Ethnic marketing of lamb and mutton

Part III. Understanding and evaluating your options

SUSAN SCHOENIANSheep & Goat Specialist

University of Maryland Extensionsschoen@umd.edu

Options for selling a live animal• There are three main options for selling live animals to the ethnic

market(s):1. Sale barn (auction)2. Middleman3. Direct to the consumer

• There are different options within each category.

• Each option has various pros and cons.

• There is no best way to market live animals; it should be the method(s) that is most profitable, when all costs considered.

Marketing animals through a sale barn (also called auction or stockyard)

• Not all auctions are equal.

• Local• Terminal• Weekly• Special• Graded• Sponsored

Pros and cons of marketing livestock through a sale barn

PROS• Place of price discovery• Price competition (usually)• Prompt, guaranteed

payment (P&S Act)• Unbiased grading (usually)• Animals are weighed and

weights are certified.• Easy• Convenient• Low labor

CONS• You are a price taker• Prices not known

ahead of time• Price volatility• Selling fees can be substantial

(commission, insurance, yardage, feed), especially for lighter lambs.

• Stressful to livestock• Transportation costs• Shrink

Tips for marketing through a sale barn, with the ethnic markets in mind

• Sell livestock prior to major ethnic holidays, at least one week ahead of time.• Do not castrate males, unless necessary.• Do not dock lambs, unless necessary.• Do not sell dirty animals with soiled hocks and hindquarters.• Consider shearing animals that are neither too fat nor too thin.• When selling suckling lambs/kids, sell them directly off their dams.• Mark your animals according to how you want them sold.• Do not bring your animals to the sale barn at the last minute.• Make sure your animals have feed and water.• Call the market manager ahead of time. Get to know manager(s).• Sit through auctions. Get to know buyers.• Consider selling when reported prices are low.• Consider breeding out-of-season.• Pay attention to body condition. Don’t sell culls that are too fat or too thin.• Sell to the auction that offers you the most profit – not necessarily the highest

price.

Ethnic/religious holidays impact prices.7-

Jan

21-J

an

4-Fe

b

18-F

eb

4-M

ar

18-M

ar

1-Ap

r

15-A

pr

29-A

pr

13-M

ay

27-M

ay

10-J

un

24-J

un

8-Ju

l

22-J

ul

5-Au

g

19-A

ug

2-Se

p

16-S

ep

30-S

ep

14-O

ct

28-O

ct

11-N

ov

25-N

ov

$100

$120

$140

$160

$180

$200

$220

$240

Price per cwt, ~70 lb. lambs, Prime and Choice, YG 2-3New Holland, Pennsylvania

Western EasterMar 31

Festival of the SacrificeOct 15

RamadanJul 9- Aug 8

Orthodox Easter (May 5)

7-Ja

n11

-Jan

15-J

an19

-Jan

23-J

an27

-Jan

31-J

an4-

Feb

8-Fe

b12

-Feb

16-F

eb20

-Feb

24-F

eb28

-Feb

4-M

ar8-

Mar

12-M

ar16

-Mar

20-M

ar24

-Mar

28-M

ar1-

Apr

5-Ap

r9-

Apr

13-A

pr17

-Apr

21-A

pr25

-Apr

29-A

pr3-

May

7-M

ay11

-May

15-M

ay19

-May

23-M

ay27

-May

31-M

ay4-

Jun

8-Ju

n12

-Jun

16-J

un20

-Jun

24-J

un28

-Jun

2-Ju

l6-

Jul

10-J

ul14

-Jul

18-J

ul22

-Jul

26-J

ul30

-Jul

3-Au

g7-

Aug

11-A

ug15

-Aug

19-A

ug23

-Aug

27-A

ug31

-Aug

4-Se

p8-

Sep

12-S

ep16

-Sep

20-S

ep24

-Sep

28-S

ep2-

Oct

6-O

ct10

-Oct

14-O

ct18

-Oct

22-O

ct26

-Oct

30-O

ct3-

Nov

7-N

ov11

-Nov

15-N

ov19

-Nov

23-N

ov27

-Nov

1-D

ec5-

Dec

1000

1500

2000

2500

3000

3500

4000Number sheep sold at New Holland Sales Stables in 2013

$148

$154

$136

$214

$191

$163

$182

$182

$230

Supply impacts prices.

