Sunday, 12 June 2011

Thinking a Little More About Raisng Meat

I have a friend I buy pork from whenever I can. He works with a  traditional breed called Berkshire (that's the boar above), farms organically and takes it seriously. I always pay well above market price and I'm sure his other customers do too. He'd like to make it a full time business, but he knows if he did it would be a quick trip to the poor house.

The complications and economics of raising livestock properly (traditionally really) is captured well in this longer article. Somehow we have to keep people like my friend at least  thinking he can make a living, and maybe one day he will be able to, but not when the lowest price is the law.

Five sustainable lessons from a family farm

June 2, 2011

Craig Rogers
Over the years, I have heard farmers speak of their "sustainable" farms, only to wonder what they actually meant by that term. Perhaps it is the engineer in me that desires precise definition, but I have not yet grasped the fidelity of sustainable land-based farming. I understand sustainable fishing and marine-based harvest4, but on the East coast of the United States, most farmers are working on land that either wishes to return to its natural forest state, or is forced into nutrition alien to its heritage.
So although I wonder about the subtleties of terminology, I have been clear on one fundamental issue all farmers face: there is nothing sustainable about losing money.

A couple of weeks ago, I heard through the grapevine that one of the South’s most noted pork purveyors, Fudge Family Farms5, was going out of business. On one hand it was a shock as Henry Fudge had created a fine reputation with many of the South’s most noted chefs. He had grown his operation from simply supplying the hogs he personally raised on his farm in Alabama, to aggregating the efforts of some 30 other family farms from six surrounding states. Not only did his closure affect 30 small family farms, it left many chefs in the South scrambling to find new sources of pork.
On the other hand, a farmer in financial difficulty is hardly breaking news. So what went wrong?
Henry Fudge is the sort of gentleman with whom any chef would want to do business. He is a preacher who has a soft voice and temperament that just barely veils the passion of a farmer with great pride in the livestock he produces. Any first conversation with Henry about his pigs is certain to become a lesson in genetics and the virtues of various heritage breeds. He has passion for farming, the breeding of animals great chefs admire, interest in old world feeding protocols of hogs, and he has a heart that wants to help others of like mind.
But business is not easy, and farming enterprises are even more challenging than most. Mr. Fudge is very open about what went wrong and why he had to close his doors - or least change course.
His lessons are fundamental and important to anyone considering the direct marketing of meat to restaurants.
1. There is nothing sustainable about losing money.
"Sustainable" agriculture has been all the vogue, but it is not just about how the land is cared for. A farmer must be able to pay the bills at the very least, and try to make a decent living. Providing protein to a restaurant and a great chef is no more noble a pursuit requiring charity than the chef feeding their patrons. It’s all business.
Small family farms are not able to compete with commodity protein on price or in delivery charges. Chefs who visit the farm where they are considering sourcing from understand that better than most.
How many lambs must my farm kill to buy a tractor? I need to kill and sell approximately 30 lambs in order to pay the annual audit fees for my be “certified organic.”
As a shepherd, I have decided the certification route is not how I wish to honor the lives of my lambs. I will use my lambs to buy a tractor, build a barn, purchase hay - all things that I believe advance the farm and life of our animals. That is my choice and that is how I wish to farm. Each farmer has their own unique set of values that guide their business decisions.
Some producers get caught up in who is buying their product and some of the “big names” simply don’t understand how to work with small family farms. They push the farmer to compete with commodity pricing. Many large restaurant groups provide incentives through cash bonuses to chefs to keep their food cost down, thereby discouraging the use of more expensive local products. Family farms do not need to feed everyone, or sell to every restaurant, but one of the hard lessons is figuring out who not to sell to – when it is best to just walk away and deal with a chef who "gets it."
Perhaps one of the most important lessons in growing a business is learning how to say “no” to a sale. No chef or restaurant is worth losing money for the small producer. Loss leaders and other such marketing approaches are a part of business for those who can afford it – generally not the small farm producer.
2. The farmer relies on a good abattoir and butcher.
Many have lamented the lack of USDA slaughter facilities, and indeed that is a challenge. However, the greater challenge is to find a slaughter facility where they can do quality custom butchery instead of commodity packing. Mr. Fudge was handcuffed by not being able to find a quality butcher who could cut the quality of hams that country curing required. That resulted in excess inventory of product that could not realize it true market potential.
3. Whole animal usage is essential.
In general, most livestock producers who are selling directly to chefs work on a margin that is so slim, it corresponds to essentially one cut of the animal. I must sell the entire animal, minus one of the prime parts simply to cover the cost of the animal and the slaughter and processing bill. If I keep any legs, racks or loins in inventory, my operating revenue is sitting in a walk-in cooler or freezer and not paying the bills.
