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Pork: Marketing Alternatives

by 5m Editor
30 April 2004, at 12:00am

By Lance Gegner, NCAT Agriculture Specialist.

Introduction

Successful marketing is a necessary part of any profitable enterprise, and alternative marketing is often necessary for sustainable hog producers to survive. Unfortunately, farmers who practice sustainable and humane hog production often neglect marketing. Sustainable hog producers need to realize that successful marketing efforts will likely be as management-intensive as their production systems and that those efforts will be directed toward specialty and niche markets, not the conventional commodity market and distribution network. There is an opportunity for producers of value-added and premium pork products to realize sustainable profits, but only if they are willing to develop the necessary marketing skills.

Kelly Klober, author of Storey's Guide to Raising Pigs and himself a farmer and value-added marketer, believes that farmers in the future should not expect to support a farming operation with a 100 to 200 sow herd. Klober says, "A lot of folks are seeing a time and means to fit a few hogs into their farming mix. Hogs will be taken up by producers wanting to work with modest numbers and also wanting to market them all across the swine production spectrum …. To succeed on the small farm, a sow herd will have to be quite small, fewer than 25— and perhaps as few as 3-5. Even from small numbers, however, you will have to pursue as many marketing opportunities as possible." (Klober, 2000)

Commodity vs. Niche Marketing

Before sustainable hog producers decide to pursue alternative marketing, they need to understand the differences between commodity and niche marketing. Commodity marketing is marketing hogs that are undifferentiated from other hogs in the mass market. Niche marketing is differentiating your pork product to a market that wants a unique or superior product.

Allan Nation, editor of Stockman Grass Farmer, has stated, "A commodity orientation means that as long as you meet the specs and can stand the price you pretty much tell everyone else to go fly a kite. Such a selfish attitude absolutely will not work in direct marketing." Nation further explains that direct niche marketing is more about providing services to others by helping them get what they want. He says:
In the U.S., consumers expect an attitude of deference and responsiveness to their wants and needs. If you are unable or unwilling to develop "or convincingly fake" such an attitude, stay in commodity- priced agriculture. However, if you see service to others as a noble calling, don't let the lack of specific marketing or production skills deter you. Aptitudes are rather easily learned. It is our attitudes that are difficult to change and that most often determine our fate (Nation, 1999).

What Is Direct Marketing?

Direct marketing involves selling products directly to consumers, thus allowing the producer the chance to receive a better price. This involves making a direct connection with consumers, determining their wants or needs, and producing the products that meet these needs.

Joel Salatin, a Virginia pastured-beef and -poultry producer, who has written several books on this subject, suggests some factors to help determine your sustainable pork pricing.

First, don't underprice your product. Sustainably produced pork products are superior because they are more environmentally friendly, are humanely produced, and are produced on family farms. Patronizing local farmers ensures that the local economy is stimulated. Salatin suggests that producers set a rewarding and satisfying gross margin and then stick to it. This will allow the producer to build a customer base with clients who appreciate the product for what it is, not for what it costs. (Salatin, 1994)

Second, don't try to satisfy all customers' needs. Take into account your time and the extra effort that is needed to accommodate their requests. Salatin says, "We must appreciate that we cannot compete with the big operators at every level, and learn to stop our production or processing at the point where our quality/price enhancement can't compete with the conventional alternatives." (Salatin, 1994)

Finally, keep accounts receivable low. Operate on a cash and carry basis as much as possible. Salatin concludes, "There you have it. Set your prices so that no matter what your volume, your return is both emotionally and financially rewarding; steer clear of the temptation to do everything the customer wants; and let cash be your business byword. By following these rules, your direct marketing endeavor can be satisfying." (Salatin, 1994)

Direct marketing has unique characteristics that depend on building relationships with the customers. In fact, the term "relationship marketing" has been used to describe the best methods of direct marketing for family farmers. In an article in The Stockman Grass Farmer, Salatin describes the five advantages of relationship marketing.

  • Consumer Education Producers have to tell the consumers why their sustainable pork products are different from the pork that can be bought in the grocery stores. This will involve explaining that the pork comes from hogs raised more humanely on a sustainable family farm, not by giant corporations, and that the pork is raised in a more environmentally friendly manner. This is not only good for business, it is also a small step toward the development of consumers' awareness about farm, social, and health issues that affect their lives.
  • Product Quality Product Quality When the producer maintains control of the hogs and raises them in a sustainable fashion, it is easier to avoid compromising the quality of the pork.
  • Customer Loyalty When the consumer knows the producer personally, the relationships built between them - personal and commercial - are not easily broken. Good sellers know and use their customers' names. Loyalty helps bring in repeat customers. The greater the loyalty and satisfaction, the higher the likelihood of repeat business, even though a similar product may be available at the grocery store at a cheaper price.
  • Lifestyle As Salatin explains, "I think one of the biggest differences between the pressures I encounter as a small potato and the pressures encountered by the big potatoes is the amount of control we have over the situations that cause pressure. No one can escape from the pressures of life, whether they are financial, emotional, physical, or spiritual. But the chances of our affecting those pressures, of dealing with them, of solving those problems, make the difference between an enjoyable lifestyle and a terrible lifestyle."
  • Balance This helps to equalize the relationship between producer and consumer. The producer has to remember that the first rule of business is that the consumer is always right, but in some cases a sale might actually cause a negative gross margin. If the consumer is not a good patron, the producer does not need to continue marketing to him or her. Salatin says about taking someone off of his customer list, "This helps to balance the producer-consumer relationship, so that we concentrate on profitable sales, appreciative customers, people who 'get with the program.'" (Salatin, 1992)

Further Reading

- You can view the full report by clicking here.

April 2004