direct market beef business plan

MSU Extension Beef

Planning and managing direct marketing opportunities for beef.

Kevin Gould and Jeannine Schweihofer, MSU Extension - December 21, 2020

Management is key to finishing cattle at the proper time for small meat processing appointments.

In many cases, farmers are making harvest appointments 12-to-24 months in advance at small processors and cattle for these appointments may not have even been born or procured. This increases the importance of pairing proper cattle selection and nutritional management with careful planning to optimize direct marketing opportunities.

Communication and scheduling harvest appointments with the processor are critical and it is important to understand and follow the appropriate regulations. Sale procedures will be different depending on how beef is marketed. Selling the live animal is required when custom exempt processing is used. Slaughtering and processing at federally inspected processors allows for marketing of individual cuts or bundles of meat.

Selecting cattle that will achieve desired carcass quality, including marbling deposition and carcass weights in a timely manner will impact business profitability. Ask questions about the about health protocol, genetics or breed type, and what to expect if you are not familiar with a breed. The exact breed is not as important as feeder calf quality and genetic potential that equates to mature size, carcass yield, and propensity for marbling.

A good feeding program is key to producing a high-quality carcass in the time you have before the harvest appointment. Growing and finishing diets differ in energy and protein density and result in different rates of weight gain. Feed resources, cattle size, environmental conditions, and management can all impact cattle growth. The key is developing your feeing program to keep cattle growing efficiently using balanced feed rations. Michigan State University Extension beef educators are available to help balance rations if needed.

Beef producers should consider utilizing safe, science-based technology where appropriate such as vaccinations and parasite control products to achieve cattle health and well-being goals. Also, some of the best technology available for increasing cattle performance come from ionophores and growth promoting implants. These technologies are proven safe and have shown to effectively increase gain, improve feeding efficiency and achieve a heavier market weight in fewer days. One pound of fat deposition requires 2.25 times more energy to achieve compared to one pound of lean muscle, so finishing is more cost effective when using proven technologies. Marketing “ naturally raised ” cattle will increase production cost and time on feed compared to using these technologies

The question of knowing when an animal is ready for market or finished is common and the answer comes with experience. Cattle generally grow skeletal mass as they reach a mature frame and then begin to increase fat deposition. Fat , also called adipose tissue, is deposited in stages, and relies on a solid nutritional source of energy for the animal. First fat is deposited around internal organs for protection and this starts happening at a young age for the animal, then intermuscular or seam fat, and subcutaneous fat or backfat are deposited. The final type of fat to be deposited is marbling or intramuscular fat. Marbling is the desirable fat that increases juiciness and flavor for greater consumer satisfaction. Fat is deposited earlier in the front of the animal, so it is critical to observe how fat deposition has progressed for timely marketing.

Determining market readiness is best done by assessing or measuring fat thickness between the 12 th and 13 th ribs. Estimating the amount of finish on the live animal is a skill that improves with experience. Look over the last two ribs for uniform fat cover and handle the animal if possible to feel the fat between the hide and rib. Observe pone fat deposition on either side of the tail head and fat fill in the brisket area. These areas will help identify harvest readiness. Over-finished cattle generate more fat trim and waste for customers. The desired 12 th rib fat for direct marketing is generally in the ranges of 0.3 to 0.5 inches for beef breeds and 0.25 to 0.35 inches for dairy type breeds. Customer preference may influence your decision to harvest at a leaner or fatter level. Follow-up carcass measurements and observations at the processor are helpful to understand the actual level of finish that was achieved.

Desired carcass weights are important to satisfy market demand. General carcass weight should range from 600-950 pounds, depending on sex or cattle type. Smaller framed cattle may be desirable for specific customers. When selling freezer beef direct to customers , it is helpful to discuss customer needs including cut preferences, packaging, ground beef fat content, and appropriate recipes for various cuts of beef . The goal is for customers to fully utilize the final product and become a repeat customer. Each processor will do things a bit differently. Producers need to understand the processing options and help customers with cutting and packaging options. Processors will also assist in communicating options with customers. Additional resources are available from MSU Extension for pricing grain finished or grass finished freezer beef.

This article was published by Michigan State University Extension . For more information, visit https://extension.msu.edu . To have a digest of information delivered straight to your email inbox, visit https://extension.msu.edu/newsletters . To contact an expert in your area, visit https://extension.msu.edu/experts , or call 888-MSUE4MI (888-678-3464).

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5 steps to successful direct-to-consumer meat sales

So, you’ve decided you want to sell meat directly to consumers. Where do you start?

"A lot of people underestimate the time it takes to become established and how quickly you build your business depends on using your time, investment and resources wisely," says Katie Olthoff, co-founder of ChopLocal, an online farmers market that offers products from 45 farmers and butcher shops.

Through a series of webinars, ChopLocal taps experts for tips on how to market meat online directly to consumers.

1. Develop a Marketing Strategy

A marketing strategy gives you a sense of direction and purpose. It directs your marketing time and attention, increasing efficiency. "Marketing is the process of understanding what the consumer wants, developing the product, and getting it to them," says Matt LeRoux, extension associate at Cornell University in his Marketing 101: How to Sell Your Meat Online webinar .

The first step is to identify your product and your targeted consumer. Learn what motivates them.

A marketing strategy needs to be specific .LeRoux says, "Focus on the bullseye in the middle of the target. You will attract others from the outer rings."

Set specific objectives that include the audience, a measurable goal, timeline, budget, and specific action required. Objectives don't have to be sales based. They may be goals for customer contacts or social media posts.

A crucial underlying component to a marketing strategy is defining your mission. You want to differentiate your positions and your farm in a way that attracts your target customers.

You need to tell consumers what you stand for, because they care.

2. Understand the Consumer

"The consumer of old is changing. Today's consumer reads labels and asks questions," says Roxi Beck with the Center for Food Integrity in Know, Like and Trust: What Today's Consumers Want to Know About Your Farm . "They care about your ethics, your farming practices, how you treat employees, and participate in your community."

They care about the environment, animal welfare, and sustainability with its many varying definitions.

They care about their personal health.

