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Developing a direct sales beef program: Considering management and logistics

Stephen Blezinger for Progressive Cattle Published on 24 December 2021

Producers have been growing and finishing calves to put in the freezer as long as there have been freezers. This has been a common process for years, especially in areas where the rural, cattle-owning population was greater than it is today.

Fast-forwarding to the present, the number of families who can simply put one of their own calves in the freezer for their own use has decreased significantly, since our rural, farming and ranching population is much lower. However, the production of locally produced “freezer beef” is alive and well and rapidly growing because of a variety of circumstances our society has encountered more recently.

The rebirth of an old industry

The consumer’s interest in locally grown and produced beef (as well as pork and chicken) is not new. People having been buying hind quarters or halves from their cattle-producing neighbors for years. This has been a neighbor-to-neighbor type of transaction and not formal by any means. But in recent years, this has changed. Distrust in our commercial meat production (hormones, antibiotics, imported product) has grown.

This has been driven, to a large degree, by the media and stories such as “pink slime” which came out a few years ago. Stories of E. coli and other pathogen contamination are common. Animal welfare and inhumane treatment (confinement feeding) has been driven by activist groups and further facilitated by the media to a population that moves farther from the farm with each generation. To some degree, this has resulted in a growing vegetarian or vegan consumer population as well as those who have an interest in “non-meat” meat products.

More recently, this has been accentuated by supply issues driven by panic buying during the pandemic, where meat cases were often significantly if not completely picked out. Labor availability has contributed to product supply and movement issues. Additionally, there have been concerns in how beef pricing is being handled by packers, distributors and retailers based on the spread between retail prices and live cattle prices disproportionately favoring multiple “middlemen.” Finally, inflation in all sectors has driven the price of beef in conventional retail locations to all-time highs.

For these and other reasons, the demand for locally grown “freezer beef” is growing. At the same time, many producers are looking for ways to improve their profitability from their cattle operations. The result is a rapidly growing industry of locally grown beef being purchased by a receptive consumer base.

So how do producers get into the freezer beef business? Over the past few years, I have worked with numerous small producers who have decided to pursue the activity – some small, some not so small. On the outside, making the decision to grow out a calf, taking it to a processor and then selling the meat sounds fairly simple. But to make the process at least somewhat cost-effective requires making a number of decisions. Considerations include:

1. Is this just a random, occasional thing or are you interested in a more structured program?

2. Who are you selling to? Neighbors, friends, relatives, stores, restaurants, etc.?

3. How will cattle be sourced? Off your farm, purchased from some other point?

4. How will the calf be produced? Conventional feedout, grass-fed, some combination?

5. How big are calves going to be grown to/finished? This changes efficiency, costs, quality of meat, flavor, etc.

6. What will the program include? Will you use implants, fed antibiotics such as CTC, ionophores (Rumensin, Bovatec), etc.?

7. What access to feed do you have? Will you have to feed out of a bag, self-feeding, bulk feeding, etc.?

8. Do you have the labor available to handle feeding if more conventional?

9. Do you know how to track all your costs so you can calculate all expenses and use this to project your profit margins?

10. Who/where are the available processors? What is their schedule? Do any of them have USDA inspectors?

11. How will you process and sell your cuts? As a half or quarter carcass, individual cuts?

12. How will you deal with variety cuts? Liver, heart, etc.?

13. How will excess product be stored if it is not picked up or delivered at the time of process completion?

14. How will you price your product to your customer?

15. If doing this on a larger scale (more than just one or two head from time to time), how will you market?

If the intent is to do this on a larger-scale, more structured level, you will need to answer these and a lot of other questions. The actual feeding process is probably the simplest part of this equation if you understand it’s about efficiency and having a solid grasp on your feed and feeding cost.

The bigger issues most producers struggle with is how to price their product. Unless you are feeding large numbers of cattle and have your own mill and can buy your own ingredients, etc., the feed cost will be higher than that of commercially fed cattle. However, on the flip side, health, management and overhead costs should be less. Processing costs per pound will likely be higher than what is done on the commercial scale. The big item where cost savings can be seen is the lack of “middlemen.” If you are selling directly to neighbors or other interested individuals, there is no dealing with distributors and retailers. There is, obviously, some transportation cost, but this is configured differently. Finally, it’s important to have an understanding of what the retail beef prices are in the area you are selling into.

Projecting and tracking all your costs are critical. This is followed by developing a pricing plan for the end products, whatever that will be. The economics are as important as all the other efforts and logistics.

Conclusions

The production of locally grown freezer beef is of great interest to many consumers. So the market is there. Feeding and producing the calves to go into that market is not a difficult process. Getting that calf to the processor is not difficult. Challenges come in collecting and tracking all the related costs and connecting with customers and consumers. This takes a lot of work and time to build, but done correctly and with a mind for the details, it can definitely be worth the effort. end mark

Dr. Stephen Blezinger in a management and nutrition consultant with an office in Sulphur Springs, Texas. He can be reached at (903) 352-3475.

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