It is important to understand marketing channels when trying to determine where in the supply chain to introduce your product. A typical supply chain would have a farmer selling his goats at a local auction where a livestock dealer picks them up to sell to a distributor either directly or through a regional auction. The distributor could be a meat packer (slaughterhouse that operates as a distributor) or a wholesale business that arranges to have the animals processed. The distributor then sells the carcasses or meat cuts to retailers who in turn serve the direct consumer. There are opportunities for shortcuts along this chain. The closer the market channel you sell to is to the actual consumer, the more responsibility you generally take on.
Live market auctions
Live market auctions are an easy way to market live goats. You expend almost no effort to find a buyer and you are guaranteed timely payment by a bonded entity. Of course, you have no control over the price you may receive. It may be a good idea to seek out larger regional sales or graded holiday sales where more buyers are likely to compete for your animals. Look over any past market reports for that particular auction. Are goats sold by the lb or, less professionally, by the head? Sometimes prices are reported for an “estimated weight range” because the goats are really being sold by the head. Make a commitment to call the sale barn manager in advance to get their advice on best date to come and gauge their enthusiasm for your product. If at all possible, use the auction to more directly connect yourself to buyers. This means staying for the bidding and introducing yourself to buyers. Hand out your business card. Let them know that you have more goats where these came from. Mention live weight payment.
Live auction
Graded kids
Livestock dealers, brokers or meat packers
Another easy way to market goats is through livestock dealers, brokers or meat packers. Livestock dealers may come straight to your farm. Brokers are similar to dealers but sell your animal on a commission. Many producer cooperatives essentially act as brokers. Meat packers operate slaughterhouses where they process animals to meet the demands of their wholesale and retail customers. Often you will be expected to deliver the goats to their slaughterhouse unless they contact you through a dealer or broker.
To sell to these buyers, you need to be able to accurately describe your animals. This means having a scale on farm and using it. You do not need to be an expert grader but you need to be able to provide accurate information about the age, weight, breed, and number of animals you have for sale. You need to know what your animals are worth, what current market prices are like, and how to cordially defend your asking prices. If a buyer is picking up on farm, keep in mind that 1) he or she is taking on your transport expenses, and 2) your on-farm weights will not reflect any transport shrinkage (live weight losses during transport). If your payment is based on on-farm weight, these two factors are advantageous to you.
Unless the buyer is paying you cash during the transaction it is very important that you establish a paper trail. You need to know the Packers & Stockyards Act. Check with your regional P & S representative or your state’s Department of Agriculture to see whether the buyer is bonded or licensed with an official agency. In order to qualify for P & S protection, do not extend credit, do not use threats or intimidation to negotiate price, and do get an invoice or other proof that the animals were delivered. The invoice should include seller’s and buyer’s names, number or lbs. of animals delivered, and sale price per unit. It is good to have the buyer sign it. However, a buyer signature is not required for P & S to file a complaint for you.
Direct sale to wholesale and retail businesses
Goat farmers can also bypass dealers and packers and instead sell animals directly to wholesale and retail businesses. You’ll receive a higher price, but take on much more responsibility. Often you’ll need to make all slaughter, processing, and transport arrangements and pay these expenses up front. The price you negotiate will need to take these into consideration. You’ll also need to accurately predict the carcass yield of your live goats as these buyers will be requesting specific sized carcasses.
Success in this market will depend on you having a dependable affordable USDA slaughter facility to work with and an economical, legal, and reliable way to get the meat to the buyer. You’ll need to judge how trustworthy your buyer is and even under good conditions there will be a time lapse between delivery and payment. Buyers can be sought through the marketing directory at www.sheepgoatmarketing.info , by obtaining lists of USDA Meat Inspection Establishments, by requesting lists of licensed packers from P & S, or by searching on-line yellow page services for key words such as “Halal Meat Market”.
Live animal markets
In some regions near high concentrations of ethnic populations, there are live animal markets. These markets are not to be confused with auctions. Rather, these are retail businesses where direct consumers can go and view penned animals, make their pick, and have the animal slaughtered at an on-site custom slaughterhouse. Because they take ownership of the animal prior to slaughter, the animal does not have to be slaughtered in a USDA federally inspected plant. Instead the animals are slaughtered under the “custom exemption” in the federal code which provides that the owner of an animal does not have to have the carcass federally inspected if the meat is going directly back to the owner’s household for consumption. The meat is stamped “not for resale” and then bagged for the customer to take home. Live animal markets usually buy from dealers or order buyers at regional auctions. However, sometimes they buy direct from producers. Some goat farms with on-farm slaughterhouses have become rural versions of live animal markets.
Direct sale of USDA-inspected meat
You can also sell USDA-inspected meat directly to restaurants, retail meat shops, and individuals. This requires expending time soliciting clients, receiving orders, arranging shipment, and staying in regular contact. Yellow Page searches can help locate restaurants and retail meat markets. Many restaurants are transitory, as are chefs. Chefs generally determine the menu and suppliers. Thus, if a chef leaves a restaurant, you’ll usually need to renegotiate with the new chef. Restaurants may only want specific cuts in which case you’ll need to come up with a market for the rest of the trim.