"Price, convenience, and taste will always be factors in purchase decision making," says Beck. "But today's consumers want more. Food choices are a complex monster. Today's consumer wants you to be able to talk about who you are and why you do what you do before you talk about the facts."

Beck cites research showing 39% of consumers consider environmental sustainability when making purchases, a 12% increase since 2019; 52% believe their purchase will impact the environment.

That requires a level of transparency that Beck says makes some producers uncomfortable. But it is essential in gaining consumer trust – and, as she adds, "trust will get you sales."

Market research can help identify consumers and their desires and helps you market products to those who already value them. Collecting data from the vendors in their network, ChopLocal found their most consistent and prolific customers were in the age 45-60 demographic, not the younger set they assumed.

"The goal should be to pull customers in, not push them toward your product," says LeRoux. He adds

there is little value in attempting to educate the consumer as to why they should buy your product. "They already have thoughts on that. It's more important to understand than to educate."

Perhaps the best way to discover how the consumer thinks is to listen .

Conversations at the farmers market, online, or with your friends and family, are portals to invaluable feedback. When you post on social media, read the comments to glean insights.

What message resonates with them? How can you give that back to them in product and services?

When a customer's questions seem silly or irritating, keep in mind they most likely don't know enough to ask a more informed question. Ag vernacular may be confusing to them (like the definition of sustainability).

Try to feel them out as to what they really want to know. Are they really concerned about the use of antibiotics in animals, or are they concerned about their own health?

3. Develop your Product

To successfully market your product to consumers, you must have a product consumers want to buy.

Familiarize yourself with the local market. Browse websites of existing online marketers to see what items are offered, and which ones appear to move.

Seek out expertise.

Then, if need be, adjust your product to what your consumers are telling you they want.

LeRoux gives the example of a producer selling freezer beef. He was hearing from customers that it was hard for a family to write one big check for a half or quarter of beef, even though it was a good price per pound. He adjusted and began selling smaller bundles.

Remember your product plan must include profit.

In Profitable Meat Marketing LeRoux offers a new Cornell University meat pricing calculator that can help you work through strategies to get the profit you need.

4. Make Yourself Seen

"Let consumers know you are there and have the product they're looking for," says LeRoux.

Invest in branding. Develop a logo and color scheme so you are easily recognized in print, on-location signage, and social media.

The past few decades have changed the way we consume information, creating opportunity to share your message beyond traditional advertising.

Social Media

Social Media outlets such as Instagram, Facebook, and Pinterest, provide an option for reaching your targeted consumer with minimal cash outlay. YouTube videos are another creative outlet. Targeted advertising is available at reasonable costs.

Start your sharing with friends and family and let their network help you build your following.

Connecting with specific community pages allows you to target your message to the group's interest and engage with its members.

Facebook offers sharable "events" for your farmers market appearance, an on-farm store sale, or a virtual event that invites a targeted audience and sends a reminder – another opportunity to share.

Make sure your information is clear, concise and consistent. A link to complete the sales process is important

Keep messages positive. Avoid whining or guilt trips.

Stories, quizzes, polls, expert advice, foodies and influencers, live videos all make effective posts. Switch it up. Try new things. Entertain. The more variation, the more ways people can engage.

Photography

Photos are the most effective way to catch the consumer's eye. They can be used to showcase product and give insight into your farm.

Farm Marketing Mentor Victoria Robinson, in Using Social Media to Sell Direct to Consumers , says people like photos of people, livestock (especially newborns), daily activity, and farming.

"When sharing real life adventures, it is best to document – not create," says Robinson. "Don't make it harder than it is. They want to see you and what you do, not what you set up for them to see."

Always highlight the best animal care practices.

Engage Other Accounts

Share photos of activities that include other people, and have them share, too. "Seize the spider web effect to get your name in front of as many potential customers as possible," says Robinson.

Use social media posts to thank customers. "Showing appreciation is a way to show others you have happy customers," says Olthoff.

Educating the consumer may not be a good overall marketing strategy, but it is useful when it helps them get what they already want – like a recipe to cook an unfamiliar cut of meat, or a new way to cook a familiar one, maybe in an ethnic dish.

Always give credit and link to the original recipe source, says "Dance Around the Kitchen" blogger Kelsey Byrnes in Food Photography and Sharing Recipes .

5. Stay engaged

In any social media campaign, engagement is more important than "likes."

"It's not a numbers game," says Robinson. "It's not about going viral. It's about having a group of loyal customers."

Social media is a form of customer service. When you use social media as a marketing tool, you create a platform that requires attention and nurturing. Posting is making a commitment to respond and engage.

Just like greeting returning customers at the farmers market with a hearty hello and a warm smile, it's about building long term relationships and selling people what they want.

The ChopLocal webinar series is Phase 1 of a 3-year public relations and marketing program through a USDA Farmers Market Promotion Program grant. The full series is available at no cost at Sell.ChopLocal.com

List of webinars:

Marketing 101: Selling Meat Online - Matt LeRoux, Extension Associate with Cornell University

Using Social Media to Sell Direct to Consumers – Victoria Robinson, Farm Marketing Mentor

Know, Like and Trust: What Today's Consumers Want to Know About Your Farm – Roxi Beck, The Center for Food Integrity

Food Photography and Sharing Recipes – Kelsey Byrnes, Dance Around the Kitchen

Profitable Meat Marketing – Matt LeRoux, Extension Associate with Cornell University

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You are here, direct marketing beef.

A niche is doing something that no one else is doing. There are many different types already being used by direct meat marketers, including organic, grassfed, no antibiotics, humane handling, etc. The increased interest in purchasing local foods gives a large advantage to direct market meat producers. Many consumers desire to know how their meat was raised, what it was fed and how it was handled and are willing to pay for that peace of mind and direct handshake with the farmer.

Selling meat directly includes increased producer attention to marketing, processing, labeling, storage and distribution. Producers interested in direct marketing meat can learn from others through case studies developed by the Sustainable Agriculture Research and Education program.

The SARE program, is a nationwide grants and education program to advance sustainable innovation to American agriculture. SARE offers competitive grants and educational opportunities for producers, scientists, educators, institutions, organizations and others exploring sustainable agriculture in America’s Midwest.

