Cooperatives mones or synthetic growth promoters and pro- • Cooperative Feasibility Study Guide vide sources of water and feed that are antibi- • Cooperative Farm Bargaining & Price otic-free. They also stress that animals must Negotiations receive adequate amounts of sunshine, fresh air, • Cooperative Marketing Agencies-in- and quality feed to maintain good health. For Common additional information contact: //PORK: MARKETING ALTERNATIVES PAGE 7
  8. 8. Patchwork Family Farms pwillis@frontiernet.net 1108 Rangeline Street http://www.nimanranch.com Columbia, MO 65201 573-449-1336 Some highlights of the AWI Pig Husbandry 573-442-5716 FAX Standards followed by Niman producers are: Rhonda@morural.org or bryce@morural.org http://www.patchworkfamilyfarms.org • Not using any growth promotants or subtherapeutic antibioticsAnother example of cooperative marketing is • Not using any meat or bone mealthe Ozark Mountain Pork Cooperative, orga- productsnized by the Missouri Farmers Union. The • Not using farrowing crates, but allow-Ozark Mountain Pork Cooperative is comprised ing sows to build nests and pigs to root,of 34 farm families that market their own fresh explore, and playand smoked cuts, sausages, brats, and pulled • Weaning pigs at a minimum of fourpork under the label Heritage Acres. The hogs weeks of ageare processed in their small, locally operated • Using low-stress environments, such asplant. For additional information contact: those on pasture or in deep-bedded sys- tems with suitable bedding materials Ozark Mountain Pork Cooperative • Being family farms, with at least one Russ Kremer member actively caring for the animals P.O. Box 190 and managing the farm Mountain View, MO 65548 417-934–5753 For additional information on the AWI stan- 417-934–5784 FAX dards, contact: http://www.missourifarmersunion.org/ coop/ffcenter/pork.htm Animal Welfare Institute P.O. Box 3650 Washington, DC 20027 Private Label Brands 703-836–4300 703-836–0400 FAXAn example of a private label product is Niman awi@awionline.orgRanch Pork Company formed in January 1999, http://www.awionline.org/farm/stanas a partnership between Niman Ranch in Cali- dards/pigs.htmfornia, Paul Willis, and some other Midwesternhog producers. Operating a pasture-farrowing Another private label brand that markets natu-operation near Thornton, Iowa, Paul Willis has ral and organic pork in the United States is dumarketed hogs for several years through Niman Breton Farms out of Quebec, Canada. DuRanch—a 20-year-old company, founded by Bill Breton Farms works with more than 45 smallNiman, that sells natural meat products on the family farms in Quebec and the Maritimes toEast and West Coast. Niman Ranch Pork Com- produce pork under the new Certified Humanepany slaughters hogs every week. Paul Willis Raised & Handled certification program admin-explained that Niman Ranch Pork Company is istered by Humane Farm Animal Care (HFAC).looking for pork producers willing to raise hogs For additional information on du Breton Farms,following the criteria set by Niman Ranch and contact:the Animal Welfare Institute (AWI). If youwould like more information about the Niman Du Breton FarmsRanch Pork Company, contact: 150 Chemin des Raymond Riviere-du-Loup, Quebec G5R 5X8 Niman Ranch Pork Company 418-863–6711 2551 Eagle Avenue 418-863–6767 FAX Thornton, IA 50479 mmailet@dubreton.com 641-998-2683 http://www.dubreton.com 641-998–2774 FAXPAGE 8 //PORK: MARKETING ALTERNATIVES
  9. 9. Humane Farm Animal Care is a nonprofit or- the guy that runs the coffee shop and even theganization that offers a certification and label- manager of your local supermarket are fairing program for meat, dairy, eggs, and poultry game in your pursuit of sales.” He also recom-raised under the HFAC animal care standards, mends that direct marketers begin with simple,which are also verified by the USDA Agricul- inexpensive advertising, using postcards, flyers,tural Marketing Services. For additional infor- or simple mailings containing words such asmation on HFAC certification, contact: “fresh,” “locally grown,” or “homegrown,” and emphasizing the control this gives the buyer over Humane Farm Animal Care everything from the animal’s diet to the thick- P.O. Box 727 ness of the pork chops. Herndon, VA 20172 703-591–0350 Kelly Klober explains that word-of-mouth is one info@certifiedhumane.com of the best methods of advertising and is a re- http://www.certifiedhumane.com/ sult of consistently good products. Word-of-mouth can reach a very long way with Individual Direct today’s phone service and e-mail, but you must be prepared to move on the inquiries it brings, per- Marketing Opportunities haps with another simple flyer or brochure. A catchy name, a few lines describing how the pork will be produced, a brief outline of processing op-Mirabel Fernandez, Wright County Educator tions, and most of the customer’s potential ques-for the University of Minnesota Extension Ser- tions are answered.vice, says that producers looking into directmarketing need to do careful analysis and plan- Today’s computer and printer pairings make aning before they start. This includes assessing newsletter a feasible option, as well. A small pub-your skills, time, money resources, personality, lication such as this can be sent to new contactsand determination. Fernandez suggests that the and keeps past buyers aware that you’re still thereproducer write out the goal for direct market- and producing.ing of the planned product. Then the producershould write down all possible steps between It also gives satisfied customers something to sharethe raw product on the farm and the final prod- with others in their circle, thus widening your circleuct on the