: MARKETING ALTERNATIVES

MARKETING AND BUSINESS GUIDE National 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 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 Gegner NCAT Agriculture Specialist Related ATTRA publications April 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 Marketing Marketing ...... 2 • Direct Marketing What Is Direct Marketing? ...... 2 • Farmers’ Markets Where Are the Niche Markets? ...... 3 Introduction Niche Marketing 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- Marketing Channels ...... 14 sive as their production systems and that those 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 References ...... 22 and premium pork products to realize sustain- 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 Center for 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. 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 service tion 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 most modest 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 sow herd will have to be quite small, fewer than 25— What Is Direct Marketing? and perhaps as few as 3-5. Even from small numbers, however, you will have to pursue as many 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- Commodity vs. Niche 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 rewarding sue 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 customer niche marketing. Commodity marketing is base with clients who appreciate the product marketing 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 that Allan Nation, editor of Stockman Grass Farmer, we cannot compete with the big operators at has stated, “A commodity orientation means every level, and learn to stop our production or that as long as you meet the specs and can stand processing at the point where our quality/price the 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. Operate about 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 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 by your business byword. By following these rules, the big potatoes is the amount of control your direct marketing endeavor can be satisfy- we have over the situations that cause ing.” (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 remember ing” has been used to describe the best methods that the first rule of business is that the of direct marketing for family farmers. In an consumer is always right, but in some article 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 not marketing. 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 • 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 Niche Marketing . Opportunities In 2003, the Iowa Pork Industry Center com- pared five niche pork markets available in Iowa Niche 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. The products raised in systems characterized as five markets surveyed were Niman Ranch Pork humane, organic, earth-friendly, free-range, Company, Organic Valley Pork Pool, Truline antibiotic-free, etc. Niche marketing can either Premium Pork, 100% Pure Berkshire Pork, and be done by working though others—a coopera- Five Star Premium Pork Company. The on-line tive, say, or a private label brand—or directly chart is available at to individuals. It can involve freezer meat sales, . kets, Internet sales, sales to restaurants, grocer- ies and/or specialty food stores, even by cater- In 2001, Paula Schafer completed her thesis, “A ing events and preparing hog roasts. Key to Successful Marketing: Understanding What a Consumer Wants When Purchasing These approaches have been verified by several Food Products Directly from the Farm.” studies during the past few years. A 1999 re- She surveyed consumers and tried to identify search project funded by the Leopold Center in what attracted them to buy directly from the Ames, Iowa, suggests that producers can add farms in rural upstate New York. Her thesis value to pork production by marketing meat discusses the findings of the survey and provides produced in ways that benefit the environment. 11 action steps that producers need to consider Iowa State University economics professor when developing a successful direct marketing James Kliebenstein and graduate student Sean program. (Schafer, 2001) Hurley say that “consumers may be willing to pay 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 marketing In 2002, six Midwestern focus groups were held promotions, on the Internet, and at a to 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 the sumer 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 • 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 that Information about Schafer’s thesis is available organic products improve environmental qual- on-line at ity. “Consumers view the premiums paid to or- . 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 that Despite the fact that “organic” is a process “in the fall of 2000, one processor/marketing claim, 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 a rily by consumers’ belief in the higher quality minimum price of $40 per hundred. The same and safety of these foods, and their awareness firm will pay $65 per hundred live weight for of the positive environmental, animal welfare, organic pork. Another national cooperative was and social impacts of organic agriculture prac- paying an average of about $50 per hundred tices. 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 live Organic 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 when tional 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 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 [email protected] USDA Organic Seal

//PORK: MARKETING ALTERNATIVES PAGE 5 1501 State Street ETHNIC MARKETING Marshall, MN 56258 507-537–7440 Ethnic markets are a growing and often under- exploited niche market. Many ethnic groups The National Pork Board has produced three form close-knit communities and can offer con- publications specifically dealing with ethnic centrated and potentially lucrative markets for marketing of pork. farmers. But bridging the cultural gaps between the 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 States The Hispanic market consumes a lot of pork, (1997) at 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 the Agricultural Utilization Research Institute • 4-page Ethnic Marketing of Pork (2000) (AURI) in Minnesota evaluated the Hispanic at 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. 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 marketing The Agricultural Utilization Research Institute cooperative, or they may form a new coopera- report is available at distribution system with other producers who or 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 Institute

