Belted Galloways

The Family Farm Favorite

           Marketing 101

Sooner or later every Belted Galloway breeder will probably have something to sell which leads to a discussion of marketing.  Although some consider marketing a dirty word, it is simply the process of a willing seller, educating the public about what it is he/she has to sell. 

The financial risks of raising Belties are not insignificant.  Although most of the Beltie breeders we know do not depend upon their farms as their primary source of income, to be sustainable a farm must be economically sustainable and selling Belties or their beef requires paying some attention to markeing.  It is a good idea to determine that marketing channel before starting any beef operation, whether grass-fed or conventionally managed. 

According to Jay Nixon, in Cowboy Marketing, most calf producers are losing $50-100 per head because they are not being active enough in their marketing efforts and not focusing their production on the quality preferences of the market.  As Robert Kiyosaki wrote in Rich Dad, Poor Dad, "In cash flow what really matters is which way the cash is flowing."  Although Beltie breeders often wish to ignore the topic, how you select and market your cull animals is an income decision of major proportions

Beltie are not sale barn animals.  Of course you can sell them there, but usually they are discounted significantly and many sale barn sellers are disappointed by their return.  Management is the most significant profit-determining factor, and in grassland farming, three resources must be managed:  Livestock, grass and cash.  Making a business plan can be an important part of the planing because it will make you aware of the strengths and weaknesses of your ideas.

Several traits are important to be successful in managing a small farm business:

Entrepreneurial Traits:

• Passion and persistence
• Good health and energy
• Creativity and innovaion
• Independence and self-reliance
• Intuition and self-confidence
• Market awareness
• Lack of need for status
• Ability to accept challenges
• Hard work ethic

These characteristics are apparent in many of the people who buy our cattle.  They have already been successful in other areas of their life and they are bringing the same energy to their farms.  The fact that you're reading this suggests that you posess them too.

Personal Considerations:

• Can you work 6 days a week, 12 hours per day, especially if you have an off-the-farm job?
• Are you prepared to lose some of your savings?
• Are you willing to take more risk to make more money
• Are you willing to borrow money to finance?

Family Considerations:

• Where do family obligations rank on the list of your priorities?
• Will your family tolerate your working the extra hours?
• Is your family on-board with you plan?
• Will family relations become strained if there isn't enough money?

Marketing involves four different aspects:

0. Product:  What product(s) do you wish to focus on and how does your product to compare to others in terms of price, quality and availability.  Can you sell it as well as you can raise it?  Are there liability issues attached to making, producing or selling it?  Will you develop a "product line," a group of similar products which build on the same strengths, to help you attract a wider audience?  Can you differentiate your product from others so as to increase product demand?  Are there any value-added strategies you might consider?
0. Price:  Can you price your product high enough to be profitable but low enough to attract attention?  Pricing is an art.  Your pricing should reflect your psoition in the market.  The biggest mistake beginners make is to assume that lower prices are better prices; newest competitors do not necessarily have to have the lowest prices and once set very low, they can be difficult to raise.
0. Promotion:  How will you promote your product.  If you choose to eliminate the middleman, you must become the middleman because the functions do not disappear.  Not everyone enjoys this essential aspect of selling, and if you're one of those people you may want to consider some of the options mentioned below.
0. Placement:  How will you distribute your product?  Will you sell all of your sirloin and end up with a freezer full of unsold hamburger.

You must find a way to reach your potential customer to tell them what you have.  Advertising is prohibitive for most small operations, but at least a small percentage of your budget should be targeted for pormotion.  To be effective it is best to "segment" your potential market, i.e. groups of customers with unique and definable characteristics who have similar but unmet needs.  Then you target your promotion to those potential customers.  Who are they?  What is the competition?  What is your trade area?  What is the potential market size?  What is your potential to produce the product?

Here are some facts we used to determine our potential market for grass-finished beef in Central Iowa:

0. 53% of Iowans eat meat 6-7 days per weak and 42% eat meat daility
0. 66% of Iowans have purchased from a local producer and an additional 25% would purchase if it were more convenient
0. Of all meat eaten, 42.8% is beef.
0. Of those who purchaed meat directly, 81% did so at a farmers' market.
0. Average annual consumption of beef in the U. S. is 62 lbs.  With a total population of about 450,000 in the Des Moines area, that is about 28,000,000 lbs of beef or about 47,000 cattle.
0. We profiled what we thought would be our potential customer:  About 200,000 people in Des Moines make more than $45,000 per year and there are about 100,000people in the age group of 45-65; over half of these would have some college education and about 30% will have a bachelor's degree or higher.
0. If a 1% of that market converted to grass-finished beef it would be about 470 steers. 

A survey of beef customers in Iowa, Nebraska, Wisconsin and Minnesota found the following:

0. The majority didn't consider organic essential
0. Many see organic as beyond their price range
0. The customers primary concerns are: Convenience, health, taste and price.

We determined that there would be several avenues for our sales:

0. Internet
0. Individual sales
0. Retail sales
0. Farmers' markets

Customers of the 21st century have grown up with the Internet.  They are used to having conversations about everything, including food and they increasingly want relationships as a part of their purchasing experience.  Anyone who does not provide an opportunity for customers to have a conversation about what they are selling, will simply not be in the market very long.  This is called "relationship" marketing, and all promotional materials should take this into consideration.

Direct marketing requires that the seller be capable of a customer service attitude, one of deference and responsiveness.  If you believe that service to others is a noble calling, direct marketing may be most appropriate for you.  Marketing skills can be learned;  however, if service to others is not your game, then other marketing strategies exist for those who do not wish to get as directly involved in sales as described previoiusly.

Alliances and Co-operatives:

The independent, small producer is at a disadvantage.  The optimum lot size for feeder cattle is 50-55 head for sale barns and much larger for video auctions.  Uniformity of sex and weight is important in getting the best prices for a lot.  A good potential exists for Belted Galloway breeders to develop alliances among the producers, providing the producers have similar goals and can add value to beef and increase their marketing leverage.  This may represent a rather large, untapped market for the small Beltie herds which are typical.  The following is a list of criteria used by one such alliance:

0. All animals must have a unique identification tag at or prior to weaning so that the age and producer can be identified.
0. Calves must remain on their mothers for a minimum of 90 days with 6-10 months being preferred.
0. After weaning the calves diet must consist of only forage or stored forage.
0. Prohibited: Grains, corn silage, genetically modified organisms, animal and fish by-products, antibiotics, supplemental hormones and feed additives.
0. Synthetic herbicides on pastures are prohibited.
0. All veterinary treatments must be recorded.
0. Animals must be humanely handled.
0. Heifers 16-30 months of age with carcass eights of 550-800 lbs or steers 16-30 months of age with a carcass weight of 550-800 lbs.
0. Ultrasound tenderness score and measure of back fat.
0. Each animal must have an average daily gain of 1.25 lbs in every weighing period, weighed every 90-120 days.

The above list is not meant to be exhaustive or definitive; it is presented as a template for modeling a co-operative.  As long as the demand for grass-fed beef exceeds the availability, this alternative could be a way to collectively market advantageously.

Contacting Malabar Farm and Blossom Ridge Farm

Address:  Loren A. Olson, M. D., and Doug Mortimer
               3032 Settlers' Trail
               St. Charles, IA 50240-8564

E-mail:     Loren@BeltieFarms.com   or   Doug@BeltieFarms.com