Tennessee Master Goat Producer Marketing

Megan Bruch, Amanda Ziehl & Rob HollandUT Center for Profitable Agriculture

Aaron RobinsonTSU Cooperative Extension

Objectives

Participants will increase their knowledge of the definition and importance of

marketing the market situation for goats and goat

meat consumer preferences for goat meat considerations for marketing strategies direct marketing considerations

Marketing is… Planning and executing the idea of a

product, its price and the promotion and distribution (place) of that product to satisfy the needs of customers

Marketing allows you to determine…

1. If a potentially profitable market exists Ability to produce at a cost low enough

and sell at a price high enough to generate a profit

2. The identity of the target market Who is likely to purchase the product

3. How to reach the target market Product, Price, Place, Promotion

Introduction to Marketing

Introduction to MarketingExample 1

Without Market Planning & Execution Farmer Clark has a herd of 50 does with

kids of several different breeds The farm loan payment is due at the end of

the month Farmer Clark takes the kids to the local

auction barn to sell them ASAP for whatever price he can get

Farmer Clark is a Seller and a Price-Taker

Introduction to MarketingExample 2

With Market Planning & Execution Farmer Jones has developed relationships with

leaders in the local Hispanic population Knows that the Hispanic people in her community desire

young goats about 50 lbs. live weight for Cinco De Mayo Farmer Jones produces her kids to the desired

specifications to be ready for pick-up by customers at the farm the first week of May at the price she sets

Farmer Jones is a Marketer and a Price-Maker

Market SituationHistory of Goat Marketing in TN

Early 1990s – Goats sold at local sale barns and off the farm to customers, Producers encouraged to pool goats for larger sale base

Mid 1990s – Tennessee Livestock Producers offer goat auctions in conjunction with sheep auctions

2001 – USDA-AMS adopted live goat grading standards and institutional meat purchase specifications for goat meat

2002 – TLP offers graded goat sales 2005 – TLP offers 2 graded goat sales

(Thompson Station and Somerville)

Market SituationSupply and Demand

All markets are a function of supply and demand

Important to understand market situation to determine market potential and plan marketing strategy

Market Situation U.S. Meat Goat Inventory

U.S. inventory estimated at 1.9 million head (NASS, 2005) Texas – 1 million head Tennessee – 98,000 head Some experts believe NASS numbers

underestimate true inventory dramatically (35-45%)

Market Situation Federally-Inspected Goat Slaughter

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

19941995199619971998199920002001200220032004

Nu

mb

er o

f H

ead

Market Situation FI Goat Slaughter by State in FY2004

NJ35%

TX18%

PA9%

NY5%

TN5%

Other28%

Market SituationOther Goat Slaughter

Some experts estimate federally-inspected slaughter is only 50 to 60% of total

Other includes State-inspection programs Direct sales to consumers

Market SituationImports/Exports of Frozen Goat Meat

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

1989

1991

1993

1995

1997

1999

2001

2003

Met

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Imports Exports

Market SituationU.S. Demand for Goat Meat

Approximately 1.3 million goats slaughtered to satisfy U.S. Demand in 2004 (by combining Federally-inspected slaughter

and imports)

Of these, over half were imported

Potential to increase domestic production if consumer preferences can be met and cost of production can compete with import prices

Market SituationTennessee Graded Goat Auction Data

0

250

500

750

1,000

1,250

1,500

1,750

2,000

2,250

Jan-0

3

Feb-0

3

Mar

-03

Apr-03

May

-03

Jun-0

3

Jul-0

3

Aug-03

Sep-0

3

Oct-03

Nov-0

3

Dec-0

3

Jan-0

4

Feb-0

4

Mar

-04

Apr-04

May

-04

Jun-0

4

Jul-0

4

Aug-04

Sep-0

4

Oct-04

Nov-0

4

Dec-0

4

Jan-0

5

Feb-0

5

Mar

-05

Apr-05

May

-05

Jun-0

5

Jul-0

5

Head Sold

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20

40

60

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160

Price($/cwt)

Slaughter Head SoldPrice, Kids, Selection 1, 40-60 lb.Price, Kids, Selection 2, 40-60 lb.Price, Kids, Selection 3, 40-60 lb.