PAGE 6 //PORK: MARKETING ALTERNATIVES Founded in 1985, Cooperative Development Cooperatives Services (CDS), a nonprofit organization, pro- vides a range of innovative, results-oriented, and The cooperative marketing concept has long cost-effective services to cooperatives and related proven useful. Hog farmers with a specialty organizations. CDS has participated in the de- product have organized together, identified velopment, restructuring, and expansion of markets, put together business plans, and built more than 500 cooperative organizations of all solid 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 helping marketing or business plans, or because they clients secure grant funding. For additional in- needed good management and clearly defined formation contact: missions. Cooperative Development Services For hog producers wanting to form a market- 30 West Mifflin Street, Suite 401 ing cooperative, the best source of information Madison, WI 53703 is the USDA Rural Business and Cooperative 608-258–4396 Development Service (RBCDS). The RBCDS 608-258–4394 FAX helps farmers and rural residents form coopera- [email protected] tive 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 organic and provides informational products to promote marketing cooperative in Wisconsin. Starting public 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 . For information on 202-720–7558 organic hog production and marketing with [email protected] 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 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 Patchwork Family Farms [email protected] 1108 Rangeline Street http://www.nimanranch.com Columbia, MO 65201 573-449-1336 Some highlights of the AWI Husbandry 573-442-5716 FAX Standards followed by Niman producers are: [email protected] or [email protected] http://www.patchworkfamilyfarms.org • Not using any growth promotants or subtherapeutic antibiotics Another example of cooperative marketing is • Not using any meat or bone meal the Ozark Mountain Pork Cooperative, orga- products nized 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 play and smoked cuts, sausages, brats, and pulled • Weaning pigs at a minimum of four pork under the label Heritage Acres. The hogs weeks of age are processed in their small, locally operated • Using low-stress environments, such as plant. 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 FAX An example of a private label product is Niman [email protected] Ranch Pork Company formed in January 1999, http://www.awionline.org/farm/stan as a partnership between Niman Ranch in Cali- dards/pigs.htm fornia, Paul Willis, and some other Midwestern hog 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 du marketed hogs for several years through Niman Breton Farms out of Quebec, Canada. Du Ranch—a 20-year-old company, founded by Bill Breton Farms works with more than 45 small Niman, that sells natural meat products on the family farms in Quebec and the Maritimes to East and West Coast. Niman Ranch Pork Com- produce pork under the new Certified Humane pany 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 you would like more information about the Niman Du Breton Farms Ranch 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 [email protected] 641-998-2683 http://www.dubreton.com 641-998–2774 FAX

PAGE 8 //PORK: MARKETING ALTERNATIVES Humane Farm Animal Care is a nonprofit or- the guy that runs the coffee shop and even the ganization that offers a certification and label- manager of your local supermarket are fair ing 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 as mation 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 [email protected] 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 Mirabel Fernandez, Wright County Educator will be produced, a brief outline of processing op- 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 direct marketing need to do careful analysis and plan- Today’s computer and printer pairings make a ning 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 contacts and determination. Fernandez suggests that the and keeps past buyers aware that you’re still there producer write out the goal for direct market- and producing. ing of the planned product. Then the producer should write down all possible steps between It also gives satisfied customers something to share the raw product on the farm and the final prod- with others in their circle, thus widening your circle uct on the consumer’s table—including trans- of contacts. portation, processing, labeling, storing, adver- tising, selling, and customer services. As A short ad under the “Good Things to Eat” col- 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/or marketer, makes the following suggestions for environmentally oriented publica- anyone interested in direct marketing of value- tions where ads for “humanely added pork. He notes that producers usually reared,” “additive-free,” or “free- start marketing to people they know: “Your range” meat are sure to mechanic, your barber, your insurance agent, draw a response.

//PORK: MARKETING ALTERNATIVES PAGE 9 • 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 be plan. A business plan is usually required when more requirements to meet, such as getting an applying for loans or grants. A business plan employer tax identification from the IRS and should 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 nonprofit tainable Business—A Guide to Developing a Busi- law center, provides legal services to family ness Plan for Farms and Rural Businesses. This farmers and their rural communities, in order guide will help develop a detailed business plan to help keep family farmers on the land. FLAG and looks at ways to take advantage of new provides an extensive array of legal services marketing opportunities. It is available on-line nationwide. In 2001, FLAG published a series at 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 [email protected] 5) Partnerships $14.00 + $3.95 shipping and handling 6) Limited Liability Companies 7) Owner Agreements Iowa State University’s Center for Industrial 8) Employment Research and Service has developed the on-line, 9) Minnesota Financial and Technical publication Adding Value to Pork Production: Resources A Business Start-up Manual to Move You Up the Chain. It is available at . they offer useful information to any new entre- preneur. Call for prices or visit their Web site.

PAGE 10 //PORK: MARKETING ALTERNATIVES 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 , 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 these Always check with local, state, and federal au- offices can be contacted for information on free thorities before trying to market any food prod- or low-cost training available in your state. The uct. A retail food establishment license may be SBA also offers on-line training at their Small needed in your state. In most cases, the state Business Training Network, a virtual campus Department of Agriculture is a good starting offering free training courses, workshops, and point to learn about regulations. Certified scales knowledge resources designed to assist entre- are probably required for weighing your prod- preneurs. It is at . your products separately from your personal . Processed meat products are heavily Processing Regulations regulated 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 own in compliance. (See Further Resources for sev- slaughtering and/or processing facility should eral books on rules and regulations, such as The remember that it is very important to comply Legal 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 small implied 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 enough needed are employer’s liability insurance to pro- profit margin in unprocessed meat alone. The tect you if employees are injured, and damage producer will also have to figure out some way insurance to protect against loss of buildings, of making money from the hides, offal, and merchandise, and other property. General com- other waste products of the processed hogs. prehensive farm liability insurance often does not cover on-farm marketing or direct market- Farmers who intend to process on-farm should ing 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 to in detail. Product liability insurance may be the follow. Your state Department of Agriculture most difficult to purchase. Many retailers want will have information about regulations, as will up 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 producer Starting a new marketing business can be re- should contact the Food Safety and Inspection warding, but it may also be frustrating and con- Service (FSIS). The FSIS works with small and fusing. Start-up help can sometimes be found very small processing plants to make sure they by contacting your local Chamber of Commerce, comply with the Hazard Analysis Critical Con-

