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Four steps to direct marketing beef

News Roundup from the August 2015 issue of Canadian Cattlemen

Four steps to direct marketing beef

Most ranchers in Canada keep their attention focused on what they do best: breeding and raising healthy, high-quality cattle. The slaughtering, processing, and sale to end consumers are things they ordinarily leave to other people. Some ranchers, however, market a part of their beef output directly to consumers, cutting out the middlemen of the cattle industry. Working with processors they package and sell freezer-ready beef to restaurants and individual customers.

One major benefit they enjoy is being able to get a consistent price for their meat: unlike live cattle sales, where the price can fluctuate in response to supply and demand as well as the animal’s condition, direct-marketed freezer beef can be sold for a consistent price that covers the cost of production and includes a healthy profit. Ranchers can also charge a premium on their beef by being able to certify that it is grass fed, organic, free of artificial hormones, and the like.

Direct marketing beef can be a productive form of business diversification for ranchers but be warned: it takes a lot of time and commitment. Ranchers who choose to direct market have to develop many more skills than just those necessary to succeed at raising cattle: they have to understand food safety regulations, how to market their beef, how to build and sustain positive customer relationships, and how to manage the new line of business to keep it profitable.

If you’re curious about direct marketing, or are looking for a new way to diversify your ranch income, we’ve assembled the following questions to ask to see whether selling to consumers is right for you:

1. Do I have the time?

One thing ranchers learn quickly when they start a direct-marketing operation: it always takes more time than they had thought it would. Tending a cattle herd is already a full-time occupation, and running a direct-marketing business is likely adding another full-time job on top of that. There’s not only a lot to learn and keep up to date on, there are also relationships to be managed, inventories to be tracked, and financials to be kept in order. If you have family involved in your business, it may be possible to assign one of them to develop this end of the business while you devote yourself primarily to the cattle-raising and -breeding end of your operation.

Chances are there is probably at least one ranch that direct markets in your area. Getting in touch with them to find out about their experience getting started and how it changed their working life can be very helpful to making your own decision.

2. Do I know where I can find customers?

Direct marketing beef is more complicated than selling to a feedlot but also presents a lot of opportunities. You can sell your beef from a store on your ranch (where you can also sell a range of other products like spice rubs and barbecue sauces), through a local farmers’ market, or direct to restaurants and supermarkets. You can also sell to municipal buying groups, where consumers band together to buy meat in bulk at a good price for their members.

Start by reaching out through your personal networks — family and friends, your local church group, and a local farmers market. Make up flyers to distribute with price lists. Also contact owners and head chefs at restaurants and find out what kinds of cuts they are looking for. This can give you an initial base of customers to whom you can sell your first direct-marketed beef.

Labelling your meat products is a must, and it is also helpful to have a website to advertise both the quality of your beef and provide consumers with prices. Website hosting is not a great expense but it is important to pay attention to site design and product branding: after all, it’s the image people will have of your product and what they will remember when they want to seek it out again. It’s worth spending money on a good web and graphic designer to get the job done right.

3. Do I know where to find a good processor?

Any beef sold to consumers has to be processed at a federally inspected and licensed slaughterhouse. Processing beef is the second-highest cost in direct marketing after the raising of the cows themselves. You’re going to need a good personal relationship with a processor to make a profit, and for that to happen you’ll both have to find a win/win solution.

When considering a processor ask them what they need to succeed economically — how many carcasses they have to process, how much advance warning they need before delivery of live animals, and what their minimum order size is. Be up front with them about your needs as well, and how much you can pay and still generate a profit. That way you can find your way to a mutually satisfactory price that pleases you both.

4. Am I prepared to handle delivery?

While your customers can pick up your meat from the processor directly this complicates their lives and can make purchasing from you unattractive. Offering to deliver the meat yourself can be a great boost. You’ll need to acquire a Food Establishment Permit from your regional health authority and a vehicle capable of delivering meat in a still-frozen condition. Alternatively, you can contract this service to a business that specializes in supplying freezer trucks.

Like many kinds of diversification direct marketing your beef is unlikely to replace your main business of selling to feedlots, but it can provide a valuable source of extra income and, with pre-sales, give you more cash to work with between sales of your herd.

For more info you can check out the Government of Alberta’s informative page on direct marketing beef.

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