Tennessee Master Goat Producer Marketing

1. Tennessee Master Goat Producer Marketing Megan Bruch, Amanda Ziehl & Rob Holland UT Center for Profitable Agriculture Aaron Robinson TSU Cooperative Extension

2. 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

3. Introduction to Marketing • 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… • 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 • The identity of the target market • Who is likely to purchase the product • How to reach the target market • Product, Price, Place, Promotion

4. 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

5. 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

6. 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)

7. 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

8. 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%)

9. Market Situation Federally-Inspected Goat Slaughter

10. Market Situation FI Goat Slaughter by State in FY2004

11. 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

12. Market SituationImports/Exports of Frozen Goat Meat

13. 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

14. Market SituationTennessee Graded Goat Auction Data

15. 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

16. 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

17. Market SituationConsumer Market • Tie to religions and cultures leads to • Distinct preferences for product characteristics • Seasonal demand

18. Market SituationConsumer Preferences

19. Market SituationConsumer Preferences

20. Market SituationConsumer Preferences

21. Market SituationConsumer Preferences

22. Market SituationConsumer Preferences

23. Market SituationConsumer Preferences

24. Market SituationConsumer Preferences

25. Market SituationConsumer Preferences

26. 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

27. Market SituationDemand in Tennessee • Other ethnic group populations, such as Muslims, located in larger metropolitan areas • Nashville, Memphis, Knoxville, Chattanooga

28. 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

29. 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 Marketing Mix/StrategyProduct • What product will you produce? • Who is your target customer? • What product characteristics do your customers want? What are your goals?

30. Marketing Mix/StrategyPlace -- Marketing Channels Meat Goat Producers Brokers/Traders Individual Local Auctions Consumers Marketing Cooperatives Processors Regional Producers can also serve as processors, wholesalers and retailers. Auctions Wholesalers Meat/Grocery Stores or Restaurants Retailers Individual Consumers

31. 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?

32. 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

33. 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?

34. Marketing Mix/StrategyPromotion • Advertising • Word-of-mouth referrals/reputation • Public relations/publicity • Web site

35. 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?

36. Direct Marketing Considerations • Considerations for • Direct marketing of goat meat • On-farm harvesting

37. 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

38. 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

39. 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

40. Direct Marketing Considerations…for Goat Meat • Not all slaughter facilities are USDA-inspected • Custom-exemptfacilities 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

41. Direct Marketing Considerations… for On-farm Harvesting • When selling live animals from the farm, farmers may be asked • Can the farmer legally harvest the animal for the customer? • Can the customer legally harvest the animal on the farm?

42. 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

43. 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?

44. 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

45. Tennessee Master Goat Producer Marketing