Why Direct Market Meat Keith Vander VeldeUW Extension Livestock Specialist Marquette County

February 25, 2010---Mauston

Why Direct Market Meat

Options:• Sell at Auction• Direct to Packer• Market To Consumer

Why Direct Market Meat Sell at Auction:

Advantage: Disadvantage Paid day of auction Price Set by Buyers Sell on live weight basis Yardage and Sales Cost Little time in transaction No buyer loyalty

Today's Prices:1,200 lb steer @$0.92 cents per lb.

$1,l04 -$25(sales expense)= $1,079

Why Direct Market Meat Selling Direct to Packer(Selling on the Grid)

Advantage: Price is usually based on carcass weight Price is usually based on set price for each carcass grade Can build packer relationships with high grading cattle Premiums paid for high choice and prime cattle Premiums paid for yield grade 1&2 cattle

Disadvantage: Poor grading cattle sell at discount Discounts on yield grade 4’s and 5’s Payment usually 3 days from delivery day

1,200 lbs live @ 62 dressing %=744 lbs x $1.49=$1,108

Why Direct Market MeatSelling Direct to Consumer

Advantages: You set the price (Market plus) Method to capture special production methods

Organic Natural Hormone Free Anti-biotic Free Home raised source identified

Why Direct Market MeatSelling Direct to Consumer

Disadvantages: You Must Sell the entire animal as meat Few clients want the whole animal Must sell as halves, quarter, bundles A steer is not all “Steak” Must schedule with local processor for harvest date You are responsible for collecting from clients If Dissatisfied with product client may want refund Unhappy can disrupt future sales

744 carcass weight @ $.175=$1,302

Why Direct MarketLets Compare:

Auction= $1,079

Grid= $1,108

Direct Market: $1,302 a $200-$223 Premium

Why Direct MarketPricing Example

Steer: 1,200 pounds live weight Yield at 62% provides 744 lbs of

carcass Yield will range from 56-65% Dressing Percent

Higher for Beef Breeds Lower for Dairy and Dairy Crosses Fatter Cattle have higher dressing %

Pig: 250 pounds live weight Yield at 70% provides 175 pounds of carcass Yield will range from 65-75% Dressing Percent

Sheep: 140 pounds live weight Yield at 50% provides 70 lbs of carcass

Yield will range from 45-55% Dressing Percent

Why Direct MarketYield Example

Beef Pork Lamb

Expected

Cutting Yield55-68% 65-75% 45-65%

Carcass Weight

744 lbs 175 lbs 70 lbs

Packaged Meat Weight

400-500 lbs 114-132 lbs 32-46 lbs

(40% of Live

Weight)(50% of Live

Weight)(30% of Live

Weight)

Why Direct MarketWhat’s in the Package

Beef Untrimmed Cuts

Trimmed

Cuts

Ground Beef Usable Product

% Total Cuts

Round (22%) 164 73 32 105 14 Sirlion Tip

Round Steaks

Round Roast

Rolled Rump

Loin (16%) 119 45 16 61 8 T-Bone

Porterhouse

Sirloin, NY Strips

Tenderloin

Rib(9%) 67 41 13 54 7 Rib Steak & Roast

Ribeyes, Short Ribs

Chuck(27%) 200 82 67 149 20 Chuck & Arm Roast

Chuck Steaks

Flank, Plate

Brisket, Shank(20%)

148 40 58 98 13 Flank Steak

Brisket, Short Ribs

Soup Bones

Miscellaneous

(6%)

45 7 7 1

Total 744 281 193 474 63%

Why Direct MarketDetermining a Price

Beef: 744 lbs of Carcass at $1.75 (a $.25 premium) Processing $275 $1,302 =(744 x $1.75) + $275 ==$1,577 474 lbs of saleable meat Price per pound received by client=$3.33

Why Direct MarketDetermining a Price

Beef: $3.33 per lb for the entire combination Cheap for Steaks High for Hamburger Price Sensitive Buyers are not your Clients

Why Direct MarketFinding Clients

Most Likely Buyers Are: Wanting Source Identified Meat Health Considerations Important Organic or Natural High Quality Consistency Accept Variety of Cuts Lean Ground Product Have Freezers

Why Direct MarketFinding Clients

How to Market in Direct Selling:Best Method- Hanging Carcass Weight paid to you Work with Processor to Collect for Processing Sell halves or quarters Avoid individual wholesale cuts Consider Marketing unsold portions to processor if

they have retail outlet for product

Why Direct MarketKeeping Clients

Client Retention and Promotion Satisfied Customers Come Back Satisfied Customers Tell Friends Know Your Clients Family Size-Estimate Their

Time to Consume Your Meat- Do a Follow-up phone call one month after the

client picks up the meat-learn about their satisfaction level

Why Direct MarketKeeping Clients

Client Retention and Promotion Dissatisfied Customers Are Hard to Get Back Dissatisfied Customers Tell Everyone Without Follow-up With Clients They Feel You

Are Not Interested in how they feel about the meat-

Consider some method to win customers back (ie Refund, Discounts)

Why Direct Market Have Time to Market Start Small Develop a Market Have Good Product Make Product Special Take Some Risks Place Premiums on

Product