Chefs who use whole animals are saviors to small family livestock producers. It is interesting to me to see how many of the most lauded Southern chefs - like my customers Sean Brock6, Linton Hopkins7, Bryan Voltaggio8 and Dan Guisti9 - are the ones who use whole animals.
What has made my growth possible, however, are the chefs who use only parts of the animals but have an appreciation for the use of the whole animal. As an example, Adam Sobel10 of Bourbon Steak in Washington, DC recently switched from using whole animals to parts. But he did it in way that was financially sustainable for me.
He wanted to use more lamb loins, which along with racks, are the hottest sellers in the lamb world. In order to kill more animals to provide the loins, I can easily sell the rest of the animal - except for the legs. He agreed to buy two legs of lamb for every lamb saddle/loin he purchased. This turned it into a win-win. He got the loins he wanted, it provided more racks, shanks, and necks for which I always have a high demand, and I was not left with any inventory.
Likewise, I have many chefs who are willing to purchase and use whatever cut of lamb I am accumulating to help maintain my whole animal usage and limit my inventory. The chef who is willing to be adaptive is every bit as important to my business as the whole animal chef.
4. Beware of wholesalers who do not purchase whole animals.
Mr. Fudge is honest about his successes and failures. One of the mistakes he admits to is growing through the use of a wholesaler who could sell all the prime cuts of his hogs but was not purchasing many of the “off cuts.” Although total revenue went up when he started working with a distributor, so did his inventory. His cash flow went south.
I have been approached by major distributors and I find their methods remarkably out of touch with the realities of farming. Every major protein distributor wants a piece of the "local" pie. As soon as they see a significant number of the customers ending their purchases of commodity protein in favor of locally-farmed meat, they want in - but only on their terms.
They want to purchase parts based on customer orders, not whole animals. As Mr. Fudge soon learned, that only hurts the local farmer. Anyone can sell racks of lamb, but each animal only has two, and that constitutes only about seven percent of the whole animal carcass.
I started my business by cold-calling chefs and knocking on doors. I sell to fewer than 100 chefs in ten states. Any of the big truck grocers call on more than 100 restaurants in any medium size city. If a farmer can sell whole animals by knocking on doors, surely a big truck grocer can make a commitment to a farmer to buy whole animals and find a way to sell all the parts.
The lesson for small family protein farmers is not to get caught up with wholesalers who don’t have a commitment to whole animal usage. And wholesalers, if you don’t have a sales force capable of moving all the parts of an animal and making a whole animal commitment to a farmer, then don’t try to entice farmers to work with you in the name of sustainability.
How many small farmers need to find the fate of Mr. Fudge before the importance of sustainable business is appreciated?
5. Use your own money.
Mr. Fudge and so many farmers have found their demise at the hands of creditors. To paraphrase John F. Kennedy, farming is the only profession where you buy everything at retail, sell everything at wholesale, and pay the the shipping costs both ways.
That is compounded by the dual realities that farms are perhaps second only to restaurants as credit risks, and small family farms must generally pay for everything in cash. I don’t know of a slaughterhouse that would not require the farmer to pay the slaughter and processing bill when they pick up the product. If farmers decide to sell directly, they must sell their product to restaurant groups on 30 day terms or worse.
It is also remarkable that essentially all of my whole animal customers also pay cash on delivery. They understand the reality of small farms and are willing to work with farmers.
Many who have decided to grow their direct protein sales have done so by buying other farmers' animals. On one hand, that is a noble gesture. If they are paying more than the auction price, it is helping more farmers in rural areas who most likely do not have the skills to sell directly to high-end consumers or chefs.
On the other hand, farmers want to get paid. So, if the farmer is paid when the animals are delivered, it creates a need for capital to handle the cash flow.
Mr. Fudge and others have done this with “investors” or friends who lend them money. The margins are simply not great enough to assume much risk. A butcher who does not cut a customers animal correctly, or a delivery truck that breaks down on the road, or a drought that reduces the hay crop and increases feed costs all can equal up to negative cash flow and negative margins. Debt is not a farmer’s friend.
Thus, Mr. Fudge’s recommendation to others is to sell what you can grow, grow what you can pay for, and pay for it all using your own money. If you can afford to do more, then please think of helping another family farmer by buying their animals, cash up front, for a fair price.
Most importantly, thank any chef who appreciates the work of a farmer enough to use a whole animal or will be adaptive to the whole animal needs of the farmer.
The story of Mr. Fudge and Fudge Family Farms continues as many good farmer stories do, and there are many chapters ahead waiting to be written. Mr. Fudge is moving back to his roots as a hands-on hog farmer selling only his own animals to chefs who are willing to take a whole animal. As he said, “You may be able to knock me down but I am going to get up and dust myself off again and move on.”
Many of the fine chefs of the South will be looking forward to continuing their relationship with Mr. Fudge on a far smaller scale than in the past. It may be harder to find a true Henry Fudge hog but those who do will have something Henry put his heart into. A farmer’s pride is hard to beat.

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