$183

$172

$193

$204

Prices for Prime & Choice, YG 2-3

major holidays

Quality (grade) has an effect on prices.

7-Jan16-Ja

n25-Ja

n3-Fe

b

12-Feb

21-Feb2-M

ar

11-Mar

20-Mar

29-Mar

7-Apr

16-Apr

25-Apr

4-May

13-May

22-May

31-May

9-Jun

18-Jun

27-Jun

6-Jul

15-Jul

24-Jul

2-Aug

11-Aug

20-Aug

29-Aug

7-Sep

16-Sep

25-Sep4-O

ct

13-Oct

22-Oct

31-Oct9-N

ov

18-Nov

27-Nov

6-Dec

$80

$100

$120

$140

$160

$180

$200

$220

$240

$260

Price per cwt, 70-lb. lambs @ New Holland, PennsylvaniaChoice & Prime, 2-3 Choice & Prime, 3-4 Good & Choice, 1-3 Utility & Good, 1-2

Effect of quality (grade) on goat prices

$70

$90

$110

$130

$150

$170

$190

60-80 lb kids, $ per head (weighted average)New Holland, Pennsylvania USA

April 1 -November, 4, 2013

Marketing animals to a middleman.There are many middlemen willing to buy your sheep.

• Buying station• Order buyer• Dealer/broker• Abattoir/processor• Ethnic Store• Ethnic restaurant• Cooperative• Live market• Other producers

PROS• Opportunity to negotiate

– Price– Shrink– Delivery– Contract

• Price known ahead of time• Low cost method

– No selling fees– No processing costs

• Low labor

CONS• Payment risk

[sell to bonded/licensed dealers; require cash payment]

• May not always be the highest price offered; middleman needs to make a profit, too.

• May not always be buying.

Pros and cons of marketing livestock to a middleman

Direct marketing live animals

• Different options1. Cash-and-carry2. Custom slaughter

Mobile slaughter3. On-farm slaughter

(where legal)

PROS• Set your own price• No selling fees

– Commission– Yardage– Insurance– Feed

• No processing costs• Less stress to animal• Low labor

CONS• Payment risk• Language and cultural barriers• Buyer may lack suitable transportation• You may not know where and how

animal is slaughtered

On-farm slaughter• Legality

[not legal in most states]• Need a place to slaughter• Offal disposal• Comfort (not for everyone)

Pros and cons of direct marketing live animals

Direct marketing carcasses and/or meat to the ethnic markets

• There are many options for direct marketing carcasses and retail cuts to ethnic consumers.a) Farm storeb) Farmer’s marketc) CSAd) Internet salese) Ethnic restaurantf) Ethnic storeg) Ethnic events

Pros and cons of direct marketing meat

PROS• You set your own price• You incur none of the costs

associated with selling a live animal.

• Your are eliminating almost all of the middlemen.

• Opportunity to sell your own branded product(s).

• The demand for local meat is growing.

• Interaction with customers.

CONS• Many regulations (local, state, and

federal) govern the sale of meat and meat products.

• All livestock have to be processed in a USDA or state-inspected plant; processing costs can be high.

• You may not be able to sell all cuts.• Can be costly and time-consuming

to deliver product to market place and to sell it.

• Some markets require year-round availability.

• Sometimes, the local live market will be higher.

American lamb check-offwww.lambcheckoff.com

• ALL sheep are subject to assessment when sold.[market lambs, feeder lambs, freezer lambs, ethnic lambs, 4-H lambs, culls, breeding stock]

• Two assessments1. Producer (and feeder)

$0.007 per lb. sheep sold2. First handler (usually processor)

$0.42 per sheep slaughtered

• Assessments should be remitted monthly to the American Lamb Board (by the 15th of the month following the sale).

• The check-off funds the activities of the American Lamb Board: promotion, education, information, and communication.

How does the check-off work?

Producer• The producer is assessed $0.007

per lb. of live sheep that he sells. • Who remits the check-off (to the

Lamb Board) depends upon the method of marketing.

• Feeders are obligated to pay $0.007 per lb. on the weight that the sheep gains.

• Sheep held for less than 10 days are exempt from the check-off.

