Hog friendly farming: These little Frantzen piggies
went to markets. Was value added?
When asked about the best actions to take on the battlefield
the great Napoleon told his officers to "do the best you
can with what you have and where you are." This very general
advice is what this leader preferred to use, as it relied on
considerations for the local conditions.
||"We made professional approaches
to the food service managers here. We donated and cooked
meals for the advisory councils that advise the food service.
We were well received, and when the required product specifications
were detailed we met them. But, in spite of repeated attempts,
we never sold one ounce of pork to a single institution."
Agriculture today certainly resembles a battle, and a rapidly
changing one too. How do we farmers decide on the best course
of action in such times? Who can we listen to for sound advice?
How do we know that our actions will help create a stable
and sustainable future for our farms? Market prices are very
low in all commodities. Will direct marketing shore up this
weak spot in our defenses? Many agricultural entrepreneurs
see direct marketing as the solution. Does this apply everywhere?
Or is that advice in conflict with the way that Napoleon handled
situations? What roles do local conditions play in this decision?
In the 28 years that I have farmed, our marketing has evolved
from all conventional (they set the price) to mostly alternative
markets where we have a major role in price establishment.
Our beef calves and our cull sows are still sold on a conventional
pricing system. In general we are satisfied with this progress.
During the last 5 years our hog and soybean marketing has
changed to suit our needs. Cash market hogs are our principal
means of income. The last "traditionally" priced
hog left our farm in early 1998. We escaped the crisis that
occurred later that year in the hog market this way. We now
sell the majority of our market hogs to the CROPP Organic
Valley market. The organic hogs were first produced for these
sales in June of 1999. The Organic Valley Pork Pool is a true
farmer-owned and governed cooperative development. Members
have to invest a set percentage of their annual sales to capitalize
this business. We also sell a small percentage of our monthly
hog production to the Niman Ranch Pork Company. Niman is a
nationwide marketer of antibiotic-free and humanely raised
meats. The Niman Ranch program uses a producer check-off to
secure funds for their capital needs.
As these markets developed a small group of hog farmers in
the Alta Vista, Iowa, area decided to form a cooperative to
assist in the production, marketing and sales of alternatively
produced hogs. This group is called Fresh Air Pork, and I
am a member. The principal activity is to coordinate the production
and shipping of market hogs for the Niman Ranch program. The
local cooperative elevator offered to play a key role in coordinating
this marketing program. This offer included an office and
enough staff assistance to help get this fledging project
off the ground. The word "fresh" in FRESH AIR PORK
is actually an acronym that stands for Family Raised Environmentally
Fresh Air Pork decided to enter the direct marketing meat
business in January of 1999. Several individuals from the
University of Northern Iowa who worked in the marketing educational
programs there assisted us in this development. We targeted
local sales, health food stores, and institutional buying.
Our first hogs were butchered in March of 1999, and we were
soon busy calling on accounts.
Fresh Air Pork came from hogs that met the Niman Ranch program
criteria. The principle claims are that they are raised with
no antibiotic use, meet the Animal Welfare Institute housing
and handling guidelines, and pass the well developed Niman
Ranch flavor testing. We butchered in a local state inspected
locker. In time we had to use two lockers for processing due
to the complicated task of meeting the customers' needs. We
received a grant from the State of Iowa to assist our business.
Experienced direct meat marketers came to advise us. I volunteered
time and travel expense to call on potential customers.
||"Here we could not sell the high
value pork and lost the margins that those cuts produce."
We had success with two health food stores right off the
bat. They were anxious to get our product. We did cooking
demonstrations, and our sales were judged to be a good addition
to the stores' offerings. Fresh Air could not afford to sell
them pork at wholesale prices, and they had to pay retail
price and then add their store margin on top of that. In spite
of that price barrier they sold our pork on a regular basis.
I called on one of those stores. The other health food store
went out of business in 2001.
We developed a steady stream of sales straight from the freezers
in the office that the local elevator provided. Local consumers
liked our quality and selection. We promoted the pork through
advertising and word of mouth. We had bus tours stop to check
the operation and make purchases. Some local businesses used
our pork in their customer dinners.
In spite of these promotions and the significant success
of local sales, the Fresh Air direct pork marketing ended
on April 1, 2002. The sales volume never reached a profitable
level in three years. What went wrong? With so much done right,
was there something out of place?
I led the initiative to try to sell our pork to two targeted
institutions. We made "professional" approaches
to the food service managers here. We donated and cooked meals
for the advisory councils that advise the food service. We
were well received, and when the required product specifications
were detailed we met them. For example, these services need
a select product cut into a precise portion and offered in
a volume. In spite of repeated attempts, we never sold one
ounce of pork to a single institution. This significantly
hurt the potential sales volume and in time was a key factor
in our decision to stop direct marketing.
All meat programs are complicated, and ours was no exception.
Our local sales were strong on ground and packaged products
like pork sausage and hot dogs. We had excellent bacon sales.
However we could not sell enough pork loin items, and ham
sales were so poor that we often had ham ground with the trim
meat. Here we could not sell the high value pork and lost
the margins that those cuts produce. You can only sell so
many $3.50-a-pound pork chops in Iowa. The supermarkets are
about $1 a pound cheaper, and that is where most people go.
Getting the best value from a hog carcass is a difficult
task. Loins amount to 20% of the hog carcass. Selling the
loin is critical as there is little processing in this item.
However the cost of making bacon and sausage is considerable.
The expense of processing cuts into the profits quickly. When
hams are ground into processed products, they hurt profits
from two directions. The ham is not sold as a high value item,
and the amount of ham (a large portion of the carcass) that
incurs processing expense adds to the bills. Fresh Air put
most of the hams into their "All Pork Wieners."
These pork hot dogs were a real treat, but we made very little
money selling them for $2.75 a pound. Pork marketing is complicated,
and the ham market is especially competitive. I really wonder
how other direct marketers sell this item.
What lessons can be learned from this experience? Is there
a place for direct marketing? I think so. But both the location
and the right kind of individual must be found. A large population
area is a major consideration. The marketers must accept the
fact that it will take years to build the business volume
that will return profits. This means that their effort will
have to be subsidized in the beginning.
I have learned to respect the highly complex nature of the
meat business. Fresh Air's best asset is the continuing relationship
with professional marketing businesses. This is where I see
the value of farmers investing in the cooperatives that sell
what they can produce and give those farmers a true say in
the pricing of the product. It limits the amount of time that
the farmers have to put into becoming expert marketers. They
are free to work on production issues. The marketing partners
have a direct link with the farmers, and they can spend their
time and resources doing what they do best. That job is to
get the best returns for each of the many components of the
hog carcass. This partnership looks like the way to go for
my operation, and I think that the members of Fresh Air Pork