In addition to funding numerous grant opportunities, SARE also provides a wide range of educational resources. From newsletters profiling funded research to video success stories to books on ag production practices, a wealth of information is available to those interested in sustainable ag practices.

The SARE publication, How to direct market your beef, portrays how one ranching couple used their family’s ranch to launch a profitable, range-based beef operation focused on direct market sales. From slaughtering to packaging, through labeling and advertising, Jan and Will Holder transform their real-life experiences into a compelling narrative rich with practical tips. Additional case studies are included from direct market entrepreneurs.

To find the book and other resources for small farmers, visit www.northcentralsare.org .

How to Direct Market Your Beef

How to Direct Market Your Beef  portrays how one couple used its family’s ranch to launch a profitable, grass-based beef operation focused on direct market sales. From slaughtering to packaging, through labeling and advertising, Jan and Will Holder transform their real-life experiences to a compelling narrative rich with practical tips.

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Cattle Marketing Plans: Traditional vs. Direct to Consumer

Introduction , traditional marketing approach: , cattle processing: levels of processing plant inspection, selling direct to consumer via custom exempt slaughter , selling direct to consumers via state or federally inspected slaughter and ta , selling at a farmers market, selling “out of the freezer”, additional licensing requirements for distributing meat products, conclusion .

Cattle production is essential to Oklahoma’s agricultural sector. To maximize profits, it is crucial that cattle producers have a marketing plan in advance. Many different avenues are available for producers to market cattle, and all have varying regulations and requirements. Although we will be providing beef examples throughout this fact sheet, many of the same rules for meat processing and sales apply to other amenable livestock species.

In this fact sheet, we focus on two marketing options, “traditional” and “direct to consumer” marketing approaches and answer several frequently asked questions:

• What level of processing facility inspection is required for my type of meat sale?
• Are there any rules limiting the sale or transportation of the meat? What types of consumers will be served with different approaches?
• What should I consider when finding the best marketing match for my operation?

Sale Barn - Taking a load of cattle to the sale barn is one of the most common and easiest methods of marketing cattle. When using a sale barn, it is important that the producer be aware of a number of factors that can and will have an effect on the price they receive. Factors such as sex of their calves, castrated or not, breed makeup, weight, condition, lot size, health, horns or not and market location to name a few. Selling at auctions involves shipping and animal shrink as well as commission costs. Producers should have an idea of the worth of their cattle and current market trends before taking them to the sale barn. There are several sources for reliable market data such as Oklahoma Feeder Cattle Report (www. ams.usda.gov/market-news/feeder-and-replacement-cattle-auctions#Oklahoma). Being aware of market trends can help you maximize your potential revenue.

Private Treaty or Off Farm Sales – Selling live cattle directly from the farm can be another opportunity for producers to receive their target price for their cattle. In a private treaty sale, the buyer and seller negotiate directly with each other over the sale price of the cattle. As mentioned before, it is critical the seller know the value of their cattle when entering these negotiations. Buyers willing to travel to the

farm to purchase cattle are often looking for specific traits,

production practices or lot size. Traits can include attributes such as breed, sex or weight. Production practices may include: pre-conditioned, grass fed or all natural. Buyers will typically pay a premium for the type and kind of cattle they are looking for and sellers avoid uncertainty in the market while building a relationship with that buyer. Selling directly from the farm will avoid commission costs but the details of shrink and weighing conditions are very important. Mississippi State University Extension has an in-depth article regarding private treaty sales.

Special Value-Added Programs - Another marketing option is to take part in a value-added program. Typically, these programs are designed to sell groups of cattle at a special sale where all of the cattle being sold have been raised and/or treated in a like manner. Buyers looking for specific production practices can attend these sales and purchase cattle. Generally, value-added programs generate a premium for added production practices. Producers must adhere to the programs guidelines in order to take part.

One value-added program is the Oklahoma Quality Beef Network or OQBN. OQBN is a pre-conditioning program made possible by a joint venture between the Oklahoma Cooperative Extension Service and the Oklahoma Cattlemen’s Association. Cattle enrolled in OQBN must be weaned for a minimum of 45 days, taught to eat and drink from troughs and tanks, and follow certain health protocols. Health protocols include vaccination with the 5-way respiratory vaccine, Pasteurella/Haemolytica (shipping fever) and the 7-way clostridial (blackleg) vaccine. Exact specifications and details of the Vac-45 requirements can be found here.  Cattle enrolled in the OQBN program in 2021 drew a $15/cwt higher premium than cattle with no preconditioning.

In addition to the revenue benefits, the OQBN preconditioning program reduces stress, reduces shrink, and builds up disease immunity. Cattle in the program are heavier after 45 days of preconditioning as opposed to selling at weaning. OQBN also stresses antibiotic stewardship. Addressing mass treatment with antibiotics and its impact on antibiotic resistance is essential in reducing overall morbidity. If producers choose to market their cattle at one of the many OQBN Certified sales, they will know their sale time and date well in advance of marketing time. The complete list of program requirements and additional information can be found here.

To explain direct to consumer marketing, it’s important to explain the four levels of processing facility inspection. For example, if you plan to sell your meat direct to consumers as cuts of meat, you will need to have the animal processed at a federally inspected (USDA Food Safety Inspection Service, aka USDA FSIS), state inspected (Oklahoma Department of Agriculture, Food and Forestry, aka ODAFF) or a Talmadge-Aiken Act (TA) facility. If you are selling the live animal to one or more consumers who will then have the animal processed for their own consumption (i.e., the resulting meat products are not for sale), the animal can be processed in a custom exempt facility. We provide more information and considerations after the table.

Table 1. Definitions and rules for the four meat processing types.

*Some USDA and TA plants have the capability to export meat products to specific approved countries if they successfully meet the FSIS requirements for export certification. Export activities must be processed via the Public Health Information System (PHIS).

The ODAFF website provides a list of current state inspected, custom exempt and TA facilities in Oklahoma. Only the state-inspected and TA facilities identified with an “S” (Slaughter) or “C” (Combination slaughter/processing) have the state’s approval to slaughter livestock for the purposes of selling the meat. “P” (Processing) facilities can make further processed products from carcasses slaughtered elsewhere, but are not approved for slaughter activities themselves. Finding a facility close to your operation that has capacity for your cattle can be difficult. Booking for slaughter times often must be done months in advance. It is important to communicate with your chosen facility in advance.

