Direct marketing has become increasingly popular as producers seek ways to add profits to their pork enterprise. While it can indeed offer extra profits, the real value of direct marketing to the whole farm enterprise depends largely on what other revenue streams exist, and the personal goals of producers and their families. As with any other entrepreneurial activity, marketing your production requires a great expenditure of time and energy.

Producers place value on an activity depending on its economic return and how well it fits with whatever else they are doing. Due to these inherent differences, what one producer may view as time well spent, may not seem so worthwhile to the next producer. The experiences of two producers as described in the following paragraphs highlight the importance of personal and family goals as hours are committed to this or any other revenue gathering activity. A key point to emerge is that direct marketing offers sufficient flexibility to meet the needs of both producers.

Meet the Rabe family from Lake City

The first couple, Dennis and Sue Rabe, own a farm near Lake City. They have 315 acres of land that is rotated in corn, soybeans and alfalfa. However, the emphasis has moved from corn to hay and pasture production. The Rabes manage their farm according to Whole Farm Planning criteria, instead of a cash basis. This gives them a picture of their farming venture that is suited to their goals.

Livestock production consists of 80 stock cows and 28 sows. They finish 20 feeder calves per year, sell 40, and keep 20 as replacements. About 30 to 40 hogs are sold each month. Some are sold as feeder pigs; others are fed to finish and sold through direct marketing or other channels. They farrow twice per year, once in pasture during the summer, and once inside during the winter. They average 8 to 9 pigs per summer farrowing, and 7 to 8 during the winter farrowing. They farrowed 18 sows this past winter.

The Rabes decided to try direct marketing in 1995. They started selling quartered pigs, 28 to 32 pounds. Shortly thereafter they began to sell regularly at the farmers market in a nearby major city. They have been there every summer for the past six years. For them it has been a successful outlet for their meat products.

They have found grocery stores and restaurants to be a "tough sell", with "lowest price" being important. To be successful in the grocery stores, the Rabes think it is necessary to be there giving out samples. Then people will buy the product.

As they worked directly with consumers, they felt the need to give them the "best possible product". For the Rabes, that meant changing the way they raised hogs. They raise hogs without sub-therapeutic antibiotics. Sick animals that receive treatment are sold to the open market. Pigs receiving antibiotics go to the sale barn, Dennis said.

Selling points for the Rabes production are:

• Antibiotic free. No sub-therapeutic antibiotics are used. If a sick animal is treated, it is sold through the conventional market.
• No crates. Uses free stalls. Raised on pasture or open-air buildings.
• Raised humanely according to standards set by the Animal Welfare Institute.
• Meat that "tastes like Grandpa's" and "just enough fat to give them a good flavor".

About half of their total pork production (170 pigs) is sold through direct marketing. Some hogs are also sold through Niman Ranch, others as feeder pigs to other direct marketers, and some through a marketing cooperative called Farming with Nature that they joined with four other producers. They also sell a handful of pigs for barbecues at a nice premium, Dennis said.

The positive points of direct marketing are:

• Flexibility. This endeavor can be as big or small as the farmer wants to make it. When the cash market is good, most production can go to the packers, while continuing to provide pork to regular customers. If the cash market drops, more effort can be made toward direct marketing.
• High return on each pound of product sold.
• The joy of meeting new people and hearing satisfied customers say, "That s the best pork I've ever had."

Points that make it difficult are:

• Time consuming. It takes time to prepare for and attend farmers markets, and to make deliveries to customers.
• They have found grocery stores and restaurants to be a "tough sell", with "lowest price" being important.

Dennis has helped other producers get started in direct marketing. He enjoys working with the public, and says direct marketing has definitely added profits to his annual net income.

Meet the Sauer family from Lewiston

Chris and Heather Sauer farm near Lewiston. Chris's brother is a partner in the enterprise. They have a diversified farm with 1,600 acres of corn, soybeans and hay. They also have several other businesses: custom haylage, custom grain drying, and a seed corn dealership.

Chris and his brother operate a 600-sow farrow-to-finish operation that produces over 10,000 hogs per year. They sell gilts for breeding stock. Chris considers himself to be a conventional producer. He uses farrowing crates and sub-therapeutic antibiotics in the feed. The Sauers also have a 120-head beef cow herd that consists of purebred Gelbveigh and commercial Angus crossed with Gelbveigh. The purebreds are sold as breeding stock. The commercial animals are sold through direct marketing or through the cash market.

They had sold half hogs and quarters of beef to family, friends, and to others by word-of-mouth. In 1997, the Sauers decided to step up the activity. They purchased their meat wholesale license and began doing demonstrations at home shows, country clubs, community celebrations, farmers markets, and grocery stores.

The Sauers now have a retail store on their farm, with a walk-in freezer to store meat. "A lot of people were coming to the farm to pick up meat anyway," Chris said. They also deliver regularly to five restaurants and two grocery stores. More meat is sold wholesale than retail. In 2000, they sold 70 steers and 300 hogs through direct marketing. Beef sales account for 70 percent of total sales. Chris figures that they will level off at this figure.

Now in their fifth year of direct marketing, the Sauers have spent a lot of time evaluating the contribution of this activity to their total net income, in proportion to the amount of time used to conduct direct marketing activities. With a new baby in the family, the Sauers are also concerned about quality of life and time commitment.

Chris concludes that direct marketing activities, such as selling at farmer's markets and delivering meat orders to customer's homes, may not be worth the time it takes. The farmer's market where the Sauers had a booth in the past doesn't have the amount of people traffic as the one the Rabes attend. Also, people at farmer's markets tend to buy for one week at a time. "What we made at our farmer's market in seven hours is equal to a delivery to one restaurant. The other businesses we have, including the wholesale meats delivery, give a better return than that type of direct marketing. From now on, we ll focus on restaurants and the retail store on the farm," Chris said.

Selling points for the Sauers production are:

• The pork they raise was tested in a meat lab. The results show it to be in the top five percent on nine different meat characteristics.
• People feel good about buying from a farmer. Customers who come to the farm get a tour so they know what farming is like.
• No silage is fed to beef. No fermented feed products to fat cattle.

Positives about direct marketing:

• Has been able to educate a lot of people about farming.
• Restaurants are good, steady customers. They always want the same products. They also pay a premium for quality. Also, one delivery per week takes care of them as a customer.

Difficulties with direct marketing:

• A great commitment of time and energy. It has taken awhile to discover that meat sales at home shows and farmers markets tend to be one time only. It is not often possible to develop long-term customers at those particular events.
• Chris doesn't consider that he has made a lot of money at it. "While there is profit to be had, the return per hour of labor is not very high, if we are honest about amount of labor used. In a way, it is almost a better deal for the consumer than the farmer. They are purchasing a premium product.
• Beef has been more profitable than pork. It is easier to move the whole animal. It is hard to move the trim parts of the hog, even though they have products such as sausage links and brats. The cost of processing has increased three times in the past three years. This might impact the future of direct marketing.
• "Grocery stores only want the lowest price from the wholesaler. Grocery store customers are also looking for the lowest price."

Conclusion

Direct marketing offers flexibility and variety, yet is a significant time commitment. The Rabe family enjoys and profits from farmers markets and home deliveries. The Sauers found the very same activities too time consuming and unprofitable when compared to other businesses they had developed on the farm. Consequently, the Sauers are changing their direct marketing focus towards wholesaling to restaurants. These two producer families highlight the importance of personal and family goals if you're thinking about direct marketing.