Center for Profitable Agriculture

PROJECT HIGHLIGHTS | PRODUCTS ON THE MARKET

Value-Added Projects — Project Highlights — 9

	Livestock Production and Processing
	Lump Charcoal and By-Products—Analyzing and Developing Markets
	Manufacturing & Marketing Beef Jerky on a Small Farm
	Marketing a Patented Honey Jelly
	Marketing Cattle for Freezer Beef
	Marketing Fresh-Cut Flowers
	Niche Marketing Lamb Meat
	On-Farm Commercial Food Processing & Marketing
	On-Farm Retailing
	Organic Grain and Grain Products, Investigating Markets
	Ostrich Meat Marketing

Livestock Production and Processing

A study was recently conducted to assess the limiting factors and competitive advantages for a livestock production, processing and marketing project. The study provided a historical look at the availability of resources pertinent to the success of the enterprise in Tennessee. The study also evaluated the market potential for a branded consumer product. Feasibility analyses were evaluated for the primary enterprise phases.

Lump Charcoal and By-products—Analyzing and Developing Markets

Developing markets for products is challenging, especially in a market with significant competition. Products must be positioned to fill a niche in the market. Market analysis, planning and implementation will be vital to potential product success.

By-products of production processes often create obstacles for producers. Ideally, a market will exist for the by-products that will bring additional revenue. In some cases, clear markets may not exist, and producers may need to work to develop markets or find a way to dispose of the by-products cost efficiently.

Manufacturing and Marketing Beef Jerky on a Small Farm

Utilization of beef in a value-added jerky business will be subject to USDA inspection and may result in a restructure or whole-muscle type end product. Basic jerky processing includes cutting or shaping the meat, seasoning, dehydration and packaging. The overall jerky industry has experienced significant growth in recent years to $1.32 billion in 1999 sales and the third leading category of new product introductions for the snack food industry. Retail sales are dominated by convenience stores and despite recent increases in specialty and gourmet jerky sales, the product is still primarily an on-the-go outdoor snack. Jerky sales at Knoxville-area grocery stores are relatively low at just under 440 ounces per-brand, per-year and only $0.91 sales per 1,000 check-out sales. While average retail prices are considered good at close to $20.00 per pound, relatively low profit margins on wholesale prices tend to necessitate a significant volume of sales resulting in the need for many retail outlets.

Marketing A Patented Honey Jelly

A patented production process can differentiate a product from its competition. A patented process and a unique product can deliver a uniquely different product that may appear to have little competition. However, with a product that combines two common edibles, honey and jelly, the product must compete, somewhat, with jelly and honey products. Because the product is unique to the marketplace, sales, consumption and usage data do not exist. In this instance, studying the jelly and honey markets can provide some insight into customer preferences and consumption levels. Even with all the signs of a national favorite, each new product must mingle through a fairly predictable product life cycle. Developing a quality product, accenting it with attractive packaging, understanding the target market, developing retail contacts and initiating promotional tactics are all parts of the necessary recipe for a successful product.

Marketing Cattle for Freezer Beef>

More and more cattle producers in Tennessee are evaluating opportunities to find local consumers for the beef they produce.  Many farmers are finishing cattle and selling them to one or more individual for their personal consumption.  Beef from an animal owned by the person or family that will consume it is not required to be harvested and processed in a USDA-inspected facility.  More than 150 custom slaughter and meat processing facilities that are permitted under the Tennessee Department of Agriculture can slaughter and process beef for individuals who own the animals.  Market opportunities do exist for cattle producers that understand the regulatory protocols and effectively develop relationships with buyers/consumers.

Marketing Fresh-Cut Flowers

There appears to be a viable market potential for locally-produced, fresh-cut flowers in some metropolitan area of Tennessee. However, to tap such markets, the correct types of flowers must be make available to florists, at the appropriate time, in the appropriate manner and at the appropriate price. Winter and spring are the most popular months for fresh-cut flowers and Monday mornings appear to be the preferred delivery time for most florists. Flower growers wanting to notify florists of the products they have should consider direct-mail promotions. This method appears to be the most preferred method of learning about cut flower suppliers.

Niche Marketing Lamb Meat

With low per-capita consumption for lamb meat in the U.S. and low concentrations in Tennessee of ethnic preferences for lamb, there does not appear to be an unmet demand for lamb meat in the state. Certain niche markets for lamb meat are likely available in the state. While these markets will not generate large income streams, they may create an opportunity for value-added sheep enterprise as a portion of other value-added enterprises with similar overhead and general operating resource requirements. However, partial or total dependency on a value-added sheep/lamb business in Tennessee should be explored and developed with caution.

On-Farm Commercial Food Processing & Marketing

Farm families considering the development of food products for commercial sales should carefully evaluate a variety of regulatory, marketing and cost factors. The facility in which the products will be prepared/processed must be approved and inspected by the proper agency. Regulations require that certain low-acid foods be processed by a specially-trained staff and meat products must be processed under USDA guidelines with a USDA inspector on-sight. Processing dairy products for commercial sale requires a strong communication with the Tennessee Department of Agriculture and adherence with FDA guidelines. An adequate evaluation of the costs of producing food products is important and should be compared with market expectations in order to determine the number of food products that must be sold in order for the business to break-even and make a profit. The cost of commercializing some food products actually exceeds the market potential and in many cases, the level of required sales often exceeds the expected number of buyers in a specified area. A complete and thorough market evaluation and marketing plan is an important ingredient in the evaluation and pending success of value-added food businesses.

On-Farm Retailing

All costs should be carefully considered in the planning phase of new on-farm retail enterprises. Oftentimes, start-up costs for retail facilities and furnishings exceed initial estimates. Renovations of existing farm resources such as barns and old out-buildings may help create a favorable marketing environment but may also have hidden costs. Annual operating costs should also be carefully evaluated -- recurring costs that do not contribute directly to sales often stress business success. After first evaluating start-up and operating costs, sales can be estimated with a break-even analysis. The break-even analysis is an effective starting place for evaluating sales levels. Many times, looking at necessary sales levels on a monthly and/or weekly basis is an extremely helpful planning tool. Other considerations for on-farm retailing include products/services planned for sale, profit margins, marketing, waste/loss, labor, hours of operation, parking and maintenance.

Organic Grain and Grain Products, Investigating Markets

The production of a significant number of acres of certified organic grains may allow a grower to target large- and small-volume buyers in both niche and mainstream markets. While the market outlook for both organic food and feed grains is good, investments in market development are still needed. Tennessee-grown organic grains can be targeted to numerous domestic and export grain dealers at premium prices or can be carefully marketed direct from the farm to organic livestock producers, organic feed mills and specialty food manufacturers. A well-planned marketing and promotion program, including bulk and bagged sales, well-designed literature and multi-media promotions, should be considered and maintained. A step-by-step action plan for market development and market diversification should be developed and the development of new uses and new markets for specialty products should be supported.

Ostrich Meat Marketing

Consumer food preferences have experienced significant change during recent years. As a result, consumers are now more likely to choose food products based on taste than on health claims or benefits. Consumers are also becoming more adventurous by trying more flavorful, fresh, ethnic and regional foods. Agricultural products possessing these new consumer preferences, positioned as such, should compete well in the marketplace. However, an investment in consumer education may be warranted for products for which little consumer experience exists. Targeting a significant number of appropriate outlets will also be a critical factor of success and consideration should therefore be given to the most effective and efficient marketing/promotion campaigns.