Tennessee Master Goat Producer Marketing

Tennessee Master Goat Producer Marketing
Marketing is not the most exciting topic to many farmers. The production side is typically enjoyed more, and therefore, little or no time is typically devoted to marketing. It is important, though, to “begin with the end in mind.” Through marketing, producers can focus production and management efforts to raise a product that is marketable, thereby creating more potential to earn an income that will allow them to continue to enjoy producing goats. Megan Bruch, Amanda Ziehl & Rob Holland UT Center for Profitable Agriculture Aaron Robinson TSU Cooperative Extension

Objectives Participants will increase their knowledge of
the definition and importance of marketing the market situation for goats and goat meat consumer preferences for goat meat considerations for marketing strategies direct marketing considerations The objectives for this session are for you to increase your knowledge of the definition and importance of marketing the market situation for goats and goat meat consumer preferences for goat meat considerations for marketing strategies direct marketing considerations

Introduction to Marketing
Marketing is… Planning and executing the idea of a product, its price and the promotion and distribution (place) of that product to satisfy the needs of customers Marketing allows you to determine… If a potentially profitable market exists Ability to produce at a cost low enough and sell at a price high enough to generate a profit The identity of the target market Who is likely to purchase the product How to reach the target market Product, Price, Place, Promotion Let’s begin with an introduction to marketing. Marketing is “planning and executing the idea of a product, its price and the promotion and distribution of that product to satisfy the needs of customers.” Notice that marketing includes both planning and executing the plan. The plan should include strategies for the 4 Ps of marketing: Product, Price, Place and Promotion. These strategies should be focused on satisfying the needs of customers. Marketing allows you to determine If a potentially profitable market exists Are you able to produce at a cost low enough and sell at a price high enough to generate a profit The identity of the target market Who is likely to purchase the product How to reach the target market Product, Price, Place, Promotion

Introduction to Marketing Example 1
Without Market Planning & Execution Farmer Clark has a herd of 50 does with kids of several different breeds The farm loan payment is due at the end of the month Farmer Clark takes the kids to the local auction barn to sell them ASAP for whatever price he can get Farmer Clark is a Seller and a Price-Taker Let’s look at a couple of examples of producers…one who incorporates market planning and execution into his or her enterprise and one who doesn’t. We’ll start with Farmer Clark who does not do market planning or execute any marketing strategies. Farmer Clark has a herd of 50 does with kids of several different breeds. The farm loan payment is due at the end of the month so Farmer Clark takes the kids to the local auction barn to sell them ASAP for whatever price he can get. Farmer Clark is a Seller and a Price-Taker.

Introduction to Marketing Example 2
With Market Planning & Execution Farmer Jones has developed relationships with leaders in the local Hispanic population Knows that the Hispanic people in her community desire young goats about 50 lbs. live weight for Cinco De Mayo Farmer Jones produces her kids to the desired specifications to be ready for pick-up by customers at the farm the first week of May at the price she sets Farmer Jones is a Marketer and a Price-Maker Now let’s consider Farmer Jones who has developed a marketing plan and executes that plan. Farmer Jones has developed relationships with leaders in the local Hispanic population and knows that the Hispanic people in her community desire young goats about 50 lbs. live weight for Cinco De Mayo. Farmer Jones produces her kids to the desired specifications to be ready for pick-up by customers at the farm the first week of May at the price she sets based on market conditions and customer willingness to pay. Farmer Jones is a Marketer and a Price-Maker.

Market Situation History of Goat Marketing in TN
Early 1990s – Goats sold at local sale barns and off the farm to customers, Producers encouraged to pool goats for larger sale base Mid 1990s – Tennessee Livestock Producers offer goat auctions in conjunction with sheep auctions 2001 – USDA-AMS adopted live goat grading standards and institutional meat purchase specifications for goat meat 2002 – TLP offers graded goat sales 2005 – TLP offers 2 graded goat sales (Thompson Station and Somerville) Now let’s switch gears a bit and take a look at the market situation for goats and goat meat. First, let’s take a look at the history of goat marketing in Tennessee. In the Early 1990s and into the present – Goats sold at local sale barns and off the farm to customers, Producers encouraged to pool goats for larger sale base In the Mid 1990s – Tennessee Livestock Producers began to offer goat auctions in conjunction with sheep auctions In 2001 – USDA-AMS adopted live goat grading standards and institutional meat purchase specifications for goat meat In 2002 – Tennessee Livestock Producers offers graded goat sales In 2005 – Tennessee Livestock Producers offers 2 graded goat sales (at Thompson Station and Somerville)