Custom-exempt slaughter has fewer inspection requirements and is registered and approved by ODAFF. Under a custom-exempt scenario, the cattle producer sells a live animal to one or more buyers. The animal is taken to the processing facility and the resulting meat products are owned by the one or more buyers of the live animal. The meat can be consumed by their family/families or non-paying guests. Meat that is slaughtered under a custom-exempt scenario cannot be sold as individual cuts and has “not for resale” listed on the packaging.

Consumers are often confused by the difference in live weight and meat produced. Additional information can be found in fact sheet FAPC-245 Custom Beef Processing Expected Yields . It is important to set realistic expectations for the consumer. Consumers also may experience a per-pound price sticker shock. They may not realize that the average price per pound includes less expensive cuts such as hamburger, and more expensive cuts such as ribeyes. When selling live animals for custom exempt, some consumers may only purchase a percentage of the live animal. It is important that the consumer understands the cuts of meat they will be receiving and selects either the front or rear quarter based on their needs, and the needs of the other buyers of the live animal. Most consumers select the exact butchering specifications from a sheet provided by the processor. Freezer space may be a limiting factor for some consumers. More information can be found in AFS-3401 Buying Beef for Home Freezers .

If your animal was slaughtered and processed in a state, federal or TA inspected plant, individual cuts of meat are eligible for resale. The processing plant should be able to help guide producers on necessary labeling for individual resale. Any specialty logo or labeling designed may result in additional costs. Organizations such as Oklahoma State’s Robert M. Kerr Food and Agricultural Processing Center  can help with the design and labeling requirements.

In general, pricing individual cuts can be more difficult. The USDA has information about boxed beef cuts that may be helpful in gauging prices. You need to take into consideration the cost of raising the animal, as well as the quality of the particular cut you are pricing. If you are selling lower quality animals, you may consider processing for hamburger only.

Selling individual cuts of meat at farmers markets can be an opportunity for some producers. While nearly every farmers market has different rules, some may require a county health department certification. On top of this requirement, markets can have fees of up to $900 for an annual license. Some farmers markets may allow you to simply have flyers advertising, whole, halves and quarters of live animals for custom exempt slaughter. Others will require the sale of actual product, which would require state, federally or TA inspected slaughter. Additional considerations for selling the actual cuts at farmers market include keeping the meat frozen and other food safety issues. When considering selling at a farmers market consider the following:

• Does the farmers market allow meat products to be sold at its venue? This is especially important to consider given some farmers markets do not allow processed food products.
• How far is the farmers market from my operation?
• What additional licenses or fees are necessary?
• Do I have the storage available to keep meat frozen before and after the market?
• Do I have the correct receptacles, dried ice, or portable freezer to keep meat frozen while at the farmers market?
• Do I have the labor, or time myself to sit at the farmers market?

If selling state or federally inspected or TA meat, there is also the option to sell the product “out of the freezer.” This can help you avoid some costly fees associated with farmers markets or opening a storefront. If you are shipping the meat product you must:

• Use a Styrofoam cooler to hold product.
• The product must be kept frozen-packed with dry ice (regular ice will not work).
• The package must be labeled perishable .
• US Mail, UPS, Fed Ex all have 2 day shipping options.

When selling out of your freezer, ensure that you have adequate storage for the frozen meat. There can also be storage costs associated with storing meat for long periods. (For example, a ribeye may sell quicker than a heart. Plan for these considerations in your cost of storage.) Will you have people pick the meat up from your home? Will you meet at a public location? How will you advertise? Your personal safety and level of comfort with strangers on your property should be considered.

While ODAFF licensing is not required, it is recommended. Having the free license number displayed can often work in your favor if you have a regulatory issue. The certification of registration for distributors, meat brokers and public warehouses is available here.

Rules for additional licensing can vary depending on county health department rules, so make sure that you are up to date on all licensing procedures and requirements, especially if delivering to grocery stores or restaurants as part of a branded beef program.

Both traditional and direct-to-consumer marketing approaches can be viable options for capturing cattle premiums. The biggest barriers to direct-to-consumer beef marketing are typically slaughter facility inspection requirements and time.

General considerations for traditional methods: 

• Where should I sell my cattle.
• What time of year?
• Will I participate in a preconditioning program?
• Private treaty, or sale barn?

General considerations for direct to consumer methods: 

• What type/level of inspection do the processing facilities around me have?
• How will I advertise my product?
• What is the quality of my meat?
• What additional licenses fees or selling fees do I need to pay?
• Do I have the storage needed?
• Is there demand in my area?
• You need to determine your costs to figure out pricing. People may not be willing to pay what you need to charge.

Regardless of whatever method is used, the key to success is to make plans in advance and mapping out steps that need to be taken along the way. Waiting until it’s time to sell calves is too late!

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Evaluating direct-to-consumer marketing opportunities for local beef in missouri.

Drew Kientzy, Research Analyst, Agricultural Business and Policy Extension

Jennifer Lutes, Field Specialist, Agricultural Business and Policy Extension

Jake Hefley, Field Specialist, Agricultural Business and Policy Extension

Many consumers seek high-quality beef from local sources. Beef producers considering finishing cattle may choose to sell cattle into the commodity beef market or market live animals or packaged beef directly to consumers. In many cases, a combination of commercial and direct marketing may be the best way for producers to capture more value from their beef and sell the volume necessary for profitability. This publication helps producers evaluate direct-to-consumer beef marketing opportunities.

Selling beef direct-to-consumer

Cattle producers have marketing options when selling directly to consumers. Producers can sell whole live animals, shares of live animals (halves and quarters), or packaged beef by the cut. Often, the producer’s marketing decision depends on the type of processing facilities nearby and the amount of time the producer is willing to spend marketing cattle or beef.