//PORK: MARKETING ALTERNATIVES PAGE 11 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 . Additional information is also available by contacting:

U.S. Department of Agriculture Food Safety and Inspection Service Labeling and Consumer Protection Staff ©20042004clipart.com 1400 Independence Avenue Room 602 – Annex Building trol Point System (HACCP). For more informa- Washington, DC 20250 tion about FSIS and HACCP, or for generic 202-205–0279 HACCP models and guides, contact their Small 202-205–3625 FAX and Very Small Plant Outreach Web site, , 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 labeling Plant Coordination Office at FSIS, USDA, SIPO, process begins with the federal inspector and 14th and Independence SW, Washington, DC the processing facility. A generic label may be 20250, 202-690–6520. allowed for a single-ingredient product (such as pork chops or pork ) 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 able ing 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 . 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 “Packed poultry, and egg products are safe, wholesome, for”—ingredient statement, and safe handling and 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 processing truthful and not misleading. Labeling includes facility has to submit a printer’s proof label all forms of product identification, claims, net showing all required label fields, including any weight, species identification, and nutritional graphics, to FSIS for approval. information related to meat, poultry, and egg products. 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 are

PAGE 12 //PORK: MARKETING ALTERNATIVES additional procedures and requirement to trans- producers have suffered a double removal. For fer 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 local designed 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 price reputation 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- of your product. There is both state and federal lows them to work on a small scale, where indi- vidual farms can contribute individual animals to registration in the U.S. Each state has a system a cooperative marketing effort. There is less waste to register trademarks used within that state. and spoilage. Their meats are available to several The U.S. Patent and Trademark Office (PTO) markets for a longer period of time than fresh administers the federal system. The symbol ® meats. In all, it allows them to compete on favor indicates a trademark has been registered with able terms; it balances the playing field dominated the PTO. The symbol ™ designates a trademark by the large fresh meat companies. established through common law use but that has not been registered with the PTO. The state And as frozen allows local farmers to flourish, it registration and federal registration both take also allows local communities to flourish. It al- time and money but are probably worth it to lows consumers to choose and purchase locally 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 is law 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 plants One obstacle to direct marketing of pork is that market? Well, there is an option available: the many consumers want fresh pork rather than controversial natural diet for dogs and cats frozen. In a commentary in the Land Steward- called BARF (Bones And Raw Food) diet. Many ship News, Ray Kirsch discusses the differences pet owners believe their pets are healthier on a between the previous and current meanings of raw diet. Hog producers’ Web sites can feature fresh meat and frozen meat. items on their lists such as stock bones, 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 and search for looked upon with suspicion, as indeed, it could BARF, or visit . 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 Developing a Clientele Base Marketing Channels

Joel Salatin, in another article from The Stock- Starting small is probably the best approach for man Grass Farmer, explains how he and his wife the beginning direct marketer. Producers need developed their customer base using a three- first to determine their target markets. These pronged approach. Salatin stresses that this could involve selling frozen pork to friends and worked for them, but that your situation may neighbors, to home delivery customers, farm be 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 to make your own adaptation. (Salatin, 1995) Restaurants” provides some good information on what is important to restaurants and some Salatin’s first course was to give samples to any- tips on marketing to them. See the article at one he thought might be interested. He com- . thing away that didn’t come back fourfold.” Sales to groceries and/or specialty food stores The 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 guaranteed to local organizations. These groups were glad amounts of frozen meat and are sometimes to 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 may production methods for pastured beef and poul- refuse to handle and display alternative meat try. People are always interested in knowing products because, as one explained, if his store about 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 many happen to have some order blanks with me and grocery stores have “slotting allowances” for you are welcome to sign up.” space in their freezers or meat coolers. This may make them too expensive for small producers Their 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 word about them. Whenever a new customer was added, Salatin asked where they had heard Live Freezer Meat Sales about their products. If the new customer gave a name from the established customer list, the next 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 to appreciated 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 weight 1995) to a customer, then take the hog to a govern- ment-approved slaughtering and processing Salatin concedes that this three-pronged ap- plant. The customer then picks up the pork from proach 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 Salatin