The goats must be butchered and inspected at a USDA slaughterhouse unless you live in a state such as Vermont or Maine where there are state inspected slaughterhouses with carcass inspections done by state employees. State inspected carcasses can only be sold within state. The meat must be transported at a temperature below 40°F and stored separately from non-inspected meat. For example, in an upright freezer USDA meat needs to be stored in shelves above any noninspected meat. In some states there is talk of requiring that the meat be stored at licensed retail facilities.
The meat must be processed at either a USDA plant or a state certified kitchen. You’ll need to accurately predict what size and weight retail cuts your carcasses will yield. A reliable slaughterhouse, processor, and distributor are paramount. You’ll need liability insurance to cover any problems with the meat you deliver. To keep most of these markets, you’ll need to provide meat on a regular basis. Unless you have a large herd and can stagger your breedings, you may need to become a dealer and purchase goats from other producers. Another strategy for selling direct to retailers is to raise a diverse range of products, for example, goat meat, farm fresh eggs, homegrown vegetables and, thus, save time by marketing a multitude of products to the same customer.
Direct meat animal marketing to consumers
Another way many goat producers market their animals is directly to the end consumer either through 1) on-farm sales where customers come to your farm and pick out a goat, or 2) the “freezer trade” where a customer orders a goat delivered to a slaughterhouse for them for slaughter and processing into retail cuts. These channels work well for farm families who enjoy dealing with numerous customers one-on-one and meeting new cultures. Initially you’ll need to advertise and actively seek clientele. It is a good idea to have your slaughter goats separated from your breeding stock kids or to have an easy way for customers to identify which is which. Posting prices and sticking with them will help cut down on time spent attempting to bargain. You need to decide if you are going to be involved in the slaughter process at all or if customers are simply going to pick up their goat and be on their way.
If you plan to be involved in the slaughter process, check with your state to find out the state regulations on 1) allowing customers to slaughter on-farm, 2) transporting purchased goats to a custom slaughterhouse for a customer, or 3) whether purchased goats are only supposed to be slaughtered at a federally inspected slaughterhouse. Some states have stricter interpretations of the “custom exemption” than the federal code and require that only the person “who has raised the animal” qualify as the owner. Some states allow a customer who has purchased a goat from a farm to slaughter the goat at their own premises but not on the goat farm. If you have questions about state restrictions ask for a printed copy of the regulation and a layperson’s interpretation of it. It is also a good idea to find out how other lamb and goat producers in your area handle these transactions.
If you allow on-farm slaughter, keep in mind that you are not supposed to be doing the slaughtering for the customer. You are simply permitting the new owner to slaughter it on your land. You should have a tree or beam to hang carcasses, potable water, and a sanitary, legal way to dispose of any offal that does not pollute water sources or conflict with local ordinances. In states where composting of offal is legal, many farms opt to compost the offal in a high carbon material such as wood chips. Other options are to provide a pre-dug trench or pay a rendering company to pick up offal. Farm liability insurance is a must.
If freezer trade customers are getting the goat slaughtered at a custom slaughterhouse keep in mind that theoretically they have already purchased the animal from you at a live weight price plus processing costs. It is important that they understand how much meat they can expect and how the retail cuts will be distributed. Forms that allow them to fill out how they want the meat processed can help. Ethnic customers using the goat for curry dishes may want the carcass processed into 1½ inch chunks of meat and bone on a band saw, while other customers may want roasts, chops, steaks with the remainder deboned for either stew or ground meat. If you are selling the meat rather than the slaughter goat (and this includes all sales at farmers’ markets or over the internet), the meat carcass must be inspected at a USDA-inspected slaughterhouse and meat handled under the same regulations as if you were selling it to a retail business. You’ll need to investigate the cheapest and safest ways to handle credit cards, shipping materials and containers, and shipping costs if you offer internet or mail order sales.
Market pooling
A big limitation for many farmers is having too few animals at any one time to negotiate directly with a volume buyer. One way to combat this is through market pooling. A group of producers pools their animals together to sell to a buyer. One or two people act as market coordinators and negotiate price with the buyer, pass on information about the type and quality of market animal required, determine a central pick-up point, and arrange to have a scale on-site. Farmer responsibilities will vary depending on the type of buyer your group targets. For example, if you group together to sell to a retail store, you’ll need to pay slaughter costs upfront. The pool will need to determine whether they can hire out trucking themselves if the buyer cannot provide it.
Marketing pools can be successful if all producers who commit to the pool show up, if animal quality, type and weight is as originally arranged with the buyer, and if the pool does not overextend itself and try to provide more product or more deliveries than they have market ready animals for. The producers who act as market coordinators do the most work and need to be reimbursed. If they act as graders, the role can be especially stressful because they may need to reject animals belonging to their coproducers and friends. Estimates of dressing percentages and transportation shrinkage get more difficult as animals raised under a multitude of management conditions are combined.
Cooperatives
Formal cooperatives are another way that producers can work together to attract volume buyers. A small core of dedicated producers and staff that communicate well together is needed to get a cooperative established. Substantial capital or livestock investment is needed to insure loyalty to the cooperative and to provide the business with enough operating capital to invest in reliable processing and trucking, and to effectively seek out buyers. Commissions charged by the cooperative to producers also need to realistically reflect the business costs. Well-defined quality assurance programs with easily verified criteria are essential. If marketing to restaurants that are committed to buying local product, information about the farm of origin as well as about the cooperative is often welcomed.
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