Selling beef by the cut requires producers to work with processing facilities under federal or state inspection. Beef producers must sell their cattle by live weight as a whole, half or quarter share if customers want to process the beef under a custom exemption to inspection. Processors operating under a custom exemption may only be hired by the animal’s owner at the time of slaughter. Custom exempt processing costs are paid by the buyer or the person taking possession of the beef.

Beef cattle producers often find it difficult to market a whole beef as many consumers are not able to store or consume such a large quantity of beef (Figure 1). To make local beef more feasible, cattle producers can offer shares of an animal to customers and reduce individual financial and storage obligations. Selling half- or quarter-shares of the animal does increase marketing costs, but it also increases the price farms can charge for the beef due to added convenience for consumers.

Some consumers prefer specific beef cuts rather than bulk orders. Producers can cater to these consumers by having finished cattle slaughtered and processed under state or federal meat inspection. Then, beef cuts can be priced and sold by the pound. Producers who elect to sell beef by the cut do incur costs for processing, cold storage and marketing. However, producers can charge premium prices for this added value. Producers with high-quality beef may elect to have their beef quality-graded during processing and charge premiums that reflect the quality of their beef.

Measuring the value of a beef carcass

The most common value measures of a beef carcass are yield grade and quality grade. Yield grades represent how much meat a carcass will yield. Yield grade can be calculated as the ratio of carcass weight to the weight of edible meat harvested. Yield grade is scored on a scale of 1 through 5, with “1” having the highest ratio of boneless closely trimmed cuts to carcass weight. The calculation for yield grade is based on the hot carcass weight of the beef; the fat thickness at the 12th rib; percent of kidney, pelvic, and heart fat (KPH); and the ribeye area. An over-finished animal of a given frame size will typically have a less desirable (higher number) yield grade, while a lean, heavily muscled animal of the same size will have a more desirable (close to “1”) yield grade.

Quality grade measures the tenderness, juiciness and flavorfulness of the beef. Marbling and maturity (animal age) are the two factors used to determine beef quality grades. Because quality grade is visually assessed, some margin of error is possible. One of eight quality grades is assigned on a “Canner” to “Prime” scale with “Prime” being the best grade. There are two components of quality grade: marbling (more intramuscular fat is better) and age (less than 30 months is ideal). USDA Agriculture Marketing Service provides quality and yield grade standards for the beef industry.

Impact of yield and quality grades

When selling beef direct-to-consumer, a better yield grade benefits the producer in terms of the total pounds available for sale. A better quality grade indicates a premium product that commands a higher price. It is important to note that yield grade and quality grade change opposite from each other when it comes to producing finished animals for direct-to-consumer sale. Less finished carcasses usually have a better yield grade, since they have little exterior fat, but a poorer quality grade because of less marbling accumulated. Likewise, a more finished carcass will generally have more marbling and a higher quality grade, but a relatively worse yield grade due to the extra fat deposited on the outside of the carcass and around the internal cavities. The balance between yield and quality chosen is dependent on your goals as a marketer of your product and the image of your brand.

Costs of marketing direct-to-consumer beef sold live

The costs of marketing beef direct-to-consumer are dependent on the costs to produce the finished beef animal, marketing costs, operating interest, and ownership costs. The companion to this guide, the On-Farm Beef Finishing Planning Budget provides greater detail about the production costs for a finished beef animal. Marketing costs, operating interest and ownership costs vary with the method of sale. Table 1 shows the estimated costs of finishing a beef animal sold direct-to-consumer as halves, by live weight. The value of the carcass used in this example assumes a yield grade of “3” and a “Choice” quality grade, common for a grain finished animal at 18 months old.

Table 1. Costs of finishing a beef animal sold in halves.

Costs of marketing beef as individual retail cuts

When evaluating the opportunity to sell beef by the cut direct-to-consumers, producers incur costs to slaughter, process, package and store packaged beef. These costs add to the costs of finishing and marketing live animals.

Selling packaged beef cuts requires the finished beef animal to be slaughtered and processed under inspection,   adding costs an estimated $800 to $900 per animal depending on animal weight and processing specifications. When pricing beef as retail cuts, be sure to account for processing and storage costs. Table 2 shows an example of the cost of raising and marketing a finished beef animal as retail cuts. The value of the carcass used in this example assumes a yield grade of “3” and a “Choice” quality grade, common for a grain finished animal at 18 months old.

Table 2. Costs of finishing a beef animal sold as retail cuts.

Custom packaging and labeling will help establish a brand for your beef. Branding increases consumer recognition and the likelihood of repeat customers. Costs of custom packaging or labeling vary depending on the type and level of detail included. Examples include labeled butcher paper, stickers for vacuum packaging or logo-printed tape.

Because producers retain processed beef until it is sold, they must purchase and operate cold storage equipment. Producers may use a walk-in cooler or freezer, but it may be more economical to buy large chest-type freezers if fewer than five beeves must be stored at a time.

Selling retail cuts also requires more marketing time. Consider the marketing time: delivering to and picking up from the processor, interacting with customers and potential customers, organizing and storing meat, removing from storage and distributing product. Additionally, the producer must also manage inventory and pricing in such a way that both fast- and slow-moving cuts are sold to clear storage space to make room for the next animal processed. All of these business practices require time and financial commitment; consider them before beginning operations.

Returns to on-farm finishing

Prices are highly variable for locally finished cattle sold direct-to-consumer. Prices depend on local supply and demand as well as the availability of local meat processors. Factors dictating supply and demand include proximity to population centers, competition for local beef, tastes and preferences of local consumers and how beef animals are sold (whole, halves, quarters or retail cuts). Table 3 shows the estimated price received per pound for fall-born cattle by each method of sale assuming a 1,300-pound animal.

Table 3. Estimated gross returns selling finished beef animals (excluding cull sales).

The Missouri Beef On-Farm-Finishing Guide and spreadsheets evaluate costs and returns for live commercial animal sales, freezer beef, or beef sold by the retail cut. Use the links below to download these resources.

• Missouri Beef On-Farm Finishing Budget for Fall Calving (XLSX)
• Missouri Beef On-Farm-Finishing Budget for Spring Calving (XLSX)
• On-Farm Beef Finishing Planning Budget

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Direct marketing beef, freezer beef.