Market SituationConsumer Market

Producers need to become familiar with who consumes goat meat, where those consumers are located and why they consume goat meat

Understanding the “who, where and why” will help producers in determining the ideal “what” for the consumers

The predominantly white, middle-class population consumes relatively little goat meat

Market SituationConsumer Market

The majority of people who consume goat meat in the U.S. are from a variety of ethnic groups Hispanic/Latino Muslim Somalis Jamaican/Caribbean Asian Jewish Christian Roman/Western Christian Greek/Eastern

Consumption tied to religious or cultural traditions

Market SituationConsumer Market

Tie to religions and cultures leads to Distinct preferences for product

characteristics Seasonal demand

Target Audience Hispanics or Latinos

Animal Type Preferences

Young milk-fed kids, cabrito, 15-25 lbs. live weightYoung goats, 25 lb. carcass weight or 50 lb. live weightYoung bucks, 65 lb. live weight

Processing Preferences

SkinlessFeet offHead on

Seasonal Demand Cinco de MayoEaster

Market SituationConsumer Preferences

Target Audience Muslims

Animal Type Preferences

35 lb. carcass weight, 70 lb. live weightLean carcass (discriminate against fat)

Processing Preferences

Halal slaughterSlaughter and processing cannot be done in facility used to harvest swineHead onSkinless

Seasonal Demand

Start of Ramadan, Month of FastEid-al-Fitr, Festival of Fast BreakingEid-al-Adha, Festival of SacrificeCelebrate birth of child

Market SituationConsumer Preferences

Target Audience

Somalis

Animal Type Preferences

35-40 lb. carcass (Perceive larger carcasses are from older goats and therefore lack quality)Prefer grass-fed goatsPrefer fresh meat over frozen

Processing Preferences

Halal (but will sometimes accept Kosher)Slaughter and processing cannot be done in facility used to harvest swine

Seasonal Demand

Start of Ramadan, Month of FastEid-al-Fitr, Festival of Fast BreakingEid-al-Adha, Festival of SacrificeCelebrate birth of child

Market SituationConsumer Preferences

Target Audience

Caribbean Islanders(Haitians and Jamaicans)

Animal Type Preferences

Mature bucks, 140 lb. live weightOlder, poor-conditioned goatsYoung smelly bucks, 60-80 lbs. live weight

Processing Preferences

HeadlessSkin-onFeet onHeavily singed“Cubed” bone-in meat

Seasonal Demand

Summer MonthsJamaica’s Independence Day (August 6th)

Market SituationConsumer Preferences

Target Audience Chinese

Animal Type Preferences

60-80 lb. live weight

Processing Preferences

Seasonal Demand Winter – Chinese New Year

Market SituationConsumer Preferences

Target Audience

Jewish

Animal Type Preferences

Young goats

Processing Preferences

Kosher

Seasonal Demand

PassoverYom Kippur

Market SituationConsumer Preferences

Target Audience Christian Roman/Western

Animal Type Preferences

Young goats, 22 lb. carcass weight or 45 lb. live weightMilk-fed kids, 18 lbs. or more live weight

Processing Preferences

Seasonal Demand

EasterChristmas

Market SituationConsumer Preferences

Target Audience

Christian Greek/Eastern Orthodox

Animal Type Preferences

Young goats, 22 lb. carcass weight or 30-45 lb. live weight

Processing Preferences

Seasonal Demand

EasterChristmas

Market SituationConsumer Preferences

Market SituationDemand in Tennessee Hispanics are the largest and fastest

growing ethnic minority group

Additional resource – The Growing Hispanic Population in Tennessee http://extension.tennessee.edu/publications/pbfiles/PB1762.pdf

Market SituationDemand in Tennessee

Other ethnic group populations, such as Muslims, located in larger metropolitan areas Nashville, Memphis,