PAGE 14 //PORK: MARKETING ALTERNATIVES 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- • Require a deposit before taking the hog preneurial activity, marketing your production re- 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 operation tion 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 farm number 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 federally explained, “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 to being as farm-direct as the Baumans. The sell all the cuts. They feel their prices compare Baumans built, at a total cost of $7000, four favorably to those in grocery stores. cooker-roaster trailer units, constructed out of former 275-gallon fuel containers.” The The Madewells started marketing frozen pork Baumans 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 they this 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 control pork 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 tomer base and allow consumers to come di- just your name, it encompasses the “who” and rectly 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 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 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 Marketing In an article in Growing for Market, Aaron Silverman, a pastured-poultry and -lamb pro- There are advantages and disadvantages to ducer, 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 sites and 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 can vary by state—even between in-state localities— about double the final price of products for the but most are consistent in one area: all meat sold consumers. Many people may browse the Web has 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 mation about Carousel Farms, LLC, visit . ham (45 lbs), loin (34 lbs), side (35 lbs), (15 lbs), picnic (16 lbs), and miscellaneous— There are many excellent sources of informa- jowls, feet, tail, neck bones, etc.—(39 lbs). These tion 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 cutting marketing is the on-line, 50-page publication methods, weights of the pigs, and the types of How to Direct-Market Farm Products on the pigs. Internet. It provides information on developing a marketing plan, researching the market, and Further breakdown into retail parts from these setting up the Web site. It is available from the major portions of the carcass will result in about USDA Agricultural Marketing Service at 140-pounds of semi-boneless products—includ- . sausage, brats, and pork wieners; and 15 pounds of jowls, feet, tails, neck bones, etc. — plus 44 Another good place to start is the Access Min- pounds of fat, skin, bones, and an allowance nesota Main Street Web site. This program is for shrinkage or loss. Additional processing and designed to help small businesses use the deboning will further lower the weight of the Internet 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 the that provides training on electronic commerce chart below is a good reference, it is advisable basics, finding business information and services to test cuts from your own hogs to determine on-line, exploring e-commerce Web sites, plan- your own product yield, so that more accurate ning your Web site, promoting your Web site, pricing can be calculated. developing your Internet business plan, and much more. The Web site is , 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 . 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 trimmed mary responsibility for all food advertising; the bone-in chops and roasts and regular ground Food and Drug Administration has responsibil- sausage. The same 250-pound hog would yield ity for food labeling. This means that your bro- only about 118 lbs. of closely trimmed boneless chures, 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 hog make, and must meet their shipping guidelines. might yield 133 lbs. of closely trimmed boneless Some examples: claims must be substantiated; chops and roasts and lean ground pork, and a disclaimers must be clear and conspicuous; re- very fat, light-muscled hog might only yield 93 funds must be made to unsatisfied customers; lbs. of the same boneless products and lean orders must be shipped within 30 days; and ground pork. (Wulf, 1999) other advertising practices can not deceive or mislead consumers. For more information about FTC regulations, visit their Web site at . 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 on According 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 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 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 15.4 Total 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 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 cuts weight requires customers to inform the proces- about $2.60 to $3.50. sor about their specific cutting, wrapping, and curing preferences. Customers need to under- The Web publication Marketing Meat Animals stand that—depending on the type of hog, Directly to Consumers provides an excellent table whether 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 listing freezer-ready meat per pig could range from of possible retail cuts and weights for a pork 40% to 55% of the live-weight. Another way of carcass to estimate the total retail value of the explaining it to customers is that going from live hanging carcass. (Henning, 2003) Producers will hog to the hanging carcass, the carcass weight need to determine the weight of retail cuts and will be only about 70% to 75% of live weight, other products from their hogs, then calculate and going from hanging carcass to cut and the value of these individual products. They wrapped products ready for the freezer will must also determine how the carcass portions reduce 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 costs for processing, cutting, wrapping, and curing Some producers have created alternative pork are added to the price paid for the hog itself. products to help market the parts of the hog Hog-processing costs vary depending on the that are in less demand. These products include cutting, wrapping, and curing, but can be be- cottage bacon from the Boston butt or pork tween $75 and $150 per hog. The producer shoulder and “Pig wings made from the upper might 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 LLC cessor. This hauling charge could be a way of quote in Frozen Meat Marketing). By creating proving that the hog was the customer’s prop- these products, producers add significant value erty before it was processed. Producers need to to those parts of the carcass in less demand, and be sure to check their state’s regulations to be hope thereby to increase their customer base and certain 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 Marketing Setting 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 the live hog’s value, as well as the processing, wrap- • AMS National Carlot Pork Report at ping, curing, storage, transportation, labor, ad- ting your product to the consumer. Producers • ERS Monthly Average Retail Price Data need 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 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 at cost of production plus a reasonable profit—as another $100, curing another $50, with another $50 to cover other costs. So the producer needs at least $350 for the 100 to 135 pounds of pork

//PORK: MARKETING ALTERNATIVES PAGE 19 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)