consumer’s table—including trans- of contacts.portation, processing, labeling, storing, adver- A short ad under the “Good Things to Eat” col-tising, selling, and customer services. As umn in the Sunday classified of your nearest ma-Fernandez says: jor newspaper will also put your message before a great many readers for a few pennies each, and a Direct marketing involves a promise to deliver simple press release announcing your new busi- something of value to the customer without ex- ness should get some free play on the local paper. cuses. Direct marketing customers expect extra value not only in what they buy, but also in how Business cards can often be had for under $20 a and when. As a direct marketer you are promising thousand, and they will give your farm venture a your customers satisfaction in all areas. Blaming professional look. They can also be pinned on ev- other people whom you contracted with for part of ery likely-looking bulletin board that crosses your the processing is not an acceptable excuse for prob- path. lems. You have to be on top of the whole process to make sure each step is done according to your qual- Free or low-cost promotion is where you find it; ity standards (Anon., 2001). here are a few other possibilities:Kelly Klober, author, farmer and value-added • Most big cities have health and/ormarketer, makes the following suggestions for environmentally oriented publica-anyone interested in direct marketing of value- tions where ads for “humanelyadded pork. He notes that producers usually reared,” “additive-free,” or “free-start marketing to people they know: “Your range” meat are sure tomechanic, your barber, your insurance agent, draw a response. //PORK: MARKETING ALTERNATIVES PAGE 9
  10. 10. • Help to get you on the Internet is now available at local Extension of- Legal Considerations fices in many areas. • Paint an attractive sign and put it by All meat products offered for sale to the general the road. public must be processed in a USDA or approved • Give a few free samples. In our cul- ture a free sample almost demands state-licensed equivalent facility. If the meat is at least a token purchase. going to be marketed across state lines, includ- • Donate some pork to good causes. ing by Internet marketing, the processing has • Take your pork to every potluck, to be done in a USDA-licensed processing facil- church supper and family reunion to ity. Marketing activities for meat products are which you are invited. governed by a wide variety of laws and regula- tions at federal, state, county, and city levels. Most farmers don’t think of themselves as sales- While marketing regulations vary by type of people. But sales and promotion are only going to enterprise and location, there are some general grow in importance for all family farmers. Try out rules that apply to all areas of direct marketing. the above tips, and you may find that successful promotion of your value-added meat is easier than Some of these legal considerations include the you think (Klober, 2001). type of business organization (sole proprietor- ship, partnership, etc.), zoning ordinances, small business licenses, building codes and permits, Develop a Business Plan weights and measures, federal and state busi- ness tax issues, sanitation permits and inspec- tions, food processors’ permits, and many more.Producers should develop a detailed business If you plan to employ workers, there will beplan. A business plan is usually required when more requirements to meet, such as getting anapplying for loans or grants. A business plan employer tax identification from the IRS andshould be a working document that is reviewed getting state worker’s compensation insurance.and updated at least a couple of times a year. Environmental laws are also becoming increas- ingly important to farmers.The Minnesota Institute for Sustainable Agri-culture publishes the 280-page Building a Sus- Farmers’ Legal Action Group, Inc., a nonprofittainable Business—A Guide to Developing a Busi- law center, provides legal services to familyness Plan for Farms and Rural Businesses. This farmers and their rural communities, in orderguide will help develop a detailed business plan to help keep family farmers on the land. FLAGand looks at ways to take advantage of new provides an extensive array of legal servicesmarketing opportunities. It is available on-line nationwide. In 2001, FLAG published a seriesat <http://www.misa.umn.edu/publications/ of booklets entitled Farm to Market: Legal Issuesbizplan.html> or can be purchased from: for Minnesota Farmers Starting a Processing or Marketing Business. The booklets include: Minnesota Institute for Sustainable Agriculture 1) Introductory Issues 411 Borlaug Hall, 1991 Upper Buford Circle 2) Choice of Business Entity St. Paul, MN 55108 3) Cooperatives 800-909–MISA (6472) 4) Corporations misamail@umn.edu 5) Partnerships $14.00 + $3.95 shipping and handling 6) Limited Liability Companies 7) Owner AgreementsIowa State University’s Center for Industrial 8) EmploymentResearch and Service has developed the on-line, 9) Minnesota Financial and Technicalpublication Adding Value to Pork Production: ResourcesA Business Start-up Manual to Move You Upthe Chain. It is available at <http:// While these booklets are specific to Minnesota,www.ciras.iastate.edu/porkmanual>. they offer useful information to any new entre- preneur. Call for prices or visit their Web site.PAGE 10 //PORK: MARKETING ALTERNATIVES