Knoxville, Chattanooga

Marketing Mix/Strategy

The four Ps of marketing Product, Place, Price and Promotion

Base your strategy on Your goals and objectives The needs and values of your target

customers

Marketing Mix/StrategyProduct

Live Animal Breed Type of feed Age of animal at

harvest Weight of animal

at harvest Condition of

animal at harvest Gender of animal Timing of harvest

to meet demand

Meat Harvest procedure

(Kosher, Halal) Fabrication

specifications Fresh vs. frozen

What product will you produce? Who is your target customer?What product characteristics do your customers want?What are your goals?

Marketing Mix/Strategy Place -- Marketing Channels

Meat Goat Producers

Brokers/Traders Local Auctions Individual Consumers

Marketing

Cooperatives

Retailers

Processors

Wholesalers

Regional Auctions

Consumers

Meat/Grocery Storesor Restaurants

Individual

Producers can also serve as processors, wholesalers and retailers.

Marketing Mix/StrategyPlace

What market channel will you use? Which method would help you best meet your goals and objectives?Who is your target customer?Where can you reach the target customer?

Marketing Mix/StrategyPrice

Prices for Selection 1 kids at TN auction range from $99.10/cwt in October 2003 to $152/cwt in April 2005

Ohio study (2003) found Somali customers paid $0.80-0.85/lb. live weight or $60/hd Willing to pay $1.99/lb frozen or $2.99/lb

fresh goat meat

Marketing Mix/StrategyPrice

What price will you seek or charge? What product are you providing (quality, value-added)?How widely available is your product?What market channel are you using?What is your target customer willing to pay?What does the product cost to produce?

Marketing Mix/StrategyPromotion

Advertising Word-of-mouth referrals/reputation Public relations/publicity Web site

Marketing Mix/StrategyPromotion

How will you promote the product? What product are you producing?Who is your target customer?How can you best reach your target customer?What is your marketing budget?

Direct Marketing Considerations

Considerations for Direct marketing of goat meat On-farm harvesting

Direct Marketing Considerations… for Goat Meat

Must be harvested, processed and packaged in a USDA-inspected facility

Must be labeled with product name, ingredients, source name and address, net weight and USDA seal

Packaging must include safe handling information

Direct Marketing Considerations… for Goat Meat

If selling meat directly to consumers (retailing) need retail permit

If wholesaling meat (like to distributors, stores or restaurants) need wholesale permit

If storing meat other than at USDA-inspected facility likely need a warehouse license

…from TN Dept. of Agriculture Regulatory Services

Direct Marketing Considerations… for Goat Meat

Direct marketing food products introduces farmers to additional liability risk

Risk management methods may include the purchase of food product liability insurance

Direct Marketing Considerations… for Goat Meat

Not all slaughter facilities are USDA-inspected Custom-exempt facilities slaughter/process

animals when the animals will not enter commerce

Example – A customer may purchase a live goat from Farmer Smith. Farmer Smith delivers the goat to a custom-exempt slaughter facility where the customer pays to have the goat slaughtered and processed for their use at a holiday celebration.

Inspected by TN Department of Agriculture Must meet Good Manufacturing Practices like

USDA-inspected facilities

Direct Marketing Considerations… for On-farm Harvesting

When selling live animals from the farm, farmers may be asked

1. Can the farmer legally harvest the animal for the customer?

2. Can the customer legally harvest the animal on the farm?

Can the farmer legally harvest the animal?

No, not without meeting regulations required for custom-exempt slaughter

To learn about specific requirements, contact the Tennessee Department of Regulatory Services

Can the customer harvest the animal on the farm?

??? No known regulations exist for

slaughter or inspection in this case

Environmental regulations for disposal of offal?

Implications for product and landowner liability if customer is injured or becomes ill?

Summary

Topics covered the definition and importance of

marketing the market situation for goats and goat

meat consumer preferences for goat meat considerations for marketing strategies direct marketing considerations

Tennessee Master Goat Producer Marketing