Thoughtful Food 
  • Pastured Pork
  • Pasture Fed Beef
  • Our Values
  • About Us
  • Farm Blog

The Decision to Lower Our Pork Price

10/22/2013

10 Comments

 
Picture
Pigs in the Fog
The old adage goes that it's easy to grow/shepherd/raise food for sale, but it ain't so easy to sell it. I was well aware of that axiom when I began farming, and I'm even more aware of it now. It's just not easy to market any farm raised product. This year our challenge has been in selling our pork shares.

Last year we sold all four shares available, and we have only modestly raised our inventory to six shares this year. The goal with our pork sales is to sell the best product in the region at the highest fair price. In pricing our pork, I look at the actual costs of production and the prices other farmers in the area are asking. Based on my current figures, it costs about $400 to raise a pig born on the farm to slaughter (that includes the partial cost of the sow and boar). We originally offered our pork at $4.50/lb hanging weight which gives us revenue of $742 per pig (based on 165 hanging weight at 6 months). I didn't factor in the cost of pasture rent, insurance, seeding, fuel, etc, but that's probably at least another $50-100. So we're talking about a profit in the range of $242-$292 per pig based on how I do the accounting. I haven't calculated the time required to produce a single pig for market, and I'd like to get a better idea of that in the future. But at my target pay of $15/hour, that's about 20 hours per pig. When you think that I spend over 400 hours on pig chores alone with only 10 pigs right now, 20 hours doesn't sound unreasonable. In general, I'd rather trade labor costs for debt and high infrastructure costs.

A quick look at other farms with that rely on custom slaughter and promote their pork as heritage/pastured/etc. like us: $4.75 hanging weight, $5.50/lb hanging weight (butcher fees included). The craigslist price is about $3/lb hanging weight (this is what you can get if you want to buy pork from some unknown person on craigslist who doesn't have a website or coordinated marketing effort. Bruce King charges $2.25/lb, which is about the lowest I've seen in the area. So there is a wide range in price, but unless you're getting tons of free or low cost feed, there isn't much range in feed costs. I imagine that most craigslist folks are trying to just break even.

After getting a few repeat orders from our customers from last year, we didn't get any new orders this year at our original price. About a month ago, we added 50 lbs of organic squash and potatoes grown on our farm (a good deal for our customers and a sensible deal for us as we produced more than we could sell at the farmers market and farmstand) per half pig. In a perfect world, we'd sell those vegetables for $50, which means we're increasing the cost of our pork to $500, and bringing our profit down to about $150/pig.

Now, with just a week to go before slaughter, we've decided to lower our prices--not because we think our pork and our time isn't worth the cost, but because we don't want to be stuck with hundreds of pounds of pork in our own freezers. We've lowered the price to $3.75/pound plus the potato and squash bonus. That gives a very small profit of $50-100 per pig. It's a tough decision, but we'd rather grow into strong demand than put all our efforts into marketing. We're open to other marketing options in the future, but for now, we just want to make it through this year!


10 Comments
Adam Stevens link
10/22/2013 05:04:19 pm

Have you thought about taking them to an inspected facility, so you can have retail cuts to sell? I realize that would add up front cost, and storage, and cost there as well, but then you would have meat you could offer at farmer's markets. Since you are already at a few markets, I would think this would be an easy thing to add to your offerings. Also, as for Bruce's price, as the largest producer in the Puget Sound, he's probably operating on a volume basis, not just with 10 hogs to sell. Also, if you are feeding organic (I don't think he is if he's still getting cast off produce from local stores) that should command a higher price. Just my thoughts...

Reply
George
10/22/2013 07:27:59 pm

I wouldn't lower pricing on meat. Produce, sure as it has a limited shelf life. The few hundred dollars you are losing in sales, you might as well put into a freezer and hang onto that pork and work at selling it. I don't know any farmer who lowers his price on a high value product due to slow sales. If you ever want a living wage you gotta stick with a price that gets you there.

You do have retail cuts right? I don't have the time today to look back at older posts, but you take the hogs in to be processed, which should be a USDA facility... sell them at market!

I assume you've got a local farming newspaper or something, put ads in there (here it is Lancaster Farming), craigslist etc.