Keeping a few feeder calves on the ranch to produce freezer beef to eat at home or sell to neighbors is very common. Niche markets for custom finished or locally produced beef have existed since the beginning of commercial beef production in the United States. When the market for feeder calves turns down and the cost of beef in the grocery store goes up, beef cattle producers often emphasize custom finishing steers and locally marketing beef, which diversify the beef cattle operation.

Important factors affect the practicality of direct marketing beef. The first is whether this type of marketing will be profitable. Use a “value of gain” calculation to determine this. The value of gain calculation is similar to the calculations for deciding whether or how long to background feeder calves or graze stockers. First, determine the value of the finished cattle. Then subtract their value as feeder calves. Divide the result by the number of pounds added.

The value of the finished cattle depends on marketing. Consider an example where finished cattle are marketed on live weight. In this example, the live weight price for finishing cattle is $0.97 per pound, and the price for 700-pound stockers is $0.80 per pound. The calculation is as follows: ((1200 pounds x $0.97/pound) – (700 pounds x $0.80/pound)) / 500 pounds = $1.21. In this example, each pound added is worth $1.21.

The next figure required to calculate the real value of gain is “cost of gain.” This will fluctuate with diet cost and cattle feed efficiency. If cost of the finishing diet is $200 per ton (($200/ton) × (1 ton/2000 pounds) = $0.10 per pound) and it takes 6 pounds of feed to produce 1 pound of gain, the feed cost of gain is $0.60 per pound ($0.10 per pound x 6 pounds feed/1 pound gain = $0.60 per pound of gain). The actual cost of gain would also include labor, equipment, and other peripheral costs of animal maintenance.

On-farm finishing of beef cattle limits cash flow from those animals in the short term. If a 700-pound steer is harvested at 1200 pounds and gains an average of 3 pounds per day (500 pounds of gain needed/3 pounds per day gain = 167 days), revenue is offset for 167 days, or about 5½ months. Therefore, include interest in economic calculations. Finally, subtract the cost of gain from the preliminary value of gain to get the actual value of gain, which in this example is $0.61 per pound for 500 pounds, or a total of $305. If the peripheral costs add substantially to the cost of gain, the gain can become a loss.

Selling beef directly to consumers enables beef cattle producers to set prices that cover costs and provide profits if there are enough buyers at these price levels. Many consumers are willing to pay premiums for freezer beef from cattle producers who develop relationships with them and share information about cattle management practices. Prices often fluctuate seasonally in fed cattle markets. Selling freezer beef directly to consumers for a consistent price can even out profits.

Feeding Program

The method for adding pounds also affects the profitability of direct marketing beef. Feeding choices include forage finishing, concentrate (grain-based) finishing, and a mix of those two methods. Deciding which feeding approach to use is not always simple. Evaluate available resources (forage availability and the quality, cost, and nutritional value of commodity feeds), and work with a nutritionist to make this decision.

Consider how cattle diet impacts feed efficiency and how feed efficiency affects cost of gain. Also take into account how the diet will influence beef quality and how that quality will be perceived by the target consumer. Most southeastern U.S. cattle producers include forages to some extent. Consider using ionophores to improve feed efficiency and help control coccidiosis.

To plan a cattle finishing program on the ranch, first decide on the target animal age and live weight at harvest. Use cattle frame size to estimate the ideal weight at harvest to achieve a given level of back fat thickness in the fed cattle. For example, large-frame steers are expected to grade Choice at 1250 pounds or higher, whereas large-frame heifers are expected to grade Choice at 1150 pounds or more. Medium-frame steers are expected to grade Choice at 1100, and medium-frame heifers are expected to do so at 1000 pounds. Small-frame steers are expected to grade Choice at less than 1100 pounds, and small-frame heifers are expected to grade Choice at less than 1000 pounds. Based on the expected animal age and weight at the start of the finishing phase, set a target harvest date.

Calculate the rate of weight gain needed during cattle finishing to meet target weights by the harvest date. Determine if this rate of weight gain is achievable and cost-effective for the production circumstances. When estimating expected rates of gain on different nutritional regimes, consider the genetic potential of the cattle. Once the finishing program is underway, monitor cattle weight gains periodically and adjust the nutritional program to meet target finishing goals.

Forage finishing requires high-quality forages to achieve acceptable rates of gain and finished weights in a reasonable time frame. Calving seasons, weaning dates, and seasonal forage growth patterns affect forage finishing. Match forage species and availability to cattle nutrient needs to develop lean muscle and fat. Efficient forage finishing systems for beef cattle require planning. Economics; consumer preference for fat color; and feed availability, nutrient value, and price may dictate the degree to which forages are used for cattle finishing.

Processing Considerations

Good communication between beef cattle producers and processors is essential. Visit with processors well in advance of cattle harvests to learn processing schedules, beef cut options, meat packing alternatives, and processing costs. Ask how much advance notice the processor needs. Ask about any processor specifications regarding age, weight, and daily number of head of cattle that can be processed at the facility. Make sure that the processor has enough freezer space available for the amount of beef to be harvested and stored over a given time period. Inquire about cost of frozen storage, if any.

Be sure all cattle delivered to the harvesting facility arrive clean, clearly identified, and on time. It may be more cost-effective to deliver as many head of cattle on each load as possible within processor limits. Maximizing the number sent at one time spreads freight cost across more head of cattle, which is especially important when hauling cattle long distances to harvest. It may also lessen processing costs.

The Niche Meat Processor Assistance Network is a group supported by the Cooperative State Research, Education, and Extension Services of the U.S. Department of Agriculture. Their goal is to “strengthen and expand processing capacity, nationwide, for niche meats.” They publish information on locating local processors and understanding beef processing and sale regulations.

Beef Marketing Considerations

The effort needed for marketing the final beef product is one of the most common reasons that some beef cattle producers do not do direct sales. If cattle have remained on the farm of origin, source verification is possible, which can attract some consumers. Advertising the product as not having been treated with antibiotics can attract some consumers who might be willing to pay more for it. Maintain accurate records, and market the individual animals that did not require medication as “not antibiotic treated.” This marketing strategy can also apply to cattle that did not receive growth-promoting implants or medicated feed. Beef from cattle finished on forage-based systems can also find a niche market.

