Direct marketing can be a way for beef producers to add value and capitalize on their efforts to assure beef quality. Through my involvement with a direct-marketing program, Yampa Valley Beef in western Colorado, I have witnessed the benefits but also have learned, through experience, some of the challenges and pitfalls.
Yampa Valley Beef grew out of discussions among ranchers, the Nature Conservancy and the local Economic Development Committee in the Steamboat Springs area. A group of ranchers began meeting in 1998 to plan the program, and began marketing beef products locally by December of that year.
The mission of Yampa Valley Beef is: “To develop an expanded market for locally produced, brand-name beef as a tool for improving the economic viability of ranching in the Yampa Valley while preserving agricultural lands and the natural communities they support.”
To accomplish its mission, the company pays premiums for cattle to member ranchers and also requires that at least 25 percent of the cattle have been grazed on lands protected from development with a conservation easement.
Yampa Valley Beef found success initially in marketing hamburger patties to restaurants in the local area and the Steamboat ski resort. Consumers responded well to the idea of locally produced, natural beef from an organization dedicated to preserving the Western landscape. After three years of operation, however, the program closed down for a time due to problems with consistency of supply and organizational structure. Reorganized as a non-profit corporation, Yampa Valley Beef resumed operations in fall 2003, selling hamburger patties, beef frankfurters and summer sausage, along with promotional items such as ball caps and branded leather coasters.
Through this process, we learned a great deal about the pros and cons of direct marketing, and about the challenges that a business plan needs to address.
Direct marketing can increase ranchers’ incomes through retained ownership and value-added marketing.
More direct contact with consumers can help build a positive image for the beef industry.
Direct marketing can potentially increase demand for beef. Offering consumers a locally produced, branded product can motivate them to choose beef over competing meats.
Most small direct-marketing attempts do not make a large profit in relation to the effort it takes to get started.
Participants can end up substituting labor for direct marketing in place of labor for the ranch.
There is an increased liability when you market a food product. You have verifiable traceback and need to account for liability and food safety in your business plan.
A business plan for direct marketing also needs to account for a wide range of details such as carcass-yield information, supply and inventory management, and business structure. One of the greatest challenges is in the area of communications. Relationships are critical, requiring good communication between participating ranchers, processors and customers.
In summary, four main items should be addressed before you begin a direct-marketing program:
1 You must have a niche that will differentiate your beef products.
2 Prepare a well-written business plan that actually forecasts a profit.
3 Form a business entity, separate from the ranch, in order to minimize liability.
4 Know the capabilities and limitations of your products’ processing, packaging and distribution.
Colorado State University, along with American Farmland Trust, has created a Web site specifically about niche marketing for beef. The site provides details on niches, business plans, case studies and links to more information. The Web site includes information and registration forms for two workshops on niche marketing for beef, scheduled during February in Colorado Springs and Montrose, Colo. The site’s address is http://dare.agsci.colostate.edu/aftnichebeef.
C.J. Mucklow, Routt County Director, Colorado State University Cooperative Extension.