Marketing agency• Marketing agencies, while

exempt from the check-off, collect the assessment ($0.007/lb) from the producer (seller) and pass it on to the buyer.

• If you market sheep through a sale barn,you do not need to remit anything to the Lamb Board.

How does the check-off work? First handler (usually processor)

• Producer portion of check-off has been passed onto the first handler by marketing agency or it is deducted from the selling price of the lambs.

• First handler is assessed an additional $0.42 per head.

• First handler remits entire assessment to Lamb Board.

Direct marketers

• Direct marketers are both producer and first handler and are assessed an additional $0.42 per head.

• If you are a direct marketer you need to remit both the producer ($0.007/lb) and first handler ($0.42/head) portions of the check-off to the Lamb Board.

Check-off examples for 100 lb. lambThe assessment for a 100-lb. lamb is $1.12 (100 lbs. x $0.007/lb + $0.42/head).

Sell at local sale barn1. Sale barn deducts producer

portion of check-off ($0.70) from sale proceeds.

2. Whoever eventually slaughters the lamb pays the first handler portion of check-off ($0.42) and remits entire amount of check-off ($1.12) to Lamb Board.

Lamb sold at Farmer’s Market1. Producer is both producer and first

handler.2. Producer pays producer

($0.007/lb. and first handler portion ($0.42/head) of check-off.

3. Produce remits both portions of check-off ($1.12) to Lamb board.

Sell freezer lamb to customer1. Producer is both producer and

first handler.2. Producer pays producer

($0.007/lb. and first handler portion ($0.42/head) of check-off.

3. Produce remits both portions of check-off ($1.12) to Lamb board.

Sell live animal to processor1. Processer deducts producer

portion of check-off ($0.70) from purchase price.

2. Processor pays first handler portion of check-off ($0.42).

3. Processor remits total check-off ($1.12) to Lamb Board.

Check-off examples for 100 lb. lambThe assessment for a 100-lb. lamb is $1.12 (100 lbs. x $0.007/lb + $0.42/head).

Sell at local sale barn1. Sale barn deducts producer

portion of check-off ($0.70) from sale proceeds.

2. Whoever eventually slaughters the lamb pays the first handler portion of check-off ($0.42) and remits entire amount of check-off ($1.12) to Lamb Board.

Lamb sold at Farmer’s Market1. Producer is both producer and first

handler.2. Producer pays producer

($0.007/lb. and first handler portion ($0.42/head) of check-off.

3. Produce remits both portions of check-off ($1.12) to Lamb board.

Sell freezer lamb to customer1. Producer is both producer and

first handler.2. Producer pays producer

($0.007/lb. and first handler portion ($0.42/head) of check-off.

3. Produce remits both portions of check-off ($1.12) to Lamb board.

Sell live animal to processor1. Processer deducts producer

portion of check-off ($0.70) from purchase price.

2. Processor pays first handler portion of check-off ($0.42).

3. Processor remits total check-off ($1.12) to Lamb Board.

State check-off programsPayment to state check-off programs is mandatory.

State Mandatory assessmentWeb site

California $0.08 per pound of wool

Colorado$0.25 per headhttp://www.coloradosheep.org/sheep---wool-authority.html

Indiana$0.005 x value of sheep soldhttp://www.hoosieragtoday.com/indiana-sheep-and-wool-checkoff-assessment-to-begin-dec-1/

Iowa$0.10 per head$0.02 per lb. of wool

http://www.iowasheep.com/

Kentucky$0.005 x value of sheep and goats soldhttps://kysheepandgoat.org/Check_Off.html

Ohio$0.005 x value of sheep sold$0.001 per lb. of wool

http://www.ohiosheep.org/oswp.html

Oregon $0.50 per headhttp://oregonsheepcommission.com/

Final thoughts about marketing options

• Sell lambs for a profit – know your cost of production.

• Sell lambs for highest “net” price; consider all marketing costs when choosing best option(s).

• Have a plan for marketing your lambs; don’t just take them to the sale barn when you feel like it.

Thank you for your attention.

Questions?

The last webinar will be held Tuesday, December 10 at 7 p.m. EST. The topic will be “Developing a marketing plan.” The speaker will be Dr. Richard Ehrhardt from Michigan State University.