  11. 11. Farmers’ Legal Action Group, Inc. doing a search on the Internet, or by contacting 46 East 4th Street, Suite 1301 either state or federal agencies. The Small Busi- St. Paul, MN 55101 ness Administration (SBA) is a good federal 651-223–5400 agency to contact. SBA’s Web site is <http:// 651-223–5335 www.sba.gov>, and the SBA Answer Desk http://www.flaginc.org phone number is 800-U-ASK-SBA or 800-827– 5722. The SBA has offices in all states, and theseAlways check with local, state, and federal au- offices can be contacted for information on freethorities before trying to market any food prod- or low-cost training available in your state. Theuct. A retail food establishment license may be SBA also offers on-line training at their Smallneeded in your state. In most cases, the state Business Training Network, a virtual campusDepartment of Agriculture is a good starting offering free training courses, workshops, andpoint to learn about regulations. Certified scales knowledge resources designed to assist entre-are probably required for weighing your prod- preneurs. It is at <http://www.sba.gov/train-ucts, and a freezer may be required for storing ing>.your products separately from your personalmeats. Processed meat products are heavily Processing Regulationsregulated to protect public health. Stay in-formed, since rules and regulations change of-ten, and keep good records to prove that you’re Producers considering construction of their ownin compliance. (See Further Resources for sev- slaughtering and/or processing facility shoulderal books on rules and regulations, such as The remember that it is very important to complyLegal Guide for Direct Farm Marketing and In the with federal, state, and local regulations for pro-Eyes of the Law.) cessing—the axiom “ignorance is not an excuse” applies here.Adequate insurance coverage is essential. Ev-ery operator should have liability insurance for Producers need to understand that meat pro-the product and the premises—for breach of cessing is a very tough business with very smallimplied warranty, negligence, violation of fed- margins involved. It is critical that differenti-eral, state, or local statutes, and for foreign sub- ated, value-added products be added to the pro-stances in product. Other types of insurance cessing mix, because there is usually not enoughneeded are employer’s liability insurance to pro- profit margin in unprocessed meat alone. Thetect you if employees are injured, and damage producer will also have to figure out some wayinsurance to protect against loss of buildings, of making money from the hides, offal, andmerchandise, and other property. General com- other waste products of the processed hogs.prehensive farm liability insurance often doesnot cover on-farm marketing or direct market- Farmers who intend to process on-farm shoulding operations. Many farm liability policies ex- be aware of all federal, state, and local regula-clude business activities that are not a natural tions. It is possible that the USDA, state De-part of the farm. It is best to contact your insur- partment of Agriculture, and local Health De-ance agent and explain your marketing plans partment may all have different regulations toin detail. Product liability insurance may be the follow. Your state Department of Agriculturemost difficult to purchase. Many retailers want will have information about regulations, as willup to a million dollar liability insurance for the your health department. Your county Exten-products that they market. sion office should be able to direct you to the county agencies that regulate zoning, health, waste disposal, and other local ordinances. Starting a Business For federal processing regulations, the producerStarting a new marketing business can be re- should contact the Food Safety and Inspectionwarding, but it may also be frustrating and con- Service (FSIS). The FSIS works with small andfusing. Start-up help can sometimes be found very small processing plants to make sure theyby contacting your local Chamber of Commerce, comply with the Hazard Analysis Critical Con- //PORK: MARKETING ALTERNATIVES PAGE 11
  12. 12. the information needed to help small food proces- sors with technical and procedural labeling con- cerns, including the name of the Agency staff liai- son chargedwith facilitating resolution of small business issues on a one-on-one basis. The Web site address is <http:// www.fsis.usda.gov/OPPDE/larc>. Additional information is also available by contacting: U.S. Department of Agriculture Food Safety and Inspection Service © 2004clipart.com 2004 Labeling and Consumer Protection Staff 1400 Independence Avenue Room 602 – Annex Buildingtrol Point System (HACCP). For more informa- Washington, DC 20250tion about FSIS and HACCP, or for generic 202-205–0279HACCP models and guides, contact their Small 202-205–3625 FAXand Very Small Plant Outreach Web site, <http:/ FSIS.Labeling@fsis.usda.gov/www.fsis.usda.gov/OA/haccp/outreachsmall.htm>, or call the FSIS Technical Producers will need to work with the federal-Service Center at 800-233-3935, extension 2, or or state-inspected processing facility that pro-contact Mary Cutshall at the Small/Very Small cesses their hogs. This is because the labelingPlant Coordination Office at FSIS, USDA, SIPO, process begins with the federal inspector and14 th and Independence SW, Washington, DC the processing facility. A generic label may be20250, 202-690–6520. allowed for a single-ingredient product (such as pork chops or pork steak) that does not con-Producers need to be aware that the USDA now tain any special claims (quality, nutrient con-has generic processing plant models to follow, tent, geographical origin, production system,but no longer has exact specifications for plants. etc.), guarantees, foreign language, or nutri-This gives some freedom to producers in design- tional facts. The processing facility will be ableing their processing plants, but it