Market Situation Supply and Demand
All markets are a function of supply and demand Important to understand market situation to determine market potential and plan marketing strategy Now we’ll talk about the supply of and demand for goats and goat meat. All markets are a function of supply and demand factors. It is important to understand the market situation and underlying supply and demand factors in order to determine market potential and plan an effective marketing strategy.

Market Situation U.S. Meat Goat Inventory
U.S. inventory estimated at 1.9 million head (NASS, 2005) Texas – 1 million head Tennessee – 98,000 head Some experts believe NASS numbers underestimate true inventory dramatically (35-45%) One component of meat goat supply is the meat goat inventory in the United States. The USDA National Agricultural Statistics Service estimated U.S. inventory at 1.9 million head in Texas was ranked first with 1 million head. Tennessee was ranked second with 98,000 head. Some experts, however, believe the NASS statistics underestimate the true inventory dramatically, by as much as 35 to 45 percent.

Market Situation Federally-Inspected Goat Slaughter
Goat meat sold at retail must be slaughtered under state or federal inspection programs. Meat sold across state lines must be federally-inspected. Numbers of goats slaughtered in federally-inspected plants have been recorded. In 1994 and 1995, less than 350,000 head were slaughtered per year. This has steadily increased over time. In 2004, more than 600,000 head were slaughtered.

Market Situation FI Goat Slaughter by State in FY2004
Goat slaughter is concentrated by geographic location. Approximately 35 percent of goats slaughtered in Fiscal Year 2004 were harvested in New Jersey. Texas had 18 percent. Tennessee and New York each had five percent.

Market Situation Other Goat Slaughter
Some experts estimate federally-inspected slaughter is only 50 to 60% of total Other includes State-inspection programs Direct sales to consumers Some experts estimate federally-inspected slaughter is only 50 to 60% of total slaughter. Other slaughter would come from state-inspection programs and direct sales to consumers (custom exempt slaughter and/or personal slaughter.)

Market Situation Imports/Exports of Frozen Goat Meat
In addition to goats and goat meat produced domestically in the United States, we also need to consider imports and exports that may impact the supply of goat meat in the country. In late 1980s and early 1990s, the U.S. exported more goat meat than it imported. By 2004, imports were significantly higher than exports. An estimated 695,000 goat equivalents were imported, mainly from Australia and New Zealand.

Market Situation U.S. Demand for Goat Meat
Approximately 1.3 million goats slaughtered to satisfy U.S. Demand in 2004 (by combining Federally-inspected slaughter and imports) Of these, over half were imported Potential to increase domestic production if consumer preferences can be met and cost of production can compete with import prices By combining federally-inspected slaughter and imports, we can determine that at least 1.3 million goats were slaughtered to supply U.S. demand in Of these, over half were imported. This indicates potential to increase domestic production of goat meat IF consumer preferences can be met and the cost of production can compete with import prices.

Market Situation Tennessee Graded Goat Auction Data
Prices are always of interest. This graph summarizes Tennessee graded goat auction data. The blue bars indicate the number of slaughter head sold. The lines indicate prices for different grades of meat goats. By looking at the bars, seasonality of production/supply is apparent across months. Where supply of goats is lower, prices are typically higher as expected by the laws of supply and demand. Where supply of goats is higher, prices are typically lower.