Make sure to communicate effectively with consumers regarding the product if cattle for harvest received any animal health products or growth-promoting additives, clearly explain this to customers to avoid any misunderstandings. It may also be helpful to provide customers with an overview of what the cattle were fed and how they were managed.

Any increase in market price from these management strategies might not offset reduced performance caused by the lack of antibiotics, growth-promoting implants, or ionophores. Refer to Mississippi State University Extension Publications 2485 Growth-Promoting Implants for Beef Cattle and 2518 Feed Additives for Beef Cattle for more information on the benefits of using growth-promoting implants or ionophores. When marketing, do not imply that other beef products are any less healthy or wholesome. Such statements could damage the beef industry as a whole. The consumer’s willingness to pay more for these management practices decreases as the general economy slumps. Constantly question whether there will be any real value to each added practice.

Finding a processor can sometimes be a challenge. Any meat product intended for retail sale must be harvested in a U.S. Department of Agriculture-inspected facility. Inspected custom processors are not as common as they once were and might be far from the ranch, making freight costs a limiting factor. To overcome this challenge, market the live animal to the consumer and offer to haul it to a custom processor that will package the beef to the buyer’s specifications. The consumer typically pays the cattle producer for the live animal based on a carcass weight price and pays the processor directly for animal harvest, beef processing, and beef packaging.

The sheer size of a whole beef carcass and consumer demand for individual cuts make direct beef marketing challenging. Customer service is extremely important in direct beef sales. Take time to explain to consumers how much beef they can expect, the processor options for different meat cuts and packaging, and the cost of processing.

Freezer beef is often priced based on hot carcass weight, so it is important that consumers understand how much carcass weight to expect. Finished beef carcass weights often weigh between 550 and 950 pounds but can vary widely depending on cattle genetics and management. Cutting and trimming procedures influence the percent retail yield. Removing fat and bone decreases the percent retail yield. Table 1 shows the approximate retail yields from carcasses of different Yield Grades. Detailed explanations of animal live weights, hot carcass weights, dressing percentages, beef Yield Grades, and beef Quality Grades appear in Mississippi State University Extension Service Publication 2522 Beef Grades and Carcass Information .

Some consumers may want a half (a side) or quarter (forequarter or hindquarter) of a beef carcass instead of a whole beef carcass, so coordinate cattle harvests based on consumer demands. A forequarter includes the chuck, rib, brisket, plate, and full flank. It generally has fewer tender cuts and more cuts that require pot roasting. However, a forequarter provides a higher percentage of usable lean meat and costs less than the side or carcass. A hindquarter includes the round, loin, and the flank. It provides more steaks and roasts but costs more per pound than a side or carcass.

Explain to consumers that a whole carcass or a side contains a variety of high- and low-priced cuts. A beef carcass generally consists of about 25 percent waste, 25 percent ground beef and stew meat, 25 percent steaks, and 25 percent roasts. For example, a Yield Grade 3 carcass weighing 700 pounds with 25 percent waste has about 525 pounds of usable meat. Each side of beef (carcass half) would therefore contain about 262.5 pounds of usable beef.

Tell consumers how much freezer space will be needed to store the meat. As a rule of thumb, one cubic foot of freezer space stores approximately 35 to 40 pounds of cut and wrapped meat. Oddly shaped meat takes up slightly more space.

Help consumers understand when to expect the final product by explaining harvest dates and meat processing and storage times. Before harvest, ask each customer detailed questions to be sure that processing directions meet their needs. For example, ask consumers how much hamburger they prefer per package, how thick they prefer their steak cuts, and how long they want their meat to age. Make sure consumers understand the importance of paying for processing and picking up beef promptly from processors.

Good communication with beef customers is critical in direct marketing beef. Listen to what they want and adjust cattle production practices when appropriate. Give written information about what to expect from a freezer beef purchase to buyers, particularly first-time buyers. Follow up with consumers who suddenly stop purchasing freezer beef to find out why they stopped. Develop an order form that makes the beef purchase clear to both the producer and consumer. Some producers request a deposit from new customers before cattle finishing to safeguard against incurring cattle finishing costs and then having no buyer for the end product.

Word of mouth is a common means to advertise direct beef sales. Thus, developing and maintaining a good reputation as a freezer beef producer is crucial to future sales. Ranch websites and advertisements in industry publications are other methods of reaching the customer base. Mississippi MarketMaker is one website that provides an interactive mapping system for locating businesses and markets of agricultural products in Mississippi and links between producers and consumers. Direct beef marketing can expand beyond the local area using these types of marketing tools.

Direct Marketing Beef Conclusions

Much of the large-scale cattle finishing operations are outside the southeast U.S. Grain growing and fed cattle processing facility locations influence this.

Forage-finishing or a mix of forage- and concentrate-based finishing eliminates or reduces reliance on concentrate-based feeds. High-quality forage systems are possible throughout Mississippi but require proper planning and management.

Maintain some flexibility with regard to cattle diet, length of feeding phase, and volume. If the feeder calf market is relatively high and cost of retail beef declines, then custom finishing on a small scale may not be profitable. Retaining a few calves each year to market as finished live cattle for freezer beef can help diversify a cow-calf or stocker operation and could increase profit. For more information on beef marketing or related topics, contact an office of the Mississippi State University Extension Service.

Mississippi MarketMaker . 2009. Accessed May 11, 2009.

NMPAN. 2009. Niche Meat Processor Assistance Network . Accessed May 11, 2009.

Publication 2563 (POD-09-23)

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AgriVision Episode 31 – Direct marketing beef can add value to farm operation

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Host Katie Wantoch and Lyssa Seefeldt, Agriculture Extension educator in Eau Claire County, discuss some of the points to consider for a farmer who is interested in direct marketing their meat to consumers.

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Katie Wantoch 

This is UW Extension’s Farm Management AgriVision Podcast. I am Katie Wantoch Agriculture Agent with UW-Madison Division of Extension. I will be chatting with fellow Extension Educators as we answer questions from farmers and share our knowledge and expertise on how you can improve your farm management skills. Today I am joined by Lyssa Seefeldt, Agriculture Extension educator in Eau Claire County. Welcome Lyssa to the podcast.