may also lead to help the producer with generic labeling with-to a situation where one inspector can approve out further authorization from FSIS. Informa-the construction of a plant, while another in- tion on generic labeling requirements is avail-spector may deny approval of the same plant. able at <http://www.fsis.usda.gov/OPPDE/ larc/Procedures.htm>. Labeling Pork Products The label has to at minimum include the prod- uct name, USDA inspection legend, net weight,The USDA/Food Safety and Inspection Service handling statement, address (signature) line—(FSIS) is also responsible for ensuring that meat, which may require ”Distributed by” or “Packedpoultry, and egg products are safe, wholesome, for”—ingredient statement, and safe handlingand accurately labeled. The Labeling and Con- instructions. If any special claims, guarantees,sumer Protection Staff ensure that all labels are etc. are wanted by the producer, the processingtruthful and not misleading. Labeling includes facility has to submit a printer’s proof labelall forms of product identification, claims, net showing all required label fields, including anyweight, species identification, and nutritional graphics, to FSIS for approval.information related to meat, poultry, and eggproducts. The FSIS Web site states: After approval of the label, the FSIS inspector monitors use of the label and the product for- FSIS strives to ensure that small and very small mulation. The labels are kept at the processing meat and poultry processors are not at a disad- vantage in accessing labeling requirements and plant where they have been approved. If you gaining label approvals. The website has all of want to use another processing plant, there arePAGE 12 //PORK: MARKETING ALTERNATIVES
  13. 13. additional procedures and requirement to trans- producers have suffered a double removal. Forfer labels from one plant to another. many shoppers, fresh meat now means animals that have been raised and processed at a great distance from their communities. These animals Trademarks are not part of a local, sustainable food system. They do not contribute to the ecological well-being of local farms. They do not contribute to the eco-Almost all businesses use some kind of logo or nomic infrastructure of local communities….design as a means of identification on their la-bels; these are called trademarks or brand An alternative, and possible antidote, to these long-names. The law that protects trademarks was distance meat systems is frozen meat….For localdesigned to prevent customer confusion and farmers who raise animals, collaboratively mar-unfair competition by someone marketing on the ket, and are successful at negotiating a fair pricereputation of another. Trademarks will help for their product, frozen meat is key to their com-prevent others from copying the look or name merce. There are several reasons why. Frozen al- lows them to work on a small scale, where indi-of your product. There is both state and federal vidual farms can contribute individual animals toregistration in the U.S. Each state has a system a cooperative marketing effort. There is less wasteto register trademarks used within that state. and spoilage. Their meats are available to severalThe U.S. Patent and Trademark Office (PTO) markets for a longer period of time than freshadministers the federal system. The symbol ® meats. In all, it allows them to compete on favorindicates a trademark has been registered with able terms; it balances the playing field dominatedthe PTO. The symbol ™ designates a trademark by the large fresh meat companies.established through common law use but thathas not been registered with the PTO. The state And as frozen allows local farmers to flourish, itregistration and federal registration both take also allows local communities to flourish. It al- lows consumers to choose and purchase locallytime and money but are probably worth it to raised and processed meats. It makes a local eco-make sure your trademarks belong to you. Even nomic infrastructure possible (Kirsch, 2000).if you decide not to register your products, us-ing the ™ symbol will provide some common- Another obstacle to direct marketing of pork islaw protection. (Evans, 1997) that many people want only the best cuts; mar- keting of the poorer cuts can be challenging. Hog producers can offer sausage—bulk, link, Obstacles and/or patties—to help market the slower sell- ing cuts. But what do producers do with the bones and organs that larger slaughtering plantsOne obstacle to direct marketing of pork is that market? Well, there is an option available: themany consumers want fresh pork rather than controversial natural diet for dogs and catsfrozen. In a commentary in the Land Steward- called BARF (Bones And Raw Food) diet. Manyship News, Ray Kirsch discusses the differences pet owners believe their pets are healthier on abetween the previous and current meanings of raw diet. Hog producers’ Web sites can featurefresh meat and frozen meat. items on their lists such as stock bones, ham or leg bones, neck bones, and organs for the BARF At one time—during my parents’ lives and even market. To learn more about BARF and for lists during my early childhood—”fresh meat” meant “local meat.” Freshness was proof that the ani- of pet owners in your area who feed their pets mals slaughtered had to have been locally raised BARF, use a search engine such as Yahoo, or and butchered. A frozen product would have been visit <http://www.onelist.com> and search for looked upon with suspicion, as indeed, it could BARF, or visit <http://www.willowglen.com/ have come from anywhere. barf.htm>. There is also a book entitled Natu- ral Nutrition for Dogs and Cats, The Ultimate Diet Times, however, have changed. Distances have that discusses the all natural, raw diet of meat arisen between rural and urban communities. Ad- and bones (see Further Resources: Books). ditionally, industrialization has moved rural communities that produce meats to selected por- tions of the nation. Thus we as consumers and //PORK: MARKETING ALTERNATIVES PAGE 13
