Saskatchewan Organic Meat Market

Kim Minogue

Kim Mclean

Kristin Nemeth

Kari Henderson

Project Set up

Proposed by Simon Weseen M.Sc. and Gary G. Storey P. Ag. who currently work in the Department of Agricultural Economics

Research the possibility of setting up a strictly Saskatchewan organic meat market

Mission Statement

“The Saskatchewan Organic Meat Market will provide a healthy, fresh, safe, chemical free, and traceable meat product that originates from one Saskatchewan organic livestock

location”

Goals & Objectives

Promote Saskatchewan organic livestock industry

Establish reliable clientele Provide a quality, well-recognized product Become know to all organic consumers

Project Benefits

Provide a market for SK organic livestock producer’s products

Provide high quality, safe and traceable product

Provide information for benefits of organic products

Location - #1- 3414 8th Street

Floor Lay Out

Spacious area for workers and equipment

Adequate retail area Flow of carcasses

Flow of WorkPine View Farms - Osler, SK

Butcher

Fresh Meat Cooler Frozen Cuts

Consumers Consumers

Organic Slaughtering and Processing Guidelines

Slaughter facility must be certified by organic certifying agency (OCIA)

Facilities inspected annually by an auditor to ensure up-to-date documents (Storage, cleaning and transporting records, etc.)

Cleaning must not leave residues on equipment. – Cleaners approved by OCIA– Water must be tested to meet standards

It is imperative that the meat stays free from contamination

Capital Budget

Equipment $159,000 Net Working Capital $ 76,281

- Cash, inventories

Total Capital Required $234,987

Organizational Structure

Shareholders

Executive Directors 3 Organic Industry Rep’s

Manager /Meat Specialist

Butcher Part-TimeCustomer Personnel

Organizational Structure

Run as a corporation Shareholders appoint board of directors Manager will be selected by the board of

directors Manager will then be in charge of a full-time

butcher and one part-time customer personnel

Job Descriptions

Manager – Hiring and overseeing employees– Ordering proper amounts of meat– Ensuring smooth operation– Maintain positive employee and customer relations

Butcher– Cutting appropriate quantities and types of meat– Assisting with customer relations

Part-time personnel– Provide customer service– Promote organic products

Employees

Employee wages– Manager $45,000– Butcher $40,000 – Part-time $7.50/hour

The salaries will increase 2% yearly with a $0.25/hr yearly raise for the part time employee

Benefits include EI, CPP, and workers compensation (holiday pay for part-time wage)

Will be hired based on experience and the butcher will be responsible for providing any additional training

Direct Labor & Benefits

Full-Time Labour 2004 2005 2006 2007 2008 Manager $ 45,000 $ 45,900 $ 46,818 $ 47,754 $ 48,709 Butcher $ 40,000 $ 40,800 $ 41,616 $ 42,448 $ 43,297 Part-Time Labour Customer Personnel $ 7,200 $ 7,440 $ 7,680 $ 7,920 $ 8,160 Benefits for Employees Full-Time $ 7388 $ 7472 $ 7560 $ 7647 $ 7734 Part-Time $ 961 $ 986 $ 1012 $ 1039 $ 1064 Workers Compensation $ 2,148 $ 2,193 $ 2,239 $ 2,286 $ 2,334 TOTAL DIRECT LABOUR & BENEFITS $ 100,632 $ 102,682 $ 104,771 $ 106,894 $ 109,052

Market Overview

Growing demand for organic meat Saskatchewan has potential to meet this

demand Incentive to become registered organic

livestock producers The need for federally inspected organic

slaughtering and processing plants

SWOT Analysis

Strengths– Only exclusively organic meat market in Saskatchewan– Provide a high quality product at a convenient location– Educated staff available to answer all questions and provide

you with the benefits of consuming organic meat– Able to educate the public about organic products

Weaknesses– Organic meat is sold at a premium– Limited profitability for by-products (bone carcass)– Limited consumer demand

SWOT Analysis

Opportunities– Meat is provided at a convenient location– Organic meat frees consumers of food safety and

healthy lifestyle concerns– Products produced by Pine View Farms provide a

consumer product with traceability and reassurance

– The market has the potential to expand into other organic products

– Eligible for grants and funding (CARDS and Agriculture development fund)

