Direct marketing for producers of livestock removes middle man

Farm Forum

BROOKINGS — Direct marketing their livestock is an option more cattle producers should consider.

“Direct marketing in essence removes the middle man from the marketing process,” said Shannon Sand, SDSU Extension Livestock Business Management Field Specialist. “It’s an alternative that beginning livestock producers should consider because it markets their product directly to potential customers.”

If a producer is considering this direct approach for their marketing plan, Sand encourages them to ask themselves the following questions: What are the legal liabilities? Who are our target customers? Can we meet demand? What are the costs?

“Once a producer answers these questions they can then begin to think about the different marketing channels available to them,” Sand said.

She explained that a marketing channel is a set of practices or activities required to transfer the ownership of products, and/or to move the products, from the point of production, on the farm or ranch, to the point of consumption – restaurant, consumer, institution – this includes all of the marketing activities done during the marketing process.

Sand says there are several different ways to direct market products:

• Producers could sell their meat at a farmers market

• Create a Community Supported Agriculture (or CSA)

• Through the internet

• A roadside stand

• A U-pick style in which consumers come and pick the animal they want and they have it processed

“In recent years, the consumer-driven movement to know where their food comes from has evolved. This movement is anecdotal evidence of greater demand for locally produced meats and direct marketing,” Sand said.

However, she added that even with increased enthusiasm, direct to consumer sales only accounts for a very small percentage of total agricultural sales.

“Support for direct marketing of meat products is not surprising given the value animal agriculture can bring to communities, particularly in a state like South Dakota. By processing locally, farmers and ranchers can capture a greater portion of the revenue stream,” Sand said.

According to a 2011 study, only 37 percent of gross annual sales of livestock and field crop producers came from local markets.

“This leads to the question why aren’t more livestock producers selling directly to the consumer,” Sand said. In order to market meat directly, Sand said it is necessary to have a stable supply to meet the demand of the market.

“If for example a producer is marketing directly to a restaurant then the producer needs to be able to supply that restaurant with the level of quality they desire, as well as the volume of product needed in order for the restaurant to meet their consumer demand year round,” she said. “However, if a producer is unable to meet the volume needed for a restaurant they may be better off marketing directly to consumers at local farmers markets, word of mouth or online advertising.”

Sand said it is also possible for a group of producers to market as a group to an entity in order to meet the demand. For more information about creating a marketing group/ co-op click here.

“In the end producers have many options in direct marketing their products directly, whether to consumers or businesses. There is some initial cost and research required by the producer, in order to determine if direct marketing is profitable for their business. Producers who direct market have the potential ability to capture some extra revenue through the use of direct marketing their product,” Sand said.

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