©20042004clipart.com

PAGE 20 //PORK: MARKETING ALTERNATIVES need a select product cut into a precise portion Failure andoffered in volume. In spite of repeated attempts, we never sold one ounce of pork to a single institu- Be prepared for failure. No matter how well tion. This significantly hurt the potential sales you plan and execute your direct marketing ef- volume and in time was a key factor in our deci- forts, some will not succeed. On the Practical sion to stop direct marketing. Farmers of Iowa’s Web site, Tom Frantzen, or- All meat programs are complicated, and ours was ganic farmer and direct marketer, discusses the no exception. Our local sales were strong on closing of the small marketing cooperative called ground and packaged products like pork sausage Fresh Air Pork (from the acronym for Family and hot dogs. We had excellent bacon sales. How Raised Environmentally Sound Hogs). Fresh Air ever we could not sell enough items and Pork was developed to assist a small group of ham sales were so poor that we often had ham Iowa farmers in the production, marketing, and ground with the trim meat. Here we could not sell sale of alternatively produced hogs. The initial the high value pork and lost the margins that those activity of the cooperative was to coordinate the cuts produce. You can only sell so many $3.50-a- production and shipping of market hogs to the pound pork chops in Iowa. The supermarkets are Niman Ranch program. about a $1 a pound cheaper, and that is where most people go.

However, in 1999 Fresh Air Pork decided to Getting the best value from a hog carcass is a diffi- enter the direct marketing business, targeting cult task. Loins amount to 20% of the hog carcass. local sales to the public, to health food stores, Selling the loin is critical as there is little process- and to institutions. All Fresh Air Pork contin- ing in this item. However the cost of making ba- ued to meet the Niman Ranch program crite- con and sausage is considerable. The expense of ria, and the hogs were butchered and processed processing cuts into the profits quickly. When at several local state-inspected lockers. The hams are ground into processed products, they hurt marketing to health food stores was successful, profits from two directions. The ham is not sold as even though Fresh Air Pork could not afford to a high value item, and the amount of ham (a large portion of the carcass) that incurs processing ex- sell pork to the stores at wholesale prices. De- pense adds to the bills. Fresh Air put most of the spite the fact that they had to add their store hams into their “All Pork Weiners.” These pork margin on to the retail price, the health food hot dogs were a real treat, but we made very little stores sold the pork on a regular basis. The lo- money selling them for $2.75 a pound. Pork mar- cal grain elevator provided freezer space to pro- keting is complicated, and the ham market is espe- mote direct sales to consumers. As Tom cially competitive. I really wonder how other di- Frantzen says: rect marketers sell this item.

Local consumers liked our quality and selection. What lessons can be learned from this experience? We promoted the pork through advertising and Is there a place for direct marketing? I think so. But word of mouth. We had bus tours stop to check the both the location and the right kind of individual operation and make purchases. Several local busi- must be found. A large population area is a major nesses used our pork in their customer dinners. consideration. The marketers must accept the fact that it will take years to build the business volume In spite of these promotions and the significant that will return profits. This means that their ef- success of local sales, the Fresh Air direct pork mar- fort will have to be subsidized in the beginning keting will end on April 1, 2002. The sales volume (Frantzen, 2002). never reached a profitable level in three years. What went wrong? With so much done right, was there something out of place? Summary

I led the initiative to try to sell our pork to two tar- The failure of Fresh Air Pork is a lesson: Mar- geted institutions. We made “professional” ap- keting alternative pork at prices higher than proaches to the food service managers. We do- those of commodity priced pork will be a chal- nated and cooked meals for the advisory councils that advise the food service. We were well received, lenge and will require exceptional marketing and when the required product specifications were talent and perseverance. In addition, selling detailed we met them. For example, these services pork successfully in a niche market may require

//PORK: MARKETING ALTERNATIVES PAGE 21 access to large population centers with enough Anon. 2001. Direct marketing food requires potential customers to fill the niche. analysis, planning. Sustainable Agriculture. March. p. 3-4. Nonetheless, a sustainable hog production and marketing system should be the goal of many Bauer, Lisa. 1998. Sustainable swine produc- small-scale hog producers. Many consumers tion: Low-cost options. Small Farm Today. June. are interested in buying pork that is produced p. 38. by alternative, sustainable methods on small family farms. As Mark Honeyman, associate Callahan, Michelle. 2000. All natural pork pro- professor of animal science and coordinator of duction: Old methods produce new products. the Research and Demonstration Farms at Iowa American Small Farm. January. p. 44–45. State University, says, “Alternative systems are pig friendly, people friendly, community Dahlhoff, Amanda. 2002. Assessment of Mar- friendly, and environment friendly.” (Bauer, ket Alternatives for Minnesota Meat Export. 1998) Sustainable farming involves the whole Southwest State University, Marshall, Minne- farming environment, both production and sota. Project funded by Agricultural Utilization marketing, and can be an important part of the Research Institute. December 2. 28 p. local community. http://www.auri.org/research/meatexport/ pdfs/meatexport.pdf Direct marketing and niche markets are just two alternative marketing options that can be con- Daykin, Tom. 2001. Beefing up sales. Milwau- sidered by all sustainable hog producers. If you kee Journal Sentinel. October 13. care enough about the way you raise your hogs, http://www.jsonline.com/bym/news/oct01/ if you do it in a humane system, you can be re- graze14101301a.asp warded both financially and emotionally. Even if you don’t want to market through farmers’ Evans, Lawrence E., Jr. 1997. Have you ne- markets, farm meat stores, or other direct mar- glected corporate(tm) trademarks(r)? Small keting means, there are now some alternative Farm Today. February. p. 40-41. marketing groups, such as Niman Ranch Pork Company and Organic Valley Family of Farms. Frantzen, Tom. 2002. Direct marketing pork— More of these marketing groups have formed A report from the field. 3 p. recently, and one may be near you. http://www.pfi.iastate.edu/Local_Food_Syst/ Fresh_Air_Pork_Frantzen.htm

