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Find The Unique Niche, Then Name Your Price

Agriculture.com Staff 07/06/2010 @ 5:20pm

At a Cattlemen's College seminar at the Cattle Industry Convention last winter, producers were asked to come to the front and share what they are doing to enhance profitability in these chaotic times. Here are some of the ideas they lined up to share.

  • California: "I'm growing turnips. The calves eat the forage above ground, then they eat the turnips, too. For a cost of 33 cents a day, I'm getting daily gains of 2.5 pounds."
  • Illinois: "I raise and sell bulls. What isn't good enough to become a bull, I sell into the Chicago-area market as butcher steers. I can get a $30-per-hundred premium over the average fat cattle price. Those people don't care about price, they just want high-quality, hormone-free, nonconfinement cattle."
  • Iowa: "I buy calves from Montana and feed them for investors that I have found. That's how I market the grain and forage produced on my farm."
  • Missouri: "I buy calves in the fall when the market is down, overwinter them, then graze in the spring and summer, and sell into feedlots when the market is high."
  • Virginia: "We're grouping lots of calves from small producers and putting enough of them together to get some market leverage."

In every one of these cases, it's a matter of finding a unique practice, niche, or service that requires an effort that others aren't willing to give. When you have that niche, then you can name your price because you're the only supplier who's doing what the customer wants.

The cattle business may be one of the few remaining parts of agriculture that has such potential to produce and to sell a unique product direct to consumers.

Who knows what the long-term impact of the hard winter just completed will be? It has taken a toll on both cows and cowboys.

One Iowa cattle producer told me that in most years he's able to graze cornstalks all winter long. But not this year.

"The stalks were under 6 inches of ice, with snow on top of that," he remembers. "Cows can go through a lot of snow to find something to eat, but they can't go through ice. I normally supplement their forage with shelled corn, but I still think they lost 200 pounds compared to a normal winter."

He speculates there will be a lot of cows lost to the hard winter, mainly due to rebreeding problems with thin cows this summer.

And it may be the final straw for some whole herds as older producers consider life without cow chores in a hard winter.

Remember when people used to cook meals at home? Now you either eat out or you take out. Increasingly, busy people take out.

I heard an astounding fact recently about the growth in take-out food:

Two thirds of food that is sold through a food-service outlet is now take-out food -- ready to set on the kitchen table, call the kids in, and eat.

Think of all those pizza delivery people zipping around in towns near you. Think of all the working moms and dads who pick up a whole cooked chicken and a couple side dishes on the way home. And think of those long car lines idling in the fast-food drive-up lanes.

There's a lot of ready-to-eat food moving around in cars!

Businesses like coffee shops, grocery stores, and even drug stores are rapidly trying to figure out how to get into the take-out and ready-to-eat prepared food business. Walgreens, with 7,000 stores nationwide, has announced they are entering the take-out food business.

This is indeed relevant to the issue of falling demand for beef in recent years. Pizza is huge in carryout and delivery. While there's some beef that gets put on pizzas, it's mostly pork (sausage, pepperoni, Canadian bacon). Same with take-out Chinese food. And those fully cooked, carryout whole chickens you see in every grocery store aren't helping beef demand, either.

Other than burgers, there aren't many beef items that you think about carrying home, hot and ready to eat, for your family. Nor is much beef delivered in a box. I wonder who's developing a new generation of take-out beef products.

At a Cattlemen's College seminar at the Cattle Industry Convention last winter, producers were asked to come to the front and share what they are doing to enhance profitability in these chaotic times. Here are some of the ideas they lined up to share.

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