Creating and Expanding Direct Markets for Sustainable Products

Project Overview

FNC98-221
Project Type: Farmer/Rancher
Funds awarded in 1998: $5,000.00
Projected End Date: 12/31/1998
Region: North Central
State: Minnesota
Project Coordinator:

Commodities

  • Animals: bovine, swine

Practices

  • Animal Production: feed formulation, feed rations, manure management
  • Education and Training: demonstration
  • Farm Business Management: marketing management, market study, value added

    Summary:

    Creating and Expanding Direct Markets For Sustainable Products

    FARM DESCRIPTION
    Dennis and Sue Rabe, Eagle View Family Farm. Our family farm of 300 acres consists of raising corn, soybean, oats, hay and pasture for our beef and hog enterprises. We use many sustainable farming practices which include:
    1. Rotationally grazing our stock cows
    2. Forage finished beef
    3. Pasture farrowing
    4. Deep straw farrowing in the winter
    5. Finishing market hogs in a deep straw system
    6. Long crop rotation with 3 – 5 years of pasture and hay
    7. Direct marketing of our antibiotic free beef and pork for five years

    PROJECT DESCRIPTION AND RESULTS
    The main objective of this project was to increase marketing of our naturally raised beef and pork products. We were hoping to reach that goal through selling at farmers markets, grocery stores, convenience stores, food co-ops, and restaurants. We also started advertising on the Internet. We conducted research on our project mainly through trial and error. Since this is a new area there are not people to ask and talk to. Our best source of information came from our best teachers: the customers.

    We tried to ask our customers for suggestions and watched to see what helped promote sales. We also spent time in the grocery stores observing how things are packaged and how they are displayed. We tried to investigate what makes a customer buy consistently. We decided that the taste was our number one concern along with availability and convenience for the customer. We did not have any other agency assisting us except those who we hired such as a photographer, and processors, etc.

    We have had an increase in sales by 10 percent or more. Our best and most consistent market has been the Rochester’s farmers market. This year there were seven farmers selling meat products and the year before there were only three. Even though there was more competition, we continued to do as well or better averaging $700 per week. We found that we had a much better success rate when we offered hot samples to whoever our prospective customer was to be. We did this at area businesses, restaurants, bed and breakfasts, and grocery stores. The demo at the Eagle’s Nest Coffeehouse brought in sales for about three months and then they discontinued due to having a preference towards more easily cooked items. This seemed to be the consensus at the coffeehouses. They are not set up for frying and preparing hot meat, even though they enjoyed the product.

    One grocery store, Marien’s Market has been consistently ordering since we did a food demo there and offered the Wild Rice Brats as a weekly special. They are ordering 30 lbs Wild Rice Brats per month. Winter months are slower for brat sales due to customers’ personal preferences.

    Food samples were mailed and/or demonstrated at ten different locations altogether. Some ordered one time only. Three bed and breakfasts were contacted and demonstrations were done for them. Three of the bed and breakfasts ordered and one, Strawberry Lace in Sparta, Wisconsin has continued to re-order on a regular basis.

    Sales on the Internet have not been successful with only one order so far. We noted that mailing frozen samples or dropping off a free package for them did not end up in a sale. When we set up a meeting and cooked up a sample right then and there they always bought. Another thing that was successful was offering the free samples at the restaurant or grocery store and at the same time offering it as today’s special. We have definitely found that tasting the product is what sells it. The second way we increased sales was to have delicious-looking colored pictures of the products. We were careful not to have cute pictures of the animals that are to be eaten but instead a picture of the brats, burgers, or steaks. Farmers often mistakenly think people are more interested in how your farm is operated. What they really want to know is how does this taste? We have found that we need to keep in mind what we are selling: food. The flyer, colored posters and colored table tents all look yummy and as they say “a picture is worth a thousand words.”

    We were able to improve our sales because of the (SARE) grant since we could not afford the expense of advertising and colored photos. We fully expected that the pictures would help and they did. We have learned that people want a delicious product and they want it to be convenient to purchase. The cost is not so much of a problem to many people. Just like the expensive coffee at the coffeehouses, our product is considered worth more. The big problem for us that we continue to explore is how to make the product convenient to our customers.

    The direct marketing sales have ended up promoting our farm as a family farm because of all our children – even though they are now adults – continue to be actively helping with this project. We have enjoyed having an additional 30 percent income from this project. We have learned so much and have gotten feedback on how wonderful our meat is. This empowers farmers to follow their product to the table and find out how it tastes. The pride in raising a quality product and at the same time farming sustainably and getting all the praise from our customers has certainly added to our life. The problem continues to be how to add so many areas of work into one operation and still have a balanced life style. Any farmer will find that they get as much out of it as they put into it.