References Henning, William R. 2003. Marketing Meat Animals Directly to Consumers. Cooperative Extension in Bedford County, PA. 12 p. Aitchison, Angela. 1999. The organic meat http://bedford.extension.psu.edu/Agricul- myth revealed. 1998 Meat New Zealand—Link ture/Lessons/market%20meat%20animals.htm Foundation Fellow. June. 22 p. http://www.dpi.qld.gov.au/extra/pdf/ Kirsch, Ray. 2000. It’s fresh, but is organicmeatmyth.pdf it sustainable? The Land Stewardship Letter. April/May/June. Anon. 1993. Real meat...From real farmers. http://www.landstewardshipproject.org/lsl/ Wisconsin Rural Development Center. May- lspv18n2.html#COMMENTARY June. p. 4. Klober, Kelly. 1998. Approaches to market- Anon. 2000. Food safety and quality as affected ing—Notes from a direct sales survivor. Small by organic farming. Twenty-Second FAO Re- Farms Today. October-November. p. 48-51. gional Conferences for Europe proceedings. Porto, Portugal, July 24–28. 14 p. Klober, Kelly. 2000. Hogs in the new millen- http://www.fao.org/docrep/meeting/ nium. Small Farm Today. May. p. 21-22. x4983e.htm

PAGE 22 //PORK: MARKETING ALTERNATIVES Klober, Kelly. 2001. Promoting value-added Wulf, Duane M. 1999. Did the Locker Plant pork. Acres U.S.A. October. p. 14. Steal Some of My Meat? Current Research Ar- ticles, South Dakota State University, Meat Sci- Larson, E. Anne. 1999. Earth-friendly pork: A ence Extension and Research. 4 p. niche market waiting to happen. Leopold Let- http://ars.sdstate.edu/MeatSci/May99-1.htm ter. Spring. p. 10. Looker, Dan. 2003. Expert pins blame for Further Resources concentration on retailers. Successful Farm- ing. February 5. 3 p. http://www.agriculture.com/default.sph/ Web Sites AgNews.class?FNC=DetailNews__Asearch_listAg News_html___49330 Agricultural Marketing Resource Center http://www.agmrc.org/pork/pork.html Martin, Wayne. 2001. Goals influence direct marketing. 4 p. Marketing Web site links to hundreds of re- http://www.misa.umn.edu/programs/ sources on direct marketing, natural, niche/eth- altswine/directmarketing.html nic, organic, processing, etc. for pork.

Nation, Allan. 1999. Allan’s observations. The Practical Farmers of Iowa Pork Niche Market Stockman Grass Farmer. May. p. 13. Working Group http://www.agmrc.org/pork/pnmwg.html National Pork Board. 2003. Pork Facts 2002/ 2003. 34 p. Supports the development of niche markets for http://www.porkboard.org/docs/2002- pork. Has on-line newsletters, news releases, 3%20PORK%20FACTS%20BK.pdf contact information, and project descriptions. Can also contact: Salatin, Joel. 1992. Relationship marketing: Five advantages—consumer education and loyalty, Gary Huber, PNMWG Coordinator product quality, lifestyle, sales balance. The Box 349 Stockman Grass Farmer. September. p. 19, 22- Ames, IA 50010 23. 515-232–5661, ext. 103 [email protected] Salatin, Joel. 1994. Sales can fail. The Stock- man Grass Farmer. June. p. 31 USDA’s Farmer Direct Marketing http://www.ams.usda.gov/directmarketing/ Salatin, Joel. 1995. Developing a clientele. The Stockman Grass Farmer. November. p. 7-8, 11. Provides on-line National Farmers’ Market Di- rectory, on-line listing of Direct Marketing Re- Schafer, Paula J. 2001. Successful direct mar- sources by state, and many links to general di- keting of livestock. 4 p. rect marketing publications and other USDA http://www.cce.cornell.edu/washington/ programs related to direct marketing. aedp/articles/marklivestock.html Books Silverman, Aaron. 2003. Selling meat at mar- ket. Growing for Market. April. p. 1, 4-6. Farm Fresh Direct Marketing Meat & Milk. 2002. By Allan Nation. 251 p. Slattery, Patrick. 1999. Farm-direct catering & direct-marketed packaged meat...Making natu- $30 plus shipping and handling. Contains in- ral meat pay. Acres U.S.A. April. p. 20. formation on preparing business and market- ing plans, naming products, setting prices, and finding and keeping customers.

