AgriVision Episode 31 – Direct marketing beef can add value to farm operation

Katie Wantoch 

This is UW Extension’s Farm Management AgriVision Podcast. I am Katie Wantoch Agriculture Agent with UW-Madison Division of Extension. I will be chatting with fellow Extension Educators as we answer questions from farmers and share our knowledge and expertise on how you can improve your farm management skills. Today I am joined by Lyssa Seefeldt, Agriculture Extension educator in Eau Claire County. Welcome Lyssa to the podcast.

Lyssa Seefeldt 

Yeah, thanks for having me, Katie.

Katie Wantoch 

Lyssa, a farmer and his brother asked this question. They milk 180 Holstein cows. For the past six years, they have been using sexed beef bull semen on the bottom half of their herd to get beef bull calves to raise. They are thinking about expanding their direct market business to 45 to 48 steers each year, the farmer’s wife would like to quit her job at an insurance office and handle this, which would free up the farmer and his brothers time to do more on the farm. The wife wants to advertise on social media and create a website. They are wondering what the downside of expanding their direct market beef business would be.

Lyssa Seefeldt 

Right. When you’re selling to a direct market, it really allows you to control your prices that you’re getting for those animals that you’re selling. Or if you’re selling halves and quarters, what you’re getting in for those halves and quarters. And the flip side with that, we also need to know what our cost of production is. So that when we’re setting that price, we’re not undervaluing our effort, and things like our labor, because that’s often something that we see happening with direct marketing, when we’re just talking about selling to friends and family. And when selling to friends and family. Usually, we’re okay with maybe undervaluing our labor a little bit. But when it starts to get to the point where we’re selling animals out to the public that we don’t know. And that if something doesn’t go quite right with the meat pickup, if there’s just something that ends up being tough, for some reason, whatever, and you start to get the questions from those outside consumers that don’t have a direct tie to you, other than you are the selling point. For that piece of meat, we get more management issues, if we will. And so we really need to make sure that we’re accounting for some of that extra time, that’s going to go into the management part of that. And that’s something that does get missed some times. So we do need to make sure that we understand what our cost of production just to feed those animals are, but also including our labor and our time, for marketing and some of those things. And it’s great to hear that the wife wants to be getting out there on social media and creating a website. You know, as we’ve went through lots of changes last several years, we know that there’s been some shifts in the trends of how people are using social media. And there’s actually been some trends for some folks to be moving away from social media. So that really does mean that if we’re trying to truly market to the public that we do actually, indeed need to create a website so that if we have folks that are trying to find our business, and they’re not on social media, they can still find us if they’re doing a Google search, that’s actually really important.

Katie Wantoch 

Right? It definitely. And maybe the wife has this background already. And she knows about all the tools to reach out to consumers outside of family and friends that they, this farmer and brother know. But if she doesn’t, I’m sure there are advertising and marketing people out there, local businesses in their area that I’m sure will be able to assist them. So they don’t always need to know everything. But they need to be able to have the customers be able to answer questions in a timely manner. And like you said, that part of it can be time consuming.

Lyssa Seefeldt 

Right, right. And you bring up a good point that if we don’t have those skills to do social media and website ourselves, they absolutely can be farmed out. But then we also need to make sure that we’re accounting for that cost when we’re talking about, you know, getting our product marketed out to the public, because, again, there’s a cost associated with that, because they are providing a service. And we need to be building that into our plan of how we’re going to be recouping that.

Katie Wantoch 

Right? And you need to be friendly, and outgoing to reach out to consumers. I mean, that’s just part of this direct marketing. Sometimes people in have information and they know what they want. And a lot of times they do not. But you also want to be making sure that you’re reaching out to your local processing facility to make sure that you can match the increased number of steers that you’re planning. What else should they think about when reaching out to their local butcher, Lyssa?

Lyssa Seefeldt 

Right and that’s a great point that butchers don’t always have that space if you’re planning on doing an increase. So it is important to have clear communication before you start that endeavor. That’s a really key thing. The other thing that we need to be thinking about is that as we get more and more of a customer base, we tend to see more requests for smaller quantities, especially when we’re talking about producing beef. Because if we’re selling a whole beef animal that’s actually a pretty significant expense for a consumer at one time. And so you’re going to see more and more requests for smaller packages of meat, if you will. So rather than wholes and halves, you may be getting requests for more quarters, or can we further subdivide this. So some folks have actually thought through and factored in creating a smaller bundle of meat that can be maybe delivered more frequently, with folks or if not delivered, at least picked up. But that also brings about the question of storage, right? Because if we don’t have our end consumer, getting that animal all at once, we may be getting a bottleneck in storage. So have we thought through? Do we have the capacity to put in freezer storage so that we can these requests over the course of a year? Or do we have a plan for that? Is it really just trying to time the number of steers going in with the number of requests that we have, and trying to match those up and, and the challenge that we get is they don’t always match up perfectly. So that can be tricky. And that’s where the freezer storage can really help us when we’re trying to do some direct marketing.

Katie Wantoch 

Right. And you know, there’s also the component of licensing. And here in the state of Wisconsin, the Wisconsin Department of Ag, Trade and Consumer Protection or DATCP handles the licensing side of that. And so depending on how you’re selling that meat, there are some licensing requirements and that you need to obtain, some fees associated with that. If meat is going across state lines, there are federal regulations that you need to seek instead of just the meat being sold in state. So those too can be a cost. And like you said, farmers need to consider not just the cost of producing the steer, but they need to determine what other additional fees and costs when they’re pricing that product for sale.

Lyssa Seefeldt 

Right. Absolutely. And again, that goes back to having some really good clear communication with your processor and knowing how they’re certified brought up a good point with if we’re looking at doing sales across state lines. We do need to have a federally inspected butcher. So that’s something that you are going to want to find out from your local butcher, how they’re being inspected, is it state inspected, or is it federal, because that can change what you’re able to do.

Katie Wantoch 

Right, definitely. So all good things to think about. And of course, this farmer and his brother and wife need to have a great plan going forward so that they can take advantage of this opportunity to add value to their farm business. Well thank you, Lyssa for joining us today. Really appreciate it.

Lyssa Seefeldt 

Yeah, thanks, Katie.

Katie Wantoch 

For more Extension AgriVision podcasts or resources to improve your farm management skills, check out farms.extension.wisc.edu. Thanks for listening.