Lyssa Seefeldt 

Yeah, thanks for having me, Katie.

Lyssa, a farmer and his brother asked this question. They milk 180 Holstein cows. For the past six years, they have been using sexed beef bull semen on the bottom half of their herd to get beef bull calves to raise. They are thinking about expanding their direct market business to 45 to 48 steers each year, the farmer’s wife would like to quit her job at an insurance office and handle this, which would free up the farmer and his brothers time to do more on the farm. The wife wants to advertise on social media and create a website. They are wondering what the downside of expanding their direct market beef business would be.

Right. When you’re selling to a direct market, it really allows you to control your prices that you’re getting for those animals that you’re selling. Or if you’re selling halves and quarters, what you’re getting in for those halves and quarters. And the flip side with that, we also need to know what our cost of production is. So that when we’re setting that price, we’re not undervaluing our effort, and things like our labor, because that’s often something that we see happening with direct marketing, when we’re just talking about selling to friends and family. And when selling to friends and family. Usually, we’re okay with maybe undervaluing our labor a little bit. But when it starts to get to the point where we’re selling animals out to the public that we don’t know. And that if something doesn’t go quite right with the meat pickup, if there’s just something that ends up being tough, for some reason, whatever, and you start to get the questions from those outside consumers that don’t have a direct tie to you, other than you are the selling point. For that piece of meat, we get more management issues, if we will. And so we really need to make sure that we’re accounting for some of that extra time, that’s going to go into the management part of that. And that’s something that does get missed some times. So we do need to make sure that we understand what our cost of production just to feed those animals are, but also including our labor and our time, for marketing and some of those things. And it’s great to hear that the wife wants to be getting out there on social media and creating a website. You know, as we’ve went through lots of changes last several years, we know that there’s been some shifts in the trends of how people are using social media. And there’s actually been some trends for some folks to be moving away from social media. So that really does mean that if we’re trying to truly market to the public that we do actually, indeed need to create a website so that if we have folks that are trying to find our business, and they’re not on social media, they can still find us if they’re doing a Google search, that’s actually really important.

Right? It definitely. And maybe the wife has this background already. And she knows about all the tools to reach out to consumers outside of family and friends that they, this farmer and brother know. But if she doesn’t, I’m sure there are advertising and marketing people out there, local businesses in their area that I’m sure will be able to assist them. So they don’t always need to know everything. But they need to be able to have the customers be able to answer questions in a timely manner. And like you said, that part of it can be time consuming.

Right, right. And you bring up a good point that if we don’t have those skills to do social media and website ourselves, they absolutely can be farmed out. But then we also need to make sure that we’re accounting for that cost when we’re talking about, you know, getting our product marketed out to the public, because, again, there’s a cost associated with that, because they are providing a service. And we need to be building that into our plan of how we’re going to be recouping that.

Right? And you need to be friendly, and outgoing to reach out to consumers. I mean, that’s just part of this direct marketing. Sometimes people in have information and they know what they want. And a lot of times they do not. But you also want to be making sure that you’re reaching out to your local processing facility to make sure that you can match the increased number of steers that you’re planning. What else should they think about when reaching out to their local butcher, Lyssa?

Right and that’s a great point that butchers don’t always have that space if you’re planning on doing an increase. So it is important to have clear communication before you start that endeavor. That’s a really key thing. The other thing that we need to be thinking about is that as we get more and more of a customer base, we tend to see more requests for smaller quantities, especially when we’re talking about producing beef. Because if we’re selling a whole beef animal that’s actually a pretty significant expense for a consumer at one time. And so you’re going to see more and more requests for smaller packages of meat, if you will. So rather than wholes and halves, you may be getting requests for more quarters, or can we further subdivide this. So some folks have actually thought through and factored in creating a smaller bundle of meat that can be maybe delivered more frequently, with folks or if not delivered, at least picked up. But that also brings about the question of storage, right? Because if we don’t have our end consumer, getting that animal all at once, we may be getting a bottleneck in storage. So have we thought through? Do we have the capacity to put in freezer storage so that we can these requests over the course of a year? Or do we have a plan for that? Is it really just trying to time the number of steers going in with the number of requests that we have, and trying to match those up and, and the challenge that we get is they don’t always match up perfectly. So that can be tricky. And that’s where the freezer storage can really help us when we’re trying to do some direct marketing.

Right. And you know, there’s also the component of licensing. And here in the state of Wisconsin, the Wisconsin Department of Ag, Trade and Consumer Protection or DATCP handles the licensing side of that. And so depending on how you’re selling that meat, there are some licensing requirements and that you need to obtain, some fees associated with that. If meat is going across state lines, there are federal regulations that you need to seek instead of just the meat being sold in state. So those too can be a cost. And like you said, farmers need to consider not just the cost of producing the steer, but they need to determine what other additional fees and costs when they’re pricing that product for sale.

Right. Absolutely. And again, that goes back to having some really good clear communication with your processor and knowing how they’re certified brought up a good point with if we’re looking at doing sales across state lines. We do need to have a federally inspected butcher. So that’s something that you are going to want to find out from your local butcher, how they’re being inspected, is it state inspected, or is it federal, because that can change what you’re able to do.

Right, definitely. So all good things to think about. And of course, this farmer and his brother and wife need to have a great plan going forward so that they can take advantage of this opportunity to add value to their farm business. Well thank you, Lyssa for joining us today. Really appreciate it.

Yeah, thanks, Katie.

For more Extension AgriVision podcasts or resources to improve your farm management skills, check out farms.extension.wisc.edu. Thanks for listening.

Related Resources

Information in this article was originally published as part of the Agrivision column in  Wisconsin Agriculturist .

Extension resources

• Direct Marketing Meat, A Resource for Direct Market Meat Producers in Wisconsin (pdf)
• How much meat should a beef animal yield?
• Livestock Decision Tools and Software webpage
• WI DATCP Direct Marketing Meat and Poultry brochure (pdf)
• WI DATCP Meat Home Safety Inspection Program

Author: Katie Wantoch

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