Market Situation Consumer Market
Producers need to become familiar with who consumes goat meat, where those consumers are located and why they consume goat meat Understanding the “who, where and why” will help producers in determining the ideal “what” for the consumers The predominantly white, middle-class population consumes relatively little goat meat It is also important to understand the situation in the consumer market. Producers need to become familiar with who consumes goat meat, where those consumers are located and why they consume goat meat. Understanding the “who, where and why” will help producers in determining the ideal “what” (ie. product to produce) for the consumers. The predominantly white, middle-class population consumes relatively little goat meat.

The majority of people who consume goat meat in the U.S. are from a variety of ethnic groups Hispanic/Latino Muslim Somalis Jamaican/Caribbean Asian Jewish Christian Roman/Western Christian Greek/Eastern Consumption tied to religious or cultural traditions Just who does consume goat meat then? The majority of people who consume goat meat in the U.S. are from a variety of ethnic groups Hispanic/Latino Muslim Somalis Jamaican/Caribbean Asian Jewish Christian Roman/Western Christian Greek/Eastern Consumption is tied to religious or cultural traditions.

Tie to religions and cultures leads to Distinct preferences for product characteristics Seasonal demand These ties to religions, cultures and traditions lead to distinct preferences for product characteristics and seasonal demand for product. Next, we’ll look at the preferences several ethnic groups who consume goat meat. Animal type preferences, processing preferences and seasonal demand will be explained when possible. More information is available in the manual in Chapter 1.

Market Situation Consumer Preferences
Target Audience Hispanics or Latinos Animal Type Preferences Young milk-fed kids, cabrito, lbs. live weight Young goats, 25 lb. carcass weight or 50 lb. live weight Young bucks, 65 lb. live weight Processing Preferences Skinless Feet off Head on Seasonal Demand Cinco de Mayo Easter Hispanics/Latinos consume several types of goat meat including: Young milk-fed kids, cabrito, lbs. live weight Young goats, 25 lb. carcass weight or 50 lb. live weight Young bucks, 65 lb. live weight In some cases, Hispanics/Latinos prefer goats to be processed skinless with the feet off and head on. Remember that Hispanics and Latinos come from a variety of geographic locations and specific cultures and preferences may vary. It is important to learn what the specific group you are marketing to wants and expects for product characteristics including animal type and processing preferences. Demand for goat meat is higher for this group around the Easter and Cinco de Mayo holidays.

Target Audience Muslims Animal Type Preferences 35 lb. carcass weight, 70 lb. live weight Lean carcass (discriminate against fat) Processing Preferences Halal slaughter Slaughter and processing cannot be done in facility used to harvest swine Head on Skinless Seasonal Demand Start of Ramadan, Month of Fast Eid-al-Fitr, Festival of Fast Breaking Eid-al-Adha, Festival of Sacrifice Celebrate birth of child Muslim people also consume goat meat. They prefer goats with a 35 lb. carcass weight (about 70 lb. live weight). They discriminate against fat and prefer lean meat. For processing, they require Halal slaughter for religious reasons. “Halal” refers to something that is permissible under the Islamic faith. The act of Halal slaughter is done using a set of special guidelines that may vary with different Muslim groups. These guidelines may include who can conduct the slaughter and what must specifically happen during the process. Typically, a pious Muslim man must conduct the slaughter by cutting the throat of the animal swiftly. In some cases, the animal must be faced in the direction of Mecca, and special prayers must be said. Also, slaughter and processing cannot be done in a facility where swine are harvested and processed as pork is prohibited in the Muslim diet. Muslims also prefer the carcass to be skinned with the head on. Seasonal demand for Muslims include several religious holidays and festivals as well as the birth of a child. A calendar of when these holidays occur is included in Chapter 1 of the manual.

Target Audience Somalis Animal Type Preferences 35-40 lb. carcass (Perceive larger carcasses are from older goats and therefore lack quality) Prefer grass-fed goats Prefer fresh meat over frozen Processing Preferences Halal (but will sometimes accept Kosher) Slaughter and processing cannot be done in facility used to harvest swine Seasonal Demand Start of Ramadan, Month of Fast Eid-al-Fitr, Festival of Fast Breaking Eid-al-Adha, Festival of Sacrifice Celebrate birth of child Somalis prefer goats with a 35 to 40 lb. carcass. They prefer grass-fed goats and fresh meat versus frozen. Somalis prefer Halal slaughter practices but, in some cases, may accept Kosher slaughter. Again, slaughter and processing cannot be done in a facility used to harvest swine. Somalis, like other Muslims, have higher demand for goat around religious holidays and festivals as well as at the celebration of a birth of a child.

