By KEN ELLIOT and GUENTHER MUELLER-HEUMANN
Marketing means producing and selling what the consumer wants in such a competitive way that the marketer makes a satisfactory profit. Producers, processor and distributors each contribute in different ways to the "added value" profit along the value chain.
Primary producers are the first in the chain and the greater their ability to shape the end product, the more they can claim of the market price. Farmers' influence on the quality of the end-product differs from industry to industry. Market gardeners deliver more or less the final product, but wool farmers deliver a raw material into a much more complicated process.
The proportion of wool's total value added ( the price the consumer pays, say, for a garment) is usually only a few per cent; the percentage of what the market gardener gets of the consumer price is a lot higher.
As a general rule, the more the farmer can claim of the consumer price, the better for the on-farm profit. The ability to claim added value profit also depends on farmers' ability to "read" the market and produce according to its requirements - to be a marketing farmer.
Dairy farmers, for example, produce a product which, like wool, is not immediately marketable to end users, but they get more of the added value because, through their dairy companies, they own the value generated past the farm gate.
Red meat, however, does not lend itself to consumer-level branding as easily as, for example, processed and packaged dairy products.
Some branding successes have been achieved with Trim Pork and similar campaigns. But the "brand-ability" of red meat is generally limited, probably because branding traditionally implies that the product has been manipulated.
Chicken and fish products can be branded comparatively easily, because manipulation is accepted there, even necessary. The freshness requirement of red meat cuts (frozen or chilled) limits branding. In addition, the meat processing industry has traditionally been very conservative in packaging.
What can the red meat farmer do to become a marketing farmer?
The two factors that determine the value of red meat are volume and quality. Volume in turn has two components: weight and type of cuts. Quality in broad terms means taste and tenderness.
Traditionally, too much emphasis has been placed on weight (including fat), too little on taste and tenderness. The marketing red meat farmer is one who manages weight as much as quality of the meat with an eye on what the consumer wants. The red meat marketing farmer sees the herd in the paddocks as "walking quality cuts," not just "walking kilograms."
An Australian cattle rancher, Peter Chilcott, has developed a cattle selection technique called Supergene Evaluation Scheme, to maximise taste and tenderness of beef. This technique allows farmers to grade their herd and focus their breeding strategy on the most tender and tasty animals.
Mr Chilcott has already won two of prized "Paddock to Palate" national competitions in Australia for taste testing.
After this success, Brisbane retailers have shown interest in his "Supergene" product to the extent that he can demand a premium of up to 30 per cent over the "normal" market price.
At present the marketing red meat farmer does, however, face an uphill battle in NZ because the meat processing industry, with a few exceptions, has not developed grower rewards for consumer meat quality.
If meat exporters want to achieve better prices in overseas markets, which means ultimately better prices paid to their farmer suppliers, the development of meat quality strategies is required urgently.
If more meat farmers start to learn about the quality of the meat they grow, and so put pressure on processing companies, a meat quality marketing revolution could be just around the corner. It is needed.
* Ken Elliot is a Strath Taieri Red Poll stud farmer.
* Guenther Mueller-Heumann is emeritus professor of marketing, at Otago University.
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