Small Beef Operation -- Marketing on Shares?

kathie_pacnwAugust 27, 2010

This year we slaughtered 2 Angus steers that we purchased at approx. 600 lbs. each, and raised to hanging weights of 880 and 711 -- we finished them carefully, sold 3 halves to friends/co-workers, and I think we did well marketing at $2.60/lb. hanging weight, plus the slaughter/cut & wrap fees. However, since our couple head of cows are not yet producing bull calves, all our costs were up-front and feed is not cheap, and now it's time to replace those two guys.

I'm reasonably certain we'll have the same beef customers next year, as all are very pleased with our product. But I was wondering if anyone out there has raised backyard beef on sort of a "share" system, where the customers actually pay per month towards defraying the purchase price of the steers and off-setting feed costs . . . and then, how do you figure in the value of your labor, etc.??

If any of you have had experience with this marketing concept, I would very much appreciate your input and advice. Thanks!

Kathie

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goodhors(z5 MI)

Just curious, why did you slaughter at the size you did? Seems kind of small, when they would have been larger animals with more time. How long did it take you to add the extra weight after purchase? Do you have pasture grazing to help feed them, not cost you cash?

How old were the calves when purchased, and when slaughtered? We just sold daughter's 4-H Prospect Beef calf at the Fair. He was at top weight limit of 500#, 7 months old, Dairy breeding. Buyer expected to keep him another 9-12 months, with calf doubling or more at his finished weight. We felt we had done quite well since calf was grazed, not a lot of grain in him. Saved on expenses. If they go over the 500#, kids can't sell in the Auction.

You may find buyers who want what special beef you sell, maybe organic or grass fed only, would go on shares. But most just want the meat, assurance of good feeding practices. They are NOT interested in paying for your time, cost of feed, other variables, just don't want to know. Sounds like you got a good price selling them, with all expenses included. That is WAY more than the good steers sold for at our Fairs!

You have to break down the expenses, time involved, to see if you are making a real profit. Sometimes your hard work is just not paid as well as you think it should be. Sure not like a Factory job or some office jobs, cash per hour!

You may or may not be really making money, no way to know without doing the details. EVERY SINGLE expense listed. If cash is that tight, you need to do things another way. Maybe have a cow account, just spent on feed, buying new stock. Any sales money goes right back into the account so you have it for the new steers coming along.

    Bookmark   August 27, 2010 at 8:57PM
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kathie_pacnw

Maybe you misread my post. We purchased the steers at approx. 500 lbs. live weight in June '09 for $600/ea., and slaughtered in July '10. Our HANGING weights were 880 and 711, so they were 1,500 lbs. or more on the hoof.
Our customers are used to store-bought beef -- not grass beef. And there is a definite difference in flavor. We planned on and did finish them in a large dry lot area, with alfalfa and a grain/corn ration. We are lucky in that we live in some of the best hay-growing country in the nation -- but the locals have to compete w/ export hay prices. We had planned on finishnig for approx. 90 days, and went to over 120+, because we had a half unsold, and you can't turn a half back out into the pasture! And we are in a small community where the custom cutter has a regular job and doesn't keep his chilling equipment on 24/7 all year. He needed a couple of head to make it worth his time/effort.
Like I said, we are new to this. When I bought the steers, they came from my sis's 400+ acre Angus ranch in Baker City, OR. I had gone over there to shop a stock trailer, and also to pick up a butchered beef that me and 3 co-workers had purchased at $2.25 hanging. And I said to myself: "Self -- you have almost 20 acres doing nothing . . . why are you buying butchered beef 6 hrs. away in Oregon?!?!" So I bought those 2 steers from them and brought them home in the newly-purchased stock trailer.

I have a friend in Salem, OR, who has a friend that buys grass fed steers from him when her demand is high -- he tells me that she got $2.70/lb. for grass fed steers in the private sector this year. ?? The healthy aspect is absolutely a seller, but there are some that still want the flavor that grain supplement provides.

Kathie

    Bookmark   August 27, 2010 at 9:35PM
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goodhors(z5 MI)

You are correct, I missed that word "hanging" on the 800# weights. DOES sure make a difference! Sorry about that. With your work, it didn't seem to make sense to only add the 280 and 111 pounds on the 600# calves and then butcher!

