Direct marketing of meat can provide farmers with a greater share of the profit
When direct marketing meat, it’s important to consider all of the costs involved.
In response to the growing demand from consumers for locally produced foods some livestock producers are considering direct marketing of meat products. While the retail price producers can receive directly from the consumer sounds attractive in comparison to commodity prices, there are a number of costs to consider.
The expense of slaughter and processing can add a significant cost to the end product. Regulations require that direct marketed meat be processed at a USDA facility and bear the USDA inspection mark. While many USDA processors are comparable in price to custom-exempt processors, a farmer may need to travel a greater distance to a USDA facility. Transportation costs need to be considered at all points. Transportation costs to processing, driving to farmers markets or delivering products to customers are all costs that need to be figured in the budget to determine the real cost of production and marketing.
Other costs to market meat products include advertising and promotion and fees such as farmers’ market vendor fees. There is also the cost of the extra hours of labor spent direct marketing. It takes time to accomplish these tasks and time equates to money.
There is an annual cost to securing the required licenses for being a food processor as well as the cost of a food warehouse license. While these are not large costs and can be spread out over all of the product sold these are costs are also part of the profit equation.
In many cases, meat needs to be stored which requires the appropriate storage space. Freezers or coolers and the associated energy costs are also factors to consider when developing a business plan.
Communicating with the consumer is an important factor in successful marketing. Consumers want to learn about farming practices and get to know the person producing their food. Farmers need to be open to questions from customers and be prepared to answer those questions in simple terms that the consumer can understand.
“I think most consumers come to the farmers market because they want to know the story of their meat,” Ben Tirrell of Tirrell Farmstead Specialties said. “I think people just have a desire to know where the product comes from and how it was produced. To be successful, farmers have to be ready to tell this story. There will be lots of specific questions. Instead of shrugging them off as silly or irrelevant, every question needs to be taken seriously.”
The Michigan State University Product Center has innovation counselors located in Michigan State University Extension offices across the state to assist livestock producers in developing a business plan for direct marketing of farm produced meat products.