    DIRECT MARKETING BENEFITS AND OPTIONS
    Direct marketing allows us more control of our market. By taking control of marketing you are:
    1. Invested in yourself
    2. Added value to our beef and pork
    3. You are cutting out the middle man
    4. Supplying a superior product to consumers
    5. Supporting a local businesses by spending money in the local community
    6. You can make this a large or small part of the farm

    Methods of direct marketing our naturally raised beef and pork:
    1. Selling by the Carcass Weight
    Consumers pay for processing and pickup. Whole or half animals preferred
    Hogs $1 to $1.40 per lb
    Beef $1.25 to $1.40 per lb

    Advantages:
    • Consumers can have animals processed the way they want them
    • Consumer’s cost per pound is very low
    • Farmer’s price per animal is much higher than conventional market
    • Farmer needs no extra licensing

    Disadvantages:
    • Many consumers do not have a freezer large enough for whole animals
    • Many consumers are not willing to pay the large amount of money for meat at one time
    • Some consumers want just certain cuts and will pay more to buy just what they want.

    2. Small Family Packs
    Pork: 1/4th hog, 28 lbs, consists of pork chops, stir fry, roast, ribs, ham breakfast links, and bratwurst. Cost is $2.69 per lb = $75.00
    Beef: 1/12, 35 pounds, consists of steak, stir fry, hamburger patties, roast, and bulk hamburger. Cost is $2.80 per pound = $98.00

    Advantages:
    • More consumers will buy packs versus whole animals
    • Smaller amounts of meat more often ensures the consumer of freshness
    • Farmers should be able to sell a hog for $200 and a 1200 lb beef for $1000 after processing costs are subtracted

    Disadvantages:
    • Farmer needs to have a food handler’s license to sell this way
    • Farmer needs to have proper freezer storage on the farm
    • Farmer pays for the processing cost and also has money tied up in inventory and possibly delivery equipment

    Farmers’ markets and large parties. Our farmers market in Rochester, Minnesota has shown us how to sell animals by the package and really increase our net per animal. These are actual examples:

    A. Hog processed into the following:

    – 4 pound stir fry @ $3.33/lb $13.32
    – 19 pork chops (2/package) @ $3.33/lb $62.27
    – 71 wild rice brats (1 lb) @ $3.33/lb $236.43
    – 10 wild rice breakfast links (1 lb) @ $3.33/lb $33.33
    – 8 roasts (3 lbs each @ $3.33/lb $79.92
    Gross $426.27
    $426.27 –161.46 (butcher cost) = $264.81 net/hog

    B. Young 1,100 pound cull beef cow ground into hamburger
    – 120 pounds bulk hamburger @ 2.00 /lb $240.00
    – 234 pounds wild rice patties @ $3.33/lb $779.00
    – 117 pounds onion burger patties @ $3.33/lb $389.00
    – Less processing costs ($501.00)
    Total gross revenue $907.00

    Cull cows are selling in the low $30 per cwt. Brings in about $360.

    -Specialty products will significantly increase your butchering costs, but will also significantly increase your net income. And if one of your innovative ideas won’t sell, you can always eat your mistakes.

    -We like to sell three pounds for $10.00 as our “Farmer’s Market Special.” There is very little change making or figuring with this deal, and it has worked very well. Different specialty meats are in the Special each week.

    -The most important part of the farmer’s market is to give samples. Once the customer has tasted how good it is, they will start buying!

    OUTREACH
    We were asked make presentations on “direct marketing” at different farm meetings. These included:
    1. Southeastern Minnesota – (Experiment in Rural Cooperation)
    2. Alternative Swine Task Force – University of Minnesota
    3. Ivanhoe Farm Forum – Sustainable Farm group, western Minnesota
    4. Farm Beginning class- Land Stewardship Project, southeastern Minnesota.

    Our presentation included the use of a farm brochure – pricing your product to add value, creating a market – selling points, color photography, licensing and possible use of Internet.

    PROGRAM EVALUATION
    We were very happy with the SARE Program. It gave us some much needed capital to help us with our direct marketing of our products. We would not have been able to do nearly as much in promotion and advertising. The only change I’d recommend is to extend some of the grants to a two-year or three-year project rather than just one year.

    Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the view of the U.S. Department of Agriculture or SARE.