//PORK: MARKETING ALTERNATIVES PAGE 23 Order from: University of Minnesota St. Paul, MN 55108-6068 Stockman Grass Farmer 800-876–8636, 612-624–4900 P.O. Box 2300 http://www.extension.umn.edu/distribu Ridgeland, MS 39158-2300 tion/businessmanagement/DF7539.html 800-748–9808 601-853–8087 FAX Front End Guidance for Value-Added Net- http://www.stockmangrassfarmer.com/ works—Marketing Pork to the Mexican Con- sgf/bookshelf.html sumer in the United States. 1997. National Pork Board. #04322. 82 p. The Legal Guide for Direct Farm Marketing. 1999. By Neil D. Hamilton. 240 p. Explains how value-added market development and implementation might be investigated, and $20 plus $3 shipping. Contains some informa- can guide the development of a business and tion specifically on farm marketing meat. marketing plan to assess the viability of an in- vestment. Can be ordered from National Pork Order from: Board and is available on-line at . Agricultural Law Center 2507 University Avenue Guide to Latino Pork Cuts. 1998. National Pork Des Moines, IA 50311-4505 Board. #04409. 56 p. 515-271-2947 Shows pork carcass fabrication, Latino style, in- In the Eyes of the Law: Legal Issues Associ- cluding retail cut pictures, cutting procedures, ated with Direct Farm Marketing. 2002. By cooking methods, yields, and relative pricing. Richard F. Prim and Daarin K. Foede. 27 p. Can be ordered from National Pork Board and is available on-line at .

Order from: Order from:

University of Minnesota Extension National Pork Board Service Distribution Center Attn: Order Department 405 Coffey Hall P.O. Box 9114 1420 Eckles Avenue Des Moines, IA 50306 Saint Paul, MN 55108-6068 515-223–2600, ext. 621 800-876–8636, 612-624–4900 515-223–2646 FAX http://www.extension.umn.edu/distri http://www.porkboard.org/Home/ bution/resourcesandtourism/DB7683.html default.asp

Collaborative Marketing, A Roadmap & Re- Cost: $10.00 each for producers or $15.00 source Guide for Farmers. 2000. By R. King. each for nonproducers

$4.75 plus $2 shipping. Presents alternative Building a Sustainable Business—A Guide to ways to market and form marketing networks. Developing a Business Plan for Farms and Rural Businesses. Minnesota Institute for Sus- Order from: tainable Agriculture. 280 p.

Extension Distribution Center 405 Coffey Hall 1420 Eckles Avenue

PAGE 24 //PORK: MARKETING ALTERNATIVES Will help develop a detailed business plan and Natural Nutrition for Dogs and Cats, The ways to take advantages of any new marketing Ultimate Pet Diet. 1999. By Kymythy R. opportunities. It is available on-line at . $8.95. Discusses the BARF (Bones And Raw Food) diet for dogs and cats. Order from: On-line Publications and Articles Minnesota Institute for Sustainable Agriculture Adding Value to Pork Production: A Business St. Paul, MN 55108 Start-up Manual to Move You Up the Chain 800-909–MISA (6472) Iowa State University Center for Industrial Re- [email protected]. search and Service http://www.ciras.iastate.edu/porkmanual/ Cost is $14.00 + $3.95 shipping and han- dling On-line manual

Making It on the Farm: Increasing Farmers’ Markets Rules, Regulations and Sustainability through Value-added Process- Opportunities ing and Marketing. 1996. Southern Sustain- Drake University Law School able Agriculture Working Group (SSAWG). http://www.law.drake.edu/centers/ aglawcenter/farmersmarkets.pdf $10.00, includes shipping and handling. Tells the stories of 12 farmers involved in value-added 49-page publication marketing. One of these is Clarence Durham, a hog farmer in Pittsboro, North Carolina, who Consumer Preferences, Premiums, and the three or four hogs a month for sale Market for Natural and Organic Pork: by the pound to individuals, and sells sausage Locating a Niche for Small-scale Producers in 5-pound bulk packages. Durham says, “We University of Minnesota Alternative Swine Pro- could probably sell a lot more sausage and bar- duction Systems Program becue—probably two hogs a week of each,” but http://www.misa.umn.edu/programs/ it is a lot of work and he and his wife are sup- altswine/litreview.html posedly retired. The book has information about Durham’s operation, information about the 10 Publication keys to success that emerged from these in- terviews, and a listing of resources for add- Goals Influence Direct Marketing ing value to farm products. University of Minnesota Alternative Swine Pro- duction Systems Program Order from: http://www.misa.umn.edu/programs/ altswine/directmarketing.html Julia Sampson SSAWG Publications Publication 210 W. South Street, #6 Fayetteville, AR 72701 or contact: 479-582–2858 Wayne Martin, Coordinator The following book is available from bookstores Alternative Swine Production Systems and on-line booksellers. If a book is listed as Program out-of-print, you may be able to obtain it 385 Animal Science Building, 1988 through Interlibrary Loan; check with your lo- Fitch Avenue cal librarian. You may also be able to buy a St. Paul, MN 55108 copy through an on-line used-book search site, 612-625–6224 such as . 612-625–1210 FAX [email protected]

