Grass-Roots Marketing: the Wisconsin. Grass-fed Beef Cooperative. Laura Paine.
Grazing & Organic Agriculture Specialist. Division of Agricultural Development.
Grass-Roots Marketing: the Wisconsin Grass-fed Beef Cooperative Laura Paine Grazing & Organic Agriculture Specialist Division of Agricultural Development 608-224-5120
[email protected]
National Small Farm Conference, September 15-16, 2009
WI DATCP
Grass-based farming Initiatives Grass-fed meat and dairy supply chain
• For most farmers, the middle part of the supply chain is a big unknown. • Few farmers have the capacity, time, or interest in direct marketing. • Program goals: – Create structures whereby they can pool resources to access premium markets. – Market development and a premium for grass-fed milk and meat.
• Why Pasture? Why Marketing? – >14,000 beef farms in Wisconsin – Average herd size ~25 cows – Pasturing is a low cost production system that is well suited to small scale farms. – Aggregating animals from many small farms allows producers to access premium markets.
USDA Grassfed Standard • Established October 10, 2007 • Grass (Forage) Fed—Grass and forage shall be the feed source consumed for the lifetime of the ruminant animal, with the exception of milk consumed prior to weaning. The diet shall be derived solely from forage consisting of grass (annual and perennial), forbs (e.g., legumes, Brassica), browse, or cereal grain crops in the vegetative (pre-grain) state. Animals cannot be fed grain or grain byproducts and must have continuous access to pasture during the growing season.
Raising Grass-fed Beef • The right genetics – Smaller framed animals – British breeds – Grass finishing genetics
• High quality forage – – – –
Keep pasture vegetative Maintain legumes in pasture Use leader-follower system Consider annuals for late summer
• Winter management – Wean later (up to 10 months) – Supplement with molasses if/when needed – Feed high quality hay or haylage
• Maintain 1.5 lb/day gain or above • Use low stress animal handling methods • Invest in a scale
Timeline and participant numbers Winter 2006
Mailing list of 150
Spring 2007
First organizational meetings
Fall 2007
Select business development strategy Preliminary protocol development Pre-feasibility study
Winter 2008
Market research Buy Local grant application
Summer 2008
Finalize protocol Articles of Incorporation Membership drive Received Buy Local grant
Fall 2008
Brand development Hire sales manager
Winter 2008/09
Identify animals for shipment Establish relationships with processors Identify customers
January 2009
Sell first beef
Summer 2009
44 members, selling 8 head/mo. 0
50
100
150
200
Business Models • Standard recommendation – Formal feasibility study – Equity drive – Dream team of expertise – Large financial investment – ‘Go/No Go’ approach
• Do-it-yourself – Stepwise process – Use member expertise, time, energy – Smaller investment – ‘Forks in the road’ approach
Changing Mindsets • Embracing cooperation – Small business people and independence – Open communication – Reinforcing consensus building – Focusing on what’s really important
Identifying a market niche • No consumer survey data on ‘grassfed beef’ • Growing demand for lean, healthy, high-quality cuts of beef – Natural/organic share of beef sales trending upward • Retail value of $59 mil in 2005 • Beef & poultry sales rose to $220.7 mil in 2005 – Up 300% from 2003 • Sales of high-quality cuts now maintaining beef’s market share in red meat category
• Interest in local foods – Ohio: 51% attracted to “Ohio Born and Raised” • Supporting local farms (63%) • Fresh/high quality (25%)
How big is the market? • No ‘grass-fed buyer’ profile available – Organic/natural/local food buyers? • Motivated by health concerns • Motivated by environmental concerns
– Specialty/Artisan shoppers • Flavor and quality important • Uniqueness, story behind the product
• Promising demographics: – More affluent, well-educated consumers – Health conscious – “Boomers”
Population of Target Geographical Location Total Mean Households Population Population Population Household w/ Annual Age 65 or with a B.A. Income Income of Older or Higher $75,000 or More Chicago
2,749,283
$62,867
270,234 (26.61%)
10.3%
25.5%
Milwaukee
563,079
$43,740
34,168 (14.96%)
9.4%
19.7
Minneapolis
369,051
$62,679
155,646 (26.94%)
8.2%
40.4
Total Population: 3,681,413
(U.S. Census Bureau 2006)
Market Research
Changing Mindsets • Producer vs. marketer (protocols) – What does the consumer want? – What works best for me? Final Protocol: • Market animals will be born and raised in Wisconsin. • Market animals will be raised and finished on pasture and forages with no grain. • A minimum of 30% of total annual dry matter intake from pasture and a minimum of 150 days on pasture. • No antibiotic or growth hormone use is allowed for slaughter animals. • Small to moderate framed animals are highly recommended. • Humane Animal Handling
3A
1A
Brand Development
3B
1B
• Our Cooperative focuses our production, processing, and marketing on: – – – –
Quality, taste and tenderness Product consistency Age and Source Verification Food safety: protocols for hormone and antibiotic use, high processing standards – Environmental Stewardship – Health benefits (CLA, Omega 3, leanness, etc.)
2A
2B
First Beef Sales: January, 2009
• Currently processing 8-10 head/month • Buyers include – Harvest Restaurant in Madison – Outpost Natural Foods – Comet Café in Milwaukee – Milwaukee RSA – LaCrosse Food Coop – Viroqua Food Coop – Basics Coop in Janesville
Successes & Challenges •
Successes –
•
Finding buyers has not been a problem. Starting with the initial buyer lists they generated for their market research, nearly every buyer that the Coop has approached has been interested and has become a customer.
And Challenges –
Cash flow—the coop’s financial projections show profitability and positive cash flow at a level of 1215 steers slaughtered per month. They’re not there yet.
•
Successes –
•
Generally, buyers have been very happy with the product. The Coop has set up a good system to enable fairly consistent quality meat in spite of a variety of breeds and management systems.
And Challenges –
Carcass utilization. High value cuts make up under 20% of a carcass and finding outlets for lower value cuts can sometimes be a challenge. Carrying inventory is costly.
•
Successes –
•
By working with two processors that offer different benefits, the coop has optimized processing costs for the wide variety of custom cuts they offer.
And Challenges –
Logistics. Working with 40 producers across the state, two processors, and buyers scattered across southern Wisconsin presents a logistical challenge. They are still working the bugs out.
Wisconsin Grass-Fed Beef Cooperative Member Farms 44 member-owners as of 9/1/09 1
Coop members Buyers Processors
Successes & Challenges •Coordinating production and demand. •Cattle are raised in cycles with most calving occurring in spring, or to a lesser extent in fall. •This is a problem that is shared throughout the beef industry, however, and the Coop’s size makes them better able to provide a consistent supply throughout the year.
Successes and Challenges: Tapping Member Expertise • Having sales staff with extensive background in sales and logistics (who happen to also be beef producers) has gotten the coop off to a great start with a very professional, but authentic, member sales team. • Team also includes – – – – –
Business management skills Graphic arts Direct marketing Grant writing expertise Administrative skills
The journey from pasture to plate has just begun, but we’ve made a good start
