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The Pros and Cons of Marketing Groups

by 5m Editor
17 July 2001, at 12:00am

By Gene Tinker, University of Minnesota Extension Service - Individual pork producers often feel they're too small to have much impact when negotiating prices with a packer. And that's why some go together to form marketing groups, which represent more pigs. This brief article looks at the pros and cons of joining a marketing group.

Oftentimes, they hire a professional marketer to market the hogs for them. But there are both pros and cons to marketing groups or professional marketers, says Gene Tinker, swine business management educator with the University of Minnesota Extension Service.

Tinker says the pros include:
  • Producers can concentrate on raising pork and let someone else do the marketing.
  • Professional marketers concentrate on watching the markets and should make more fact-based decisions on when to sell, with less emotion involved.
  • A professional has time to study and understand the futures markets and marketing strategies.
  • A professional is more likely to develop a marketing plan.
  • Producers can learn from one another and evaluate how their pigs compare to others produced in the group.
  • And, producers may be able to purchase inputs together, thus lowering costs.
On the downside, Tinker lists these cons:
  • You must follow someone else's guidelines to be in the group, especially if the group wants all pigs in the group to be as similar as possible.
  • You may be required to use the product of a company coordinating the group, such as a feed company.
  • It costs money to have someone market for you--they don't do it for free.
  • You're required to continue in the business for the length of the contract.
  • All group members must have similar goals.
  • It takes time to coordinate the schedules of hogs ready for market from different farms so the negotiator has all information needed when dealing for the best price.
  • You must trust that others in the group and the professional marketer are concerned about your best interests. "Without trust, the group won't survive," Tinker says.
Source: University of Minnesota Extension Service - July 2001
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