  14. 14. Developing a Clientele Base Marketing ChannelsJoel Salatin, in another article from The Stock- Starting small is probably the best approach forman Grass Farmer, explains how he and his wife the beginning direct marketer. Producers needdeveloped their customer base using a three- first to determine their target markets. Thesepronged approach. Salatin stresses that this could involve selling frozen pork to friends andworked for them, but that your situation may neighbors, to home delivery customers, farmbe different. He wants his approach to stimu- meat stores, farmers’ markets, and/or restau-late your creative thinking; you will have to rants. The article “The ABCs of Marketing tomake your own adaptation. (Salatin, 1995) Restaurants” provides some good information on what is important to restaurants and someSalatin’s first course was to give samples to any- tips on marketing to them. See the article atone he thought might be interested. He com- <http://www.newfarm.org/features/0802/mented, “Over the years, we’ve never given any- restaurant.shtml>.thing away that didn’t come back fourfold.” Sales to groceries and/or specialty food storesThe second approach was education. They put may be more difficult for beginning marketers,together a slide show and began presenting it because the stores usually want guaranteedto local organizations. These groups were glad amounts of frozen meat and are sometimesto get a different, interesting program. The locked into exclusive contracts with large sup-Salatins’ slide show illustrated their alternative pliers. (Klober, 1998) Some store managers mayproduction methods for pastured beef and poul- refuse to handle and display alternative meattry. People are always interested in knowing products because, as one explained, if his storeabout alternatives available to them. He didn’t “made a big deal out of humane meat,” cus-really make a sales pitch, but at the end of his tomers might start to wonder whether some-presentation, he’d say, “Now if any of you would thing was wrong with the regular meat. (Anon.,like to participate in this type of agriculture, I 1993) Producers also need to consider that manyhappen to have some order blanks with me and grocery stores have “slotting allowances” foryou are welcome to sign up.” space in their freezers or meat coolers. This may make them too expensive for small producersTheir third strategy was to turn their patrons who do not generate enough turnover. (Looker,into evangelists. They let their customers know 2003)that they appreciated their spreading the wordabout them. Whenever a new customer wasadded, Salatin asked where they had heardabout their products. If the new customer gave Live Freezer Meat Salesa name from the established customer list, thenext time that established customer picked up For many producers, selling live hogs to custom-something, Salatin would say how much he ers for their freezers has been an easy way toappreciated their referral and give them a small get started in alternative marketing. Typically,package of beef or chicken in return. (Salatin, the producer might sell the hog by live weight1995) to a customer, then take the hog to a govern- ment-approved slaughtering and processingSalatin concedes that this three-pronged ap- plant. The customer then picks up the pork fromproach was unconventional, but it was consis- the plant and pays for the processing and pack-tent with their unconventional product. aging. But before beginning live freezer sales, the producer needs to form a good working re- lationship with the processing and packaging “Our experience, as well as that of others, facility. An article in Small Farm Today suggests shows that advertising an unconventional several points to consider. product conventionally never pays off.” —Joel SalatinPAGE 14 //PORK: MARKETING ALTERNATIVES
  15. 15. 1) The facility needs to be close to both your Bauman notes that a considerable number of location and the market area. people—for dietary or religious reasons—do not 2) It should be a clean, regularly inspected eat pork, while most do eat chicken. There are facility. licensing and insurance requirements for cater- 3) The facility operator will need to be will- ers, but Bauman hasn’t had any problems fol- ing to work with buyers who have little lowing the regulations. As he explains, “Most knowledge of processing, and who will state inspectors are good people and are only probably do most of their business on a trying to do their jobs in order to protect the weekend. (There are people who think public.” (Slattery, 1999) a hog is all chops.) 