And having to work with processors who have their own requirements can make things more difficult. Have you done the Craigslist or local newspaper advertising for your extra half? Maybe even break it down to quarters, many buyers have smaller families now, can't use a half. Our processor always mixes both front and hind cuts of the half, for those buying only a quarter. It is nice to have some of all the good cuts. Doing quarters and mixing cuts, just anything to get it moved along when you need it done! That could save you having to "hold" the steers longer until the entire halves are all sold.

I do understand the grain to finish, it really adds to the flavor and appearance of the meat with grass fed beef. My mother the food expert, says without the marbling, some added fat in the diet from corn, meat would be tough to eat. A longer hanging time in the cooler, before processing is also a huge help in getting tender beef. She always tells them to add a few days hanging time over their normal wait before cutting. The steers we raised then were superb, didn't really need a knife to cut any of the meat cuts!

Sorry about the misunderstanding on time and weights.

Look for an angle to make your meat desirable. The grass feeding, free range, slower, NATURAL growth of animals to finish, "happy or contented" beef! Word of mouth promotion of your "wonderful" meat by your happy customers. Some discreet advertising to sound exclusive. Like "Star Farms will have grass fed beef available on Sept 5. These animals are field raised, the natural way. Call now to reserve your half or quarter. Once it is gone, there is no more until next year".

I would NOT recommend letting the customers "meet" the animals personally! Can't eat things with names!!

Just not sure the beef share thing would work like getting shares in farm gardens with weekly baskets. Good luck with your enterprise.

    Bookmark   August 27, 2010 at 11:06PM
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lazy_gardens

Market what is most profitable for you to sell - if you advertise the "superb flavor of grass-fed beef" they can't complain it's not like supermarket beef.

Some light finishing - supplementing the pasture for the final couple of months does wonders for the tenderness, as does correct aging. A rancher near Springerville AZ does this, and he sells all he produces.

To defray the cost of calves and feed, let people 'reserve a half' for a couple hundred bucks before you buy the calves.

    Bookmark   August 28, 2010 at 9:41AM
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oregonwoodsmoke(5 OR Sunset 1A)

Well.... I have gone partners on a pig before. I wouldn't do it again.

Maybe you could find someone who was really wanting to get into Mother Earth News lifestyle and couldn't afford to own pasture.

Some things to think about:

What if the calf dies or is stolen?

What if the calf has a big vet bill?

What if the "share" person is really bad about paying their bills on time?

How are you gong to handle it if they want special treatment, special food for "their" calf?

Are you going to let them come wander around your farm? What about liability?

    Bookmark   August 28, 2010 at 9:19PM
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kathie_pacnw

Thanks, all for your input. Oregonwoodsmoke, all of those dreaded thoughts had occurred to me, which is why I'm wondering if someone has done this successfully w/out a lot of hassle.

Lazygarden, we did take deposits on the beef this year, but I didn't do that until we had all the buyers rounded up, and I waited a little too long to do the round up, I think. You may be right that taking deposits up front is the way to go, because they are absolutely locked in after that. Also, they are all so pleased that I expect a couple of them may go up to a half beef rather than a quarter next time, and/or that they will give us referral business. So I really need to decide ASAP if we're going to do 2 again, or 3 or 4. Locking them in now would save the aggravation of either over-doing or under-doing.

Kathie

    Bookmark   August 28, 2010 at 10:25PM
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oregonwoodsmoke(5 OR Sunset 1A)

My electrician raises beef and he gets the reservations before he buys the calves. But he has been doing it for decades and has a regular customer base.

Local farmers are taking reservations right now (August). Ads are in the freebie papers and on Craigslist for locker beef ready in late October or November.

Reservations for butchering, with the best butchers in this area, must be made months in advance. They turn away work in the fall. Between cattle at the end of pasture and hunting season, they are too busy.

I've sold locker beef and figure I never made any money with it. But you can't have one cow. Two is minimum and three is better, both for their health and their behavior. My family can eat a lot of beef, but we can't eat 3 whole cows in a year.

    Bookmark   August 29, 2010 at 12:21PM
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