SWOT Analysis

Threats– People who do consume organic meat purchase it

from reliable and trust worthy producer– Natural producers have a quality product at a

lower price– Limited number of consumers in Saskatoon and

surrounding area

Marketing Mix

Product– Organically raised and processed beef and pork– Animals consume feed free of pesticides,

chemical fertilizers, and GMO’s– Organic livestock is verified and inspected by an

accredited certifying body

Marketing Mix

Service– Gives consumers the peace of mind regarding the

meat they are consuming– Location is more convenient compared to the

farm gate– Butcher will cut meat according to customer

specifications– The market will educate consumers on the

benefits of organic products

Marketing Mix

Target Market– Consumers that can afford to buy and those who

make it a priority to buy– High income households in Saskatoon– Adults responsible for making purchasing

decisions for themselves and their children

Estimated Market Share & Meat Consumption

Type of Meat Total # of organic animals

consumed per week

% of market share the Market hopes to capture

# of organic animals

ordered per week

# of organic animals

ordered per year

Beef 6.58 30% 2 104

Pork 25.84 15% 4 208

Canadian meat consumer rates per capita and applied to Saskatoon

Organic consumer percentage to derive the above numbers

Marketing Mix

Pricing– The Saskatchewan Organic Meat Market is a price maker – The premium meat will be marked up 30% from natural

prices– Beef (prices per pound) – Ground $3.42

- Roast $8.40

- Steak $12.00– Pork (prices per pound) – Chops $5.10

- Ham $4.37

- Roast $3.54

Marketing Mix

Promotion– Two Types – inform organic consumers about

store

- convince current traditional meat consumers to change to organic meat

– External promotion – trade shows, websites, radio ads, magazine and publications all dealing with healthy living and/or organic products

– Internal promotion – cooking demos, taste tests, in-store brochures and displays

Direct Competition

Saskatchewan Organic Meat Market Direct Competitors

Business Strengths Weaknesses

Steep Hill Co-op 730 Broadway Ave.

Existing clientele base Location high income consumer base as well as some student consumers

Very little organic meat selection Co-op structure difficult to understand, staff consists of members which may lack in knowledge of organic products

Boryski’s Butcher Block 2210 Miller Ave. &

Broadway Ave.

Specialized meat productionknowledgeable experienced staffgood location

small variety of organic products Natural meat – grass fed beef coming from 4 different farmer which may alter consistency

Indirect Competition

Saskatchewan Organic Meat Market Indirect Competition

Business Strengths Weaknesses

Prairie Meats2326 Miller Ave. & 8th St

Specialized in meat production

Higher prices for a traditional product

M&M Meat Shops3322 8th St E & Lawson Heights Mall

Diversified productsprepared productsvariety of location

Don’t do their own processing

Costco 115 Marquis Dr.

High quality meatslarge quantities for cheaper

No personal service

IGA, Safeway, etc.Located throughout Saskatoon

Convenience - everyone has to go to the grocery store

Limited traceability of the products

Marketing Budget

Promotional Activity: Estimated Expense:

Paper & Printing $1000

Publications & Magazines $2000

Website $1500

Trade ShowTrade Show BoothTrade Show Supplies & Expenses

$500$3000

Radio Spots $1500

Taste Tests & Demos $500

Total Marketing Expenses $10000

Financial Results

2004 2006 2008 2010 2012

Total Revenue $ 475,863 $ 514,533 $ 556,576 $ 602,296 $ 652,024

Cost of Goods Sold $ 367,382 $ 487,293 $ 502,129 $ 521,151 $ 543,155

Gross Margin $ 108,481 $ 27,241 $ 54,447 $ 81,144 $ 108,870

Total Expenses $ 15,952 $ 15,978 $ 15,945 $ 15,839 $ 15,646

Income Before Taxes $ 92,529 $ 11,262 $ 38,502 $ 65,305 $ 93,223

Income Taxes $ 3,655 $ - $ - $ - $ -

Net Income (Loss) $ 85,941 $ 10,962 $ 35,761 $ 60,655 $ 86,586

Internal Rate of Return – 39%

Sensitivity Analysis

Conducted for quantity purchased, selling and purchasing price

Most sensitive variable– Quantity of beef purchased– Selling prices of all pork cuts– Purchase price of beef

Best/Worst Case Analysis

Worst Base Best

Average Revenue 75% 100% 150%

Average Materials Purchase Price

120% 100% 75%

Average Revenue $ 428,647 $ 571,530 $ 857,295

Average Materials Purchase Price

$ 384,248 $320,207 $240,155

Conclusions

Feasibility will depend on consumer support Could be a viable enterprise in larger centers

with a higher number of organic consumers

Questions and Comments?