Reply
Jeff
10/23/2013 01:17:03 am

I wish I had retail cuts! The closest USDA inspected facility is 122 miles away. While I know that some producers are willing to drive that far, I'm not. There is a local co-op that is at max capacity that has a mobile slaughter unit, as well as another co-op that is in development that will also have mobile slaughter.

For those not familiar, when using a USDA custom butcher, customers must pre-buy the meat which means it is not legal for me to have the animal butchered, put it in my freezer, and then sell it later.

Reply
Adam Stevens link
10/23/2013 02:14:49 am

Jeff, 122 miles? Who is that? The closest one I know of is over in Odessa. It seems like a no-brainer to me to invest the five hours of drive time, to push your per pound price from $3.75 to over $5.50, probably more like $6. I'm with George, your cutting your own neck by cutting your price (not to mention possibly undercutting other producers in the area with the same product). Like Bruce says, growing the food is easy, it's selling it that's hard, frankly the hardest part. Have you reached out to other small farms that do pastured pork in the area (like WellFedFarms?) to see if they would be willing to pass your contact info onto customers of theirs who want pork? I know WellFedFarms is sold out for 2013...
Also, using craigslist as the litmus test for pricing, especially when you are comparing what you have (in quality) to what they are probably growing (non-organic scrap food fed) is a bad idea. I'll digress- I gave a run at the photography industry, starting in 2008, I had been shooting as a hobby for over a decade, and started moonlighting. This could be an entire blog post, so I'll cut to the chase, if you want to make a living at it (photography) you have to charge like you do, there are dozens of $500 craigslist wedding photographers out there, if you try to compete with them at their price point, your going to bleed to death. Hundreds have. Just a little googling will bring up hundreds of momtographers who have tried, and stopped. Zac Arias probably has some of the best metrics, and perspective on the rise and fall of the $500 wedding photographer (his opinion is that if folks want to charge $500 for a wedding, let them, they'll be gone in a year).
I applaud you for tracking the expenses, time and viability of living off of a farming income. It's doable. The Amish have continued to grow as a people in the US, still agrarian in bulk.
If you haven't been able to sell the pork you have, I'd look at your sales process, marketing (no I don't mean an expensive add campain) and dump some time into that. Cutting your prices would make sense, if you were over market price (again, look at your peers, other farms, not the bottom feeders on craigslist) or work with customers one on one, ("hey my normal price on this is $4.50, but I've got more that I thought I would have, and I know that $4.50 is out of your price range (because they told you it was) is there a price point that would work for you?" I'm not sure how much experiance you have in sales, but it's a lot of talking, listening, and more talking. Heck, if you know someone who is a whiz at sales, ask them if they would be interested in a commission of $1.00 per lb to sell pork for you. That way the customer is still paying your listed price, and although you might be taking a cut in profit, you haven't created a person who you are going to have to talk back into the higher price point at a later date. We have found with turkeys that we can't even try to sell them to folks who buy the $.39 per lb WalMart turkey, they don't understand what we are selling. Good sales is education, for the customer. And serioulsy, think about hitting the USDA slaughter facility. Read Forfest Pritchards book, and follow that model for selling at farmers markets, he has some nuggets of wisdom in there.

Reply
George
10/23/2013 03:41:03 am

Have you contacted other farms to see where they process, and is it possible if they could haul some of your pigs with theirs, or vice versa? My livestock trailer has a center divider, so I can keep animals separate.

250 miles round trip, @ 10mpg (probably low) = 25 gallons @ 3.50 = $87 in fuel costs. Round up to $100 for depreciation etc. 4 pigs at 165lbs each is 660lbs of ready to sell pork, meaning your cost for fuel is roughly 7 cents a pound. Obviously these are ballpark, but my point in this is that the round trip isn't THAT cost prohibitive.

When I worked in Pennsylvania, it wasn't uncommon for producers north of Harrisburg, to travel down to Virginia to get their pork done.



