More Marketing - What Producers Should Know and Why They Should Participate

September 2005
Shelley Humphries - Glades County Extension, 4-H Coordinator/Livestock/Horticulture Agent

In the present market structure and production practices, more that half the value of beef is added after the cattle leave the farm and cow calf producers see little to no net return. The producer's profit is continuously lessened by price fluctuations, middle man fees, and the grading process. Producers who sell in this highly competitive market can be described as price takers competing with many other producers of relatively homogenous commodity products. This leads us to the alternative marketing system.

In the conventional market, producers can increase their profits by retaining ownership, adding value, by producing higher grade and heavier animals, by carefully managing the culling process, and by minimizing the costs of production. Small producers can further themselves by forming marketing cooperatives or other types of alliances.

Some producers judge the conventional market as unresponsive both to their needs and the changing desires of consumers so they develop markets outside the conventional system. These producers add value to their products by differentiating it from other end products of the commodity market. Alternative marketing of beef primarily means niche marketing and direct marketing. The "niche" of the alternative market are those consumers that are unhappy with the conventional market. The most likely way to for a producer to connect with these consumers is by marketing directly to them.

Small producers may also want to become members of an alliance. By creating economies of scale and allowing for effective and proper planning, producers with similar goals can add value to beef and increase their leverage in a market that is dominated by large buyers. Alliances are generally developed around some common values and practices in which all those that participate work towards the same goals.

A marketing cooperative is a common and popular type of marketing alliance. A cooperative is a producer owned, democratically operated business structure. Cooperative marketing pools cattle from many different producers into uniformed loads. These loads are packaged according to what characteristics the buyers are looking for. The present marketing system is set up for larger producers who are able to market uniform loads. There are some small cattle operations that cannot meet the uniform load requirement hence, cooperatives help to fill that void.

By actively participating in the marketing process producers tend to realize a profit they would typically not see. If a producer raises a marketable product by producing what the market wants, and takes the time to get to know the sale barns and what packers are looking for, they are better able to use management practices that will be beneficial in the long run, increasing their profit.

There are many avenues that producers can look to be effective and efficient in the marketing process. They need to take some time and look at all the marketing alternatives to better understand what is out there and what would best fit their actual operation.

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