Collaborative Business for Local Sustainable Meats Part 2 Slav Heller St. Paul, AB November 2012

Farmer’s cooperative options in the mainstream meat business A. A.Form livestock production cooperative and seek mainstream meat processing and retail partners 1. 1.Potential for good returns 2. 2.Meat volume matching problems 3. 3.Not easy to find reliable meat slaughter and meat fabrication industry partners 4. 4.Pressure from retail to cut prices 5. 5.Fragile relation with large retailers

B. B. Form their own cooperative meat businesses, own meat processing plants 1. 1.Lure of high returns and high level of control 2. 2.Must seek new markets, competing often head on with big meat companies 3. 3.Possibility of under financing, high debt 4. 4.Management of meat plants a challenge 5. 5.Possible conflict between board and operations management Farmer’s cooperative options in the mainstream meat business

C. C.Sign on as contract producers with existing companies that already supply the mainstream markets 1. 1.Lower premiums but also low risk 2. 2.Some guarantee of profitable sales 3. 3.Need to strictly follow the marketer production protocols 4. 4.Options most likely limited to beef 5. 5.Reliability of the marketing companies vary Farmer’s cooperative options in the mainstream meat business

Farmer’s cooperative options to participate in the local meat business 1. 1.Buying (contract) livestock/meat from other farms and marketing their meats The same type of livestock and poultry Complementary variety of different meats 2. 2.Joint marketing with other farms of complementary meats, poultry and even other foods 3. 3.Joint processing and marketing with other farms horizontal cooperation This is still only about horizontal cooperation (farmers with farmers)

Local supply chain vertical alliances All kinds of link options are possible and have been tried It all depends on relationships that can be built and integrity of participants. Again, it will help building meaningful business relationships if one understands properly what is important to other people (what they value) Farmer’s cooperative options to participate in the local meat business

Imbalance of power. Those on the top of the chain with close link to consumer (retailers) control the chain. Tendency to squeeze supply chain to be competitive Imbalance of vested interest in functioning of the chain. Farmers may have much higher stake than retails as to these farmers can be “disposable” Problems with all food supply (value) chains; big and small, mainstream and local

Possible problems with understanding and accepting by farmers and processors what the upper urban part of the chain wants and needs (what is really valued) Matching volumes. Do farmers have the capacity to deliver what retail needs? Quality assurance. Ability to consistently deliver what is expected Problems with all food supply (value) chains; big and small, mainstream and local

Problems For farmers vertical cooperation too often means “putting all eggs in one basket”. This is not a good business strategy For upper parts of the supply chain (retailers), this may just be a “one small egg in their big basket”

Problems with effectiveness of cooperative organizations cooperative organizations big one Making cooperative organizations working effectively is another problem and a big one But this is a different topic that we will not be addressing today

Marketing Marketing is all about people Business cooperation Business cooperation is also about people but there are some important differences … focused on consumer’s values and their feedback Marketing Marketing is a reciprocal but linear relationship …

Business cooperation is about a web of relations and reconciling different values and beliefs

There has been developed a new business scenario that offers a new alternative for Local Sustainable Meat initiatives newunique concepts It incorporates some new and unique concepts in organization of food supply

 local sustainable meat brand  New local sustainable meat brand  Alberta city  Selling to an Alberta city (Edmonton)  supply chain  Local meat (food) supply chain  local enterprises  Independent small local enterprises with balanced sizes  multi-location slaughter  May incorporate multi-location slaughter What is the new scenario about?

 Livestock farmers  Livestock farmers producing variety of sustainable livestock & poultry forming a cooperative  Slaughtermeat cutting  Slaughter and meat cutting facility   Alternatively, multi-location abattoirs operating with a meat cutting facility  Processed meats  Processed meats operations (can be part of meat cutting, urban retail or independent)  Urban retail  Urban retail centre(s) that can be operated by a consumer cooperative The single chain will consists of:

broad range of Alberta livestock and poultry Meats and processed meats from broad range of Alberta livestock and poultry Capacity Capacity of a chain will be defined by slaughter and meat cutting capacities of the chosen meat plant, possibly a mobile abattoir independent business Each part of the chain can operate as independent business but various vertical ownership arrangements are possible Processed meat sustainable processing Processed meat formulations will follow sustainable processing principles Characteristics of the proposed new sustainable local meat brand