Reply
Jeff
10/27/2013 01:27:13 am

George and Adam,

The USDA inspected facility is Kapowsin Meats. One thing to keep in mind is that every trip to the facility is actually two trips: one to bring the animals down, and one to get the meat after it's been cut and smoked. Also, even though I could charge more selling individual cuts, I would need to spend a lot of time marketing. My time (or my wife's, or an employees) is not free. Every trip to the farmers market is a major investment of time, fuel, and farmer's market feets. I'd likely need to travel the 70 miles one way to Seattle in order to realize the best demand and the farmers markets down there. I'd also need to invest in coolers, freezers, and a stock trailer (unless I could partner with someone going down there, as George suggests).

I haven't figured out all those costs, but they likely significantly erode into the potential increased profits from selling individual cuts.

Reply
Gerge
10/28/2013 02:54:49 am

Assets can be amortized and written off, freezers, trailers etc.

It seems like a lot of excuses honestly, I'm not THAT familiar with your situation, time you have to spend w/ farming etc (I understand it's not your FT job), but if you really want to make it a living wage, you're going to have to sacrifice a bit more in the beginning, just seems like that is the way it goes for us all. I still believe lowering your prices is a bad move. Don't you work at a university? Surely there is some under the table marketing to be done there.... I know I did when I was near them...

Reply
Adam Stevens link
10/28/2013 03:30:52 am

Jeff, sorry to say I'm with George. (and I"m glad you've managed to sell off the last pig) I'm a little more familiar with the area we are farming in (closer to the high dollar East Side or Seattle market would be nice, no?) Seriously though, how much time would it take to have sent off a half dozen e-mails to other farms in the area, who are sold out on pork for 2013? Just like farming takes time to grow out the critters, it takes time to sell them, and it's every bit as hard as the farming. It sounds like maybe the sales side is an area you weren't expecting to have difficulty with (most entrepreneurs are caught off guard by that). If you read some of Bruce King's farm postmortems, you can see an aspect of marketing, or sales contributing to (if not being mostly responsible) the death of the farm.

As farming is not yet my full time job, I get time being tight (and we don't have the cash flow to finance big animal grow out trials). In that, we have made a decision to not bring any animals onto the farm to grow out that either 1- we don't want to end up in our freezer or 2- aren't paid for (or at least that we have a deposit for). Kelly and Andy just podcasted about pre-sale farming. We had over 30 folks respond to a single facebook post about Turkeys back in May. It took almost a month to get enough deposits for us to pull the trigger on the order (9 of the 15 needed to have deposits on them, as we figured 2 for mortality, and one for our T-day bird, would leave 4 to either sell, or put in our freezer, either an acceptable resolution), and in fact, it almost didn't happen at all due to only about 20% of the folks who 'really wanted one' not even responding to the e-mail with deposit information.

I guess I'm saying that it sounds like you might want to look at your marketing, and advertising strategy. Or ask someone who has that skill to help you out. If your in collage, you should be well networked enough to have a business major friend or two who could at least give you some ideas. I'm no graphic artist, and had a business contact from way back work up our new logo (hope to have it live in another week or two). You have to grow and then lean into your community. With over 125 likes on FB alone, you have a group of folks who might just surprise you with their skills, and willingness to help you out. Everyone want's to be part of something bigger than themselves.

Reply
Jeff
10/28/2013 03:57:27 am

I appreciate your comments. I know that I can be better at the marketing side, but I also know that isn't my strength. The best marketing that we've found for this business model (wholes and halves) is word of mouth/social media.


To respond to a few of your points:

Investment in infrastructure: I'm very, very conservative with money. I've already borrowed enough to get this business started. I've seen enough other farms fail because of debt burdens. Perhaps that's low risk low reward thinking, but it's just the way I'm wired.

Working with other farms: I do that as much as I can, but I also respect that other farms that sell pork in the area are in direct competition with us. If they have customers on a waiting list, it's in their best interest to try to increase their production to meet that demand next year.

I'll try to do another post summarizing this issue after I reflect on it some more. In the end, we're very thankful to all our customers who bought pork from us this year and look forward to growing and adapting in the next few years.

Reply
Tom
7/8/2014 08:46:08 pm

Wanna know why Bruce King charges just $2.25/lb? Take a look at how he farms! http://truefarming.blogspot.com/2011/11/bruce-king-pig-farm-everett-wa.html

He's a disgrace to farmers everywhere.

Reply



Leave a Reply.

    RSS Feed

Powered by Create your own unique website with customizable templates.