Advantages of Marketing Your Beef Directly

- [Tara] This video will discuss the advantages of marketing your beef directly to your customers.

Selling your product directly to consumers may significantly increase profits and prices over those received in conventional markets.

There are two market channels that you can use to get your product to the consumer: wholesale and retail.

When you sell wholesale, a middleman purchases your product from you to sell to the retail marketer.

On the other hand, when you market your beef directly to consumers through retail, it means that you are not using a second party or an intermediary.

Instead, you are selling your beef yourself.

In this video, we will discuss what defines selling your beef yourself as well as its economic advantages.

To begin, there are four ways that you can market your livestock directly: selling to a packer or buyer, selling the animal to a consumer, selling retail cuts to the consumer, and setting up a processing facility.

In general, when you sell to a packer or buyer, you sell your calves as one group.

These calves might be feeder calves that have recently been weaned from their mother or they might be market weight cattle that are ready for processing.

The second way of direct marketing your livestock is to sell live animals by the head to the consumer.

The consumer then has the responsibility of making slaughter arrangements themselves.

Several consumers may share in the ownership of the live animal and divide the resulting carcass into halves or quarters.

This option is often referred to as producing freezer beef.

The third way to sell your beef is selling all or part of the carcass by the cut to the consumer after it has been processed by an established butcher shop.

This method may utilize farmer's markets, restaurants, or other outlets for selling cuts of meat.

In addition, this method requires a good working knowledge of meat cuts as well as the skills for managing inventory.

Finally, the fourth method is setting up a processing facility.

This method requires the most commitment in terms of finances, time, licensing, and inspections for the facility.

It is important to note that if you want to retail your meat yourself through a store or farmer's outlet, or if you're selling through your own processing facility, the facilities that your animals are processed in must be federally inspected.

Now let's switch gears a bit and talk about the advantages of direct marketing.

The first advantage is that direct marketing allows you to set a profitable price by selling directly to your consumer.

This enables you to avoid any price discriminations from selling small groups of animals.

You see, most packers or buyers want groups of livestock that are numerous enough to pay for the costs of buying and trucking the animals.

Thus, they are less likely to make the trip to your farm to offer a bid on three or four steers.

Even at auction, small groups of livestock tend to bring lower prices.

The second advantage to directly marketing your livestock is that you may get higher prices for leaner and lighter weight animals than you could from a pack or a sale barn.

This means that you can market animals to your own specifications, without adhering to the specifications on weight or degree of finish set forth by packers and/or buyers.

Some consumers prefer leaner beef, while others want smaller and more affordable size quarters or halves of carcasses.

This then allows you to match the animals you raise to your customer specifications.

In many communities, consumers prefer to buy the leaner, lighter animals that have been raised and fed in their area.

A lean burger from beef cattle raised locally can command a higher retail price than if the animal were sold at auction.

The third reason marketing directly is advantageous is that you can garner more net profit.

This is a result of higher selling prices and no sales company or buyer commissions.

If you are a small-sale livestock producer, your production costs can put you at a distinct disadvantage.

Fixed costs are generally spread over fewer animals and feed costs may be greater than those used by larger producers because the larger producers can purchase in greater bulk and often at discounted prices.

Direct marketing allows a smaller producer to set a higher price to account for higher input costs, ultimately resulting in more net profit.

Thus, when selling directly to consumers, small scale producers can set selling prices at a level that ensures profitability, if they know their production costs.

The fourth advantage of direct marketing is better cash flow.

Setting your price and standards for the number of livestock fed and sold, the market weight, and the amount of finish, allows you to know the expected market price prior to selling, and perhaps even prior to purchasing or producing the feeder animals.

Better cash flow can coincide with cash needs, such as those that might be required for tax payments.

It can also accommodate a year-round schedule, without the seasonal price fluctuations normally found in other marketing situations.

To summarize, direct marketing can work in your favor by allowing you to avoid discounted prices for smaller groups of cattle and by allowing you to match leaner animals to customers that prefer leaner beef.

Ultimately, direct marketing can help by returning more net profit and ensuring a better cash flow.