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Learn the benefits and drawbacks of direct market meat sales, including pricing examples and tips for finding and retaining clients. Compare methods such as selling at auction, directly to packers, or marketing to consumers.
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Why Direct Market Meat Keith Vander VeldeUW Extension Livestock Specialist Marquette County February 25, 2010---Mauston
Why Direct Market Meat • Options: • Sell at Auction • Direct to Packer • Market To Consumer
Why Direct Market Meat • Sell at Auction: • Advantage: Disadvantage • Paid day of auction Price Set by Buyers • Sell on live weight basis Yardage and Sales Cost • Little time in transaction No buyer loyalty Today's Prices:1,200 lb steer @$0.92 cents per lb. $1,l04 -$25(sales expense)= $1,079
Why Direct Market Meat • Selling Direct to Packer(Selling on the Grid) • Advantage: • Price is usually based on carcass weight • Price is usually based on set price for each carcass grade • Can build packer relationships with high grading cattle • Premiums paid for high choice and prime cattle • Premiums paid for yield grade 1&2 cattle Disadvantage: • Poor grading cattle sell at discount • Discounts on yield grade 4’s and 5’s • Payment usually 3 days from delivery day • 1,200 lbs live @ 62 dressing %=744 lbs x $1.49=$1,108
Why Direct Market Meat Selling Direct to Consumer Advantages: • You set the price (Market plus) • Method to capture special production methods • Organic • Natural • Hormone Free • Anti-biotic Free • Home raised source identified
Why Direct Market Meat Selling Direct to Consumer Disadvantages: • You Must Sell the entire animal as meat • Few clients want the whole animal • Must sell as halves, quarter, bundles • A steer is not all “Steak” • Must schedule with local processor for harvest date • You are responsible for collecting from clients • If Dissatisfied with product client may want refund • Unhappy can disrupt future sales 744 carcass weight @ $.175=$1,302
Why Direct Market Lets Compare: Auction= $1,079 Grid= $1,108 Direct Market: $1,302 a $200-$223 Premium
Why Direct MarketPricing Example Steer: 1,200 pounds live weight • Yield at 62% provides 744 lbs of carcass • Yield will range from 56-65% Dressing Percent • Higher for Beef Breeds • Lower for Dairy and Dairy Crosses • Fatter Cattle have higher dressing % Pig: 250 pounds live weight • Yield at 70% provides 175 pounds of carcass • Yield will range from 65-75% Dressing Percent Sheep: 140 pounds live weight • Yield at 50% provides 70 lbs of carcass • Yield will range from 45-55% Dressing Percent
Why Direct MarketDetermining a Price Beef: • 744 lbs of Carcass at $1.75 (a $.25 premium) • Processing $275 • $1,302 =(744 x $1.75) + $275 ==$1,577 • 474 lbs of saleable meat • Price per pound received by client=$3.33
Why Direct MarketDetermining a Price Beef: • $3.33 per lb for the entire combination • Cheap for Steaks • High for Hamburger • Price Sensitive Buyers are not your Clients
Why Direct MarketFinding Clients Most Likely Buyers Are: • Wanting Source Identified Meat • Health Considerations Important • Organic or Natural • High Quality • Consistency • Accept Variety of Cuts • Lean Ground Product • Have Freezers
Why Direct MarketFinding Clients How to Market in Direct Selling: Best Method- • Hanging Carcass Weight paid to you • Work with Processor to Collect for Processing • Sell halves or quarters • Avoid individual wholesale cuts • Consider Marketing unsold portions to processor if they have retail outlet for product
Why Direct MarketKeeping Clients Client Retention and Promotion • Satisfied Customers Come Back • Satisfied Customers Tell Friends • Know Your Clients Family Size-Estimate Their Time to Consume Your Meat- • Do a Follow-up phone call one month after the client picks up the meat-learn about their satisfaction level
Why Direct MarketKeeping Clients Client Retention and Promotion • Dissatisfied Customers Are Hard to Get Back • Dissatisfied Customers Tell Everyone • Without Follow-up With Clients They Feel You Are Not Interested in how they feel about the meat- • Consider some method to win customers back (ie Refund, Discounts)
Have Time to Market Start Small Develop a Market Have Good Product Make Product Special Take Some Risks Place Premiums on Product Why Direct Market