Grass-Roots Marketing: the Wisconsin Grass-fed Beef Cooperative

Transcription

1 Grass-Roots Marketing: the Wisconsin Grass-fed Beef Cooperative Laura Paine Grazing & Organic Agriculture Specialist Division of Agricultural Development National Small Farm Conference, September 15-16, 2009

2 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.

3 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.

4 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.

5 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

6 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 members, selling 8 head/mo

7 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

8 Changing Mindsets Embracing cooperation Small business people and independence Open communication Reinforcing consensus building Focusing on what s really important

9 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%)

10 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

11 Population of Target Geographical Location Total Population Mean Household Income Households w/ Annual Income of $75,000 or More Chicago 2,749,283 $62, ,234 (26.61%) Milwaukee 563,079 $43,740 34,168 (14.96%) Minneapolis 369,051 $62, ,646 (26.94%) Population Age 65 or Older Population with a B.A. or Higher 10.3% 25.5% 9.4% % 40.4 Total Population: 3,681,413 (U.S. Census Bureau 2006)

12 Market Research

13 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

14 1A 3A 1B Brand Development 3B 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

15 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

16 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 steers slaughtered per month. They re not there yet.

17 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.

18 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.

19 1 Wisconsin Grass-Fed Beef Cooperative Member Farms 44 member-owners as of 9/1/09 Coop members Buyers Processors

20 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.

21 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

22 The journey from pasture to plate has just begun, but we ve made a good start