4) The facility needs to be willing to handle special orders. Frozen Meat Marketing 5) Cut, size, selections, packaging, package weight, and other processing steps (slic- Frozen pork can be marketed by several direct ing, smoking, curing, etc.) should be methods, such as delivering meat directly to written down and fully understood by consumers’ doors, marketing at on-farm or in- all parties. (Klober, 1998) town stores, marketing at farmers’ markets, or over the Internet. As Wayne Martin, coordina-Some additional points to consider tor of the Alternative Swine Production Systems Program at the University of Minnesota, says: • In pricing the hogs, be sure to include the cost of handling and delivery to the While direct marketing can indeed offer extra prof- facility. its, the real value of direct marketing to the whole • Make sure the buyer understands that farm enterprise depends largely on what other rev- there will be loss of weight during slaugh- enue streams exist, and the personal goals of pro- tering, processing, and curing. ducers and their families. As with any other entre- preneurial activity, marketing your production re- • Require a deposit before taking the hog quires a great expenditure of time and energy. Pro- to slaughter. (Klober, 1998) ducers place value on an activitydepending on its economic return and how well it fits with what- ever else they are doing. Due to these inherent dif- Catering Events or Hog Roasts ferences, what one producer may view as time well spent may not seem so worthwhile to the next pro-Kalton Bauman in east central Wisconsin has a ducer (Martin, 2001).400-acre farm with pheasants, hogs, chickens,and cattle. Formerly a farrow-to-finish opera- One small-scale, direct-marketing hog operationtion with 75 sows, the farm now has only 15 is Madewell Meats, LLC, in southwest Missouri.sows. Bauman is striving to produce only the Steve Madewell and Sons operate a 90-acre farmnumber of hogs needed for his direct market- where 90 to 100 sows farrow outdoors all year.ing. The Baumans do catering of livestock pro- About one-third of the market hogs are pro-duced on the farm and direct market chicken, cessed and sold directly to consumers as all-pork, and beef. As the article in Acres U.S.A. natural pork. The Madewells use a federallyexplained, “Caterers are many in today’s con- inspected processing plant close to their opera-venience-driven society, but few can attest to tion. The family attempts to set their prices tobeing as farm-direct as the Baumans. The sell all the cuts. They feel their prices compareBaumans built, at a total cost of $7000, four favorably to those in grocery stores.cooker-roaster trailer units, constructed out offormer 275-gallon fuel containers.” The The Madewells started marketing frozen porkBaumans cater many different events during the to family, friends, and teachers. They still de-summer. “Pork is not the only meat offered by liver most of the frozen products because theythis catering service; they also offer homegrown want to hear comments directly from the con-chicken. The usual offering is three-quarters sumers, and they feel this gives them controlpork and one-quarter chicken.” over how their product is marketed. They opened a store in town to diversify their cus- //PORK: MARKETING ALTERNATIVES PAGE 15
  16. 16. tomer base and allow consumers to come di- just your name, it encompasses the “who” andrectly to them. They also help other farmers “what” of your product, and in case of most meats,market their products in the store. As Michelle the “how.”Callahan wrote in American Small Farm: Central to building this brand identity is your story. Your product’s story is crucial for distinguishing Best-selling meat products vary with the seasons. yourself to customers who are used to purchasing Hams are popular during the Christmas holidays, meat and poultry from a supermarket case. Pic- chops move quickly during the outdoor grilling tures speak much louder than words…. season. Nitrite-free bacon sells well all year, ac- cording to Steve. Consistency is the most crucial element to ensur- ing lasting success at your farmers’ market. When Madewell Meats does have a signature product. marketing meats at the farmers’ market, you are “Pig wings” are made from the upper shoulder by starting with many disadvantages. The greatest is cutting away the bone and marinating the meat. the novelty of the product. People aren’t used to Two flavors are available—hot and apple-cinna- purchasing their meats at a farmers’ market, even mon. “If buffaloes can have wings, why not pigs,” those that purchase the majority of their produce Steve comments. there. Purchasing meats doesn’t fit as well in some customers’ schedule, due to its highly perishable “People come back because of quality,” Michael nature. If your product is high quality, every time, [Madewell] states. “Our customers like the way these inconveniences will be overlooked by your our meat tastes and are constantly telling us how customers. You are not only competing against different it is from what they used to buy in the the products and pricing of supermarkets; you are store” (Callahan, 2000). competing against their convenience (Silverman, 2003). Farmers’ Markets Internet or Mail Order MarketingIn an article in Growing for Market, AaronSilverman, a pastured-poultry and -lamb pro- There are advantages and disadvantages toducer, discusses direct marketing of meat at Internet marketing. More consumers are shop-farmers’ markets. He says that meat marketing ping on the Internet, so Web sites can help buy-at farmers’ markets has been slow to develop ers locate producers in their area, and Web sitesand that the burden of regulations for process- are accessible 24 hours a day. A big disadvan-ing meat is part of the problem. Regulations tage is that packaging and shipping costs canvary by state—even between in-state localities— about double the final price of products for thebut most are consistent in one area: all meat sold consumers. Many people may browse the Webhas to be processed in a licensed facility. sites without making any purchases.Silverman makes several suggestions for mar-keting meat in farmers’ markets. Internet marketing of pork requires a well-de- signed, user-friendly Web site that provides in- Marketing meat at farmers’ markets is similar to formation about the producer’s products and marketing any value-added product, and very services. A