Over the last several months, the profit margins for beef producers have been slim at best. While cost of gain and transportation costs rise, the fat cattle board is one of few commodities that has not skyrocketed. Conversely, box beef and retail prices have drastically increased, and large packers have been prospering while producers are left to metaphorically “squeeze blood from a stone.” Diversifying entities or utilizing niche markets are two different ideologies producers have adopted to increase revenue.
Developing a freezer beef business can be a lucrative revenue source for beef producers or start-up farmers looking to sell meat products. Previous research has shown that selling meat to locals by the quarter, half or whole animal creates higher profits for the producer and lower costs for the consumer. Starting or adding a freezer beef business to an operation does require planning for it to be a successful business venture. Here are some tips and considerations to make when beginning this endeavor.
· Understand the market you are getting into.
People are also reading…
Instead of selling product to a large packer, target families that would be willing to buy a quarter or half. When starting this venture, it is not required to have a store front and commonly the customer can pick up their portion directly from the local locker. Expanding after early success is always an option and encouraged prior to dumping large amounts of money into brick-and-mortar business.
· Determine your niche.
Increasing numbers of consumers are becoming more engaged with how their food is produced. Becoming certified to sell meat products for one of the many accredited programs will increase profits.
· Market your product.
Marketing is key to being successful in the meat product business. This is where your niche will earn you profits. Urban and suburban consumers want the back story to their protein sources, and tools such as social media allow for free or inexpensive advertisement. Enticing shoppers to buy locally produced meat of high quality enhances the chances of repeat customers.
· Crunch the numbers.
Calculate your breakeven costs and determine what profits can be feasibly achieved. The simplest way to determine sale price is to start with the market animal and work your way to the consumer. (Example: It costs $x to make a 500-pound calf, $x to finish it, $x to process it, and $x to transport, package and distribute.) Once that has been figured, you add in what you deem as a fair profit.
· Schedule in advance
Just like other goods and products, recently, locally owned meat lockers are having trouble keeping up with the current demand. It should be advised to make sure that kill-dates are reserved prior to the dates you and your customers would prefer the product for sale and consumption.
For more information on Nebraska Beef Extension or producing your own freezer beef reach me at my office (402) 624-8007 or follow my twitter page @BigRedBeefTalk for more information on Nebraska Beef Extension.