//PORK: MARKETING ALTERNATIVES PAGE 25 How to Direct-Market Farm Products on the Patchwork Takes Pork to the People and Gives Internet Firm Market to the Farmers USDA Agricultural Marketing Service The New Farm from Rodale Institute http://www.ams.usda.gov/tmd/MSB/ http://www.newfarm.org/depts/pig_page/ PDFpubList/InternetMarketing.pdf patchwork_farms/index.shtml

50-page publication Article

Small Farm Cooperative: Quality and Innova- Direct Marketing Well-raised Hogs Takes tion Special Finesse: Fair Partnering with Market- North Central Initiative for Small Farm Profit- ers Would Allow Farmers to Farm ability The New Farm from Rodale Institute http://www.farmprofitability.org/research/ http://www.newfarm.org/features/0902/ smallfarm/smallfarm.pdf iowa_letter/index.shtml

Case study Article

Attracting Consumers with Locally Grown A Pig’s Tale: Marketing Stories for New Value Products Chains from “Niche and Value Added Mar- North Central Initiative for Small Farm Profit- keting: What’s in it for you?” 2001 Conference ability Leopold Center for Sustainable http://www.farmprofitability.org/local.pdf http://www.leopold.iastate.edu/pubs/ speech/files/091801_p.pdf Publication, a study of consumer attributes and purchasing patterns in four Midwestern states. Keynote address

Family Farms and Ranches Can Benefit from Pasture Raised Products Messages and Niche Markets Strategy Center for Rural Affairs Food Routes and Midwest Collaborators http://www.cfra.org/newsletter/ http://www.foodroutes.org/doclib/167/ 2003_03.htm#Feature Pasture+Raised+FRN+project+Final+report.doc

Article Consumer focus group study

Direct Marketing Pork – A Report from the Comparing Swine Niche Market Opportuni- Field ties Practical Farmers of Iowa Iowa State University Iowa Pork Industry http://www.pfi.iastate.edu/Local_Food_Syst/ Center Fresh_Air_Pork_Frantzen.htm http://www.extension.iastate.edu/ipic/infor- mation/IowaPorkNiche.pdf Article 2001 on-line publication Pennsylvania Farmers Consider New System for Happy Hogs Market, To Market, To Sell a Fat Hen: How The New Farm from Rodale Institute to Grow Your Business from Idea to Success- http://www.newfarm.org/depts/pig_page/ ful Company pig_alliance/index.shtml Iowa State University Geography of Rural Fi- nancial Intermediation Article http://www.wallacefdn.org/ chickenandtheegg1.pdf

On-line publication

PAGE 26 //PORK: MARKETING ALTERNATIVES Case Studies of Value Added Production & Order from: Marketing National Pork Board National Pork Board http://www.mnpork.com/producer/re- Attn: Order Department search/valueadd.pdf P.O. Box 9114 Des Moines, IA 50306 1999 on-line publication 515-223–2600, ext. 621 515-223–2646 FAX Ethnic Marketing of Pork http://www.porkboard.org/Home/ National Pork Board default.asp http://www.meatscience.org/Pubs/ factsheets/q-ethnicmktng.pdf

2000 on-line publication Pork: Marketing Alternatives By Lance Gegner Videos NCAT Agriculture Specialist April 2004 Pork, The Other Producers: A Better Way to ©2004 National Center for Raise Hogs is a 41-minute video examining the Appropriate Technology changes in hog production and what they mean IP 153 for family farmers and rural communities. Pro- Slot 100 duction systems requiring lower amounts of capital—especially important for beginning farmers—are presented as alternatives to the large-scale, corporate structure of production. The electronic version of Pork: Marketing 1998. #V3. Cost $10.00. Alternatives is located at: HTML Order from: http://www.attra.ncat.org/attra-pub/altpork.html PDF Center for Rural Affairs http://www.attra.ncat.org/attra-pub/PDF/ 101 S. Tallman Street altpork.pdf P.O. Box 406 Walthill, NE 68067 402-846-5428 402-846-5420 FAX [email protected] http://www.cfra.org

Latino Meat Cutting Video shows meat cut- ters preparing retail cuts to Latino market speci- fications. Both carcass and boxed fabrication is shown. #08072. Cost is $10.00 for producers or $15.00 for nonproducers.

//PORK: MARKETING ALTERNATIVES PAGE 27