more complex Web site may include different than marketing vegetables or cut flowers….Purchasing meat requires a heightened a secure system to take orders and payments, level of trust by the customer, since neither fon- and a method to address customer questions dling nor smelling is possible. Your ability to gain, and problems. A simple Web site may contain and more important, retain your customers’ trust only a phone number and contact address. will determine your success marketing meats at farmers’ markets. One company selling beef and pork directly over the Internet is Carousel Farms, LLC. The com- We use three elements to gain our customers’ trust. pany is made up of three northwest Iowa farm- The first is the creation of a marketing brand—the ers who market their products collectively. The customer’s way of identifying our product outside perishable products are usually shipped by UPS of the farmers’ market. Brand identity is even more critical when processing and marketing is done in an insulated shipping box packed with dry on a collaborative basis. Your brand is more than ice to insure their safe delivery. For more infor-PAGE 16 //PORK: MARKETING ALTERNATIVES
  17. 17. mation about Carousel Farms, LLC, visit <http:/ cass. The five major parts of the carcass are/www.carouselfarms.com>. ham (45 lbs), loin (34 lbs), side (35 lbs), Boston butt (15 lbs), picnic (16 lbs), and miscellaneous—There are many excellent sources of informa- jowls, feet, tail, neck bones, etc.—(39 lbs). Thesetion on establishing and designing Web sites. A figures are averages from actual carcass tests.good place to start for information on Internet The actual yields vary depending on cuttingmarketing is the on-line, 50-page publication methods, weights of the pigs, and the types ofHow to Direct-Market Farm Products on the pigs.Internet. It provides information on developinga marketing plan, researching the market, and Further breakdown into retail parts from thesesetting up the Web site. It is available from the major portions of the carcass will result in aboutUSDA Agricultural Marketing Service at 140-pounds of semi-boneless products—includ-<http://www.ams.usda.gov/tmd/MSB/ ing 18 pounds of trimmings for such things asPDFpubList/InternetMarketing.pdf>. sausage, brats, and pork wieners; and 15 pounds of jowls, feet, tails, neck bones, etc. — plus 44Another good place to start is the Access Min- pounds of fat, skin, bones, and an allowancenesota Main Street Web site. This program is for shrinkage or loss. Additional processing anddesigned to help small businesses use the deboning will further lower the weight of theInternet as a business tool. The Web site has a retail pork products that can be sold to the con-copyrighted Electronic Commerce Curriculum sumer. (National Pork Board, 2003) While thethat provides training on electronic commerce chart below is a good reference, it is advisablebasics, finding business information and services to test cuts from your own hogs to determineon-line, exploring e-commerce Web sites, plan- your own product yield, so that more accuratening your Web site, promoting your Web site, pricing can be calculated.developing your Internet business plan, andmuch more. The Web site is <http:// In his article “Did the Locker Plant Steal Somewww.extension.umn.edu/mainstreet>, or you of My Meat?,” Duane Wulf provides some ex-can e-mail the coordinator, Rae Montgomery, amples of pork yields from different cutting re-at <mainstreet@extension.umn.edu>. quests. He says that an average 250-pound hog weighed full (not removed from water and feed)The Federal Trade Commission (FTC) has pri- would yield about 133 lbs. of closely trimmedmary responsibility for all food advertising; the bone-in chops and roasts and regular groundFood and Drug Administration has responsibil- sausage. The same 250-pound hog would yieldity for food labeling. This means that your bro- only about 118 lbs. of closely trimmed bonelesschures, mail order catalogs, and Web site must chops and roasts and lean ground sausage.meet FTC standards for any claims that you Wulf also says that a lean, heavily-muscled hogmake, and must meet their shipping guidelines. might yield 133 lbs. of closely trimmed bonelessSome examples: claims must be substantiated; chops and roasts and lean ground pork, and adisclaimers must be clear and conspicuous; re- very fat, light-muscled hog might only yield 93funds must be made to unsatisfied customers; lbs. of the same boneless products and leanorders must be shipped within 30 days; and ground pork. (Wulf, 1999)other advertising practices can not deceive ormislead consumers. For more information aboutFTC regulations, visit their Web site at <http:// Whole or Half Carcass Saleswww.ftc.gov>. Probably the easiest method of pricing carcasses Carcass Cutout or halves is to ask a set price per pound, either by live weight or by hanging carcass weight, and Pricing without the head, offal, hooves, etc. Carcass weight will also be affected if the skin is left onAccording to the National Pork Board’s publi- the carcass or the carcass is skinned by the pro-cation Pork Facts 2002/2003, a typical 250-pound cessor: a skinned carcass will yield a lower hang-market hog will yield about a 184-pound car- ing carcass weight; however, neither method will //PORK: MARKETING ALTERNATIVES PAGE 17
  18. 18. Breakdown of Cuts from a 184 lb. Pork Carcass Retail Pork* Other Products Carcass Total (pounds) Ham (45.0 lbs) Cured ham 25.5 Fresh ham 2.3 Trimmings 5.8 Skin, fat, bone 11.4 Total 33.6 11.4 45 Loin (33.8 lbs) Backribs 3.2 Boneless loin 10.7 Country style ribs 7.6 Sirloin roast 5.7 Tenderloin 1.6 Trimmings 1.6 Fat & bone 3.4 Total 30.4 3.4 33.8 Side (34.9 lbs) Cured bacon 19 Spareribs 5.8 Trimmings 9.1 Fat 1.0 Total 33.9 1.0 34.9 Boston Butt (14.7 lbs) Blade steaks 4.4 Blade roast 7.8 Trimmings 1.7 Fat 0.8 Total 13.9 0.8 14.7 Picnic (16.6 lbs) Boneless picnic meat 12.6 Skin, fat, bone 4.0 Total 12.6 4.0 16.6 Miscellaneous (39.2 lbs) Jowls, feet, tail, 15.4 neckbones, etc. Fat, skin, bone 22.0 Shrink and loss 1.8 Total 15.4 23.8 39.2 Total 139.8 44.4 184.2 *Retail cuts on semi-boneless basis. Fully boneless would show lower retail weights. Source: NPPC, Purdue University and Texas A & M University, 1994. (National Pork Board, 2003)PAGE 18 //PORK: MARKETING ALTERNATIVES
  19. 19. affect the amount of meat the consumer will get to cover all the costs and return a profit, mak-from the hog. (Wulf, 1999) Pricing by carcass ing the average per-pound price for all cutsweight requires customers to inform the proces- about $2.60 to $3.50.sor about their specific cutting, wrapping, andcuring preferences. Customers need to under- The Web publication Marketing Meat Animalsstand that—depending on the type of hog, Directly to Consumers provides an excellent tablewhether the cuts are boneless or not, and how for estimating the retail value of a pork carcass.closely the meat is trimmed—the amount of The worksheet below provides a sample listingfreezer-ready meat per pig could range from of possible retail cuts and weights for a pork40% to 55% of the live-weight. Another way of carcass to estimate the total retail value of theexplaining it to customers is that going from live hanging carcass. (Henning, 2003) Producers willhog to the hanging carcass, the carcass weight need to determine the weight of retail cuts andwill be only about 70% to 75% of live weight, other products from their hogs, then calculateand going from hanging carcass to cut and the value of these individual products. Theywrapped products ready for the freezer will must also determine how the carcass portionsreduce the hanging weight by 25% to 30%. will be fabricated into the various pork prod- ucts that their customers want.Customers must also understand that the costsfor processing, cutting, wrapping, and curing Some producers have created alternative porkare added to the price paid for the hog itself. products to help market the parts of the hogHog-processing costs vary depending on the that are in less demand. These products includecutting, wrapping, and curing, but can be be- cottage bacon from the Boston butt or porktween $75 and $150 per hog. The producer shoulder and “Pig wings made from the uppermight want to add a separate hauling or han- shoulder by cutting away the bone and mari-dling charge for delivering the hog to the pro- nating the meat” (see Madewell Meats LLCcessor. This hauling charge could be a way of quote in Frozen Meat Marketing). By creatingproving that the hog was the customer’s prop- these products, producers add significant valueerty before it was processed. Producers need to to those parts of the carcass in less demand, andbe sure to check their state’s regulations to be hope thereby to increase their customer base andcertain it is legal to sell live animal carcasses and profits.halves to the consumer. Producers may want to keep track of how their prices compare to commodity wholesale and Retail Pork Sales retail pork prices. Commodity prices are re- ported by the USDA Agricultural MarketingSetting the price per pound for the many var- Service (AMS) and the Economic Research Ser-ied individual pork products can be challeng- vice (ERS). Their on-line reports are:ing. The pricing structure needs to reflect thelive hog’s value, as well as the processing, wrap- • AMS National Carlot Pork Report atping, curing, storage, transportation, labor, ad- <http://www.ams.usda.gov/vertising, and all the other costs involved in get- mnreports/nw_ls500.txt>ting your product to the consumer. Producers • ERS Monthly Average Retail Price Dataneed to be very concerned about carrying a large for Selected Cuts of Red Meat and Poul-inventory of unsold products, because the in- try at <http://www.ers.usda.gov/ventory will add greatly to the overhead a pro- data/MeatScanner/>ducer has to cover. To give an oversimplified • ERS Food Marketing and Price Spreads:example of how costs mount, let’s say the pro- Farm-to-Retail Price Spreads for Indi-ducer sees the value of a hog—calculated as the vidual Food Items atcost of production plus a reasonable profit—as <http://www.ers.usda.gov/briefing/$150. Processing, cutting, and wrapping add foodpricespreads/meatpricespreads/>another $100, curing another $50, with another$50 to cover other costs. So the producer needsat least $350 for the 100 to 135 pounds of pork //PORK: MARKETING ALTERNATIVES PAGE 19
  20. 20. Worksheet for estimating the retail value of a pork carcass (165 lb). Retail cut Pounds Price/lb Total $ Ham Cured hams (2) 29.7 X $___________ $___________ Loin Blade roast 8.0 X $___________ $___________ Center chops 17.3 X $___________ $___________ Sirloin roast 5.6 X $___________ $___________ Side Cured bacon (2) 18.6 X $___________ $___________ Spareribs 6.4 X $___________ $___________ Shoulder Blade roast 7.3 X $___________ $___________ Blade steaks 4.2 X $___________ $___________ Arm roast 7.7 X $___________ $___________ Various Trimming for sausage 20.8 X $___________ $___________ Misc. (Neck bones, feet) 3.5 X $___________ $___________ Fat, skin, bone 32.7 Shrink 3.5 Retail Wt (excl fat & bone) 128.8 Total Retail Value $___________ Retail Value/lb of Hanging Carcass (Total $/165) $___________ Summary of cuts Pounds Cured pork 48.3 Roasts 28.3 Chops and steaks 21.5 Misc. 9.9 Sausage 20.9 (Henning, 2003) © 2004clipart.com 2004PAGE 20 //PORK: MARKETING ALTERNATIVES