Target Audience Caribbean Islanders (Haitians and Jamaicans) Animal Type Preferences Mature bucks, 140 lb. live weight Older, poor-conditioned goats Young smelly bucks, lbs. live weight Processing Preferences Headless Skin-on Feet on Heavily singed “Cubed” bone-in meat Seasonal Demand Summer Months Jamaica’s Independence Day (August 6th) People from the Caribbean Islands, such as Haitians and Jamaicans, also consume goat meat. These people prefer mature bucks of around 140 lb. live weight. They also like older, poor-conditioned goats or young smelly bucks of 60 to 80 lb. live weight. For processing, they prefer headless, skin on, feet on, heavily singed or cubed bone-in meat. Demand is higher in the summer months and for Jamaica’s Independence Day.

Target Audience Chinese Animal Type Preferences 60-80 lb. live weight Processing Preferences Seasonal Demand Winter – Chinese New Year Chinese people prefer goats of 60 to 80 lb. live weight. Specific processing preferences were not found. Demand is higher in the winter, especially for the Chinese New Year.

Target Audience Jewish Animal Type Preferences Young goats Processing Preferences Kosher Seasonal Demand Passover Yom Kippur Jewish people prefer young goats. The goats must be slaughtered using Kosher methods approved by Jewish law. Kosher methods include slaughter by cutting the throat by a sharp knife by a pious man trained in Jewish law. The blood must be drained from the carcass. Demand is higher during Passover and Yum Kippur. Dates are listed in the manual in Table 3 of Chapter 1.

Target Audience Christian Roman/Western Animal Type Preferences Young goats, 22 lb. carcass weight or 45 lb. live weight Milk-fed kids, 18 lbs. or more live weight Processing Preferences Seasonal Demand Easter Christmas Roman/Western Christians also may consume goat meat. They prefer young goats with around a 22 lb. carcass weight (45 lb. live weight) or milk-fed kids of about 18 lbs. live weight. Processing preferences were not found. Seasonal demand is seen for Easter and Christmas.

Target Audience Christian Greek/Eastern Orthodox Animal Type Preferences Young goats, 22 lb. carcass weight or lb. live weight Processing Preferences Seasonal Demand Easter Christmas Greek/Eastern Orthodox Christians prefer young goats with around a 22 lb. carcass weight (45 lb. live weight). Processing preferences were not found. Seasonal demand is seen for Easter and Christmas. Note that Eastern and Western Christians use a different calendar so holidays may fall on different days. Refer to the calendar of holidays in Table 3 of Chapter 1 in the manual.

Market Situation Demand in Tennessee
Hispanics are the largest and fastest growing ethnic minority group Additional resource – The Growing Hispanic Population in Tennessee In Tennessee, Hispanics are the largest and fastest growing ethnic minority group. The map shows Hispanic population concentrations by county. Davidson and Shelby counties have more than 25,000 Hispanics. Montgomery, Rutherford, Hamilton, Knox and Hamblen have between 5,000 and 10,000 Hispanic persons. Several counties have between a 1,000 and 5,000 Hispanics. A publication by the Center for Profitable Agriculture has more information on the Hispanic population in Tennessee and Hispanic product preferences. The publication can be accessed on-line or is available at County Extension Offices or from the Center for Profitable Agriculture.

Market Situation Demand in Tennessee
Other ethnic group populations, such as Muslims, located in larger metropolitan areas Nashville, Memphis, Knoxville, Chattanooga Other ethnic populations also reside in Tennessee, typically in metropolitan areas, but in much smaller numbers than Hispanics.

Marketing Mix/Strategy
The four Ps of marketing Product, Place, Price and Promotion Base your strategy on Your goals and objectives The needs and values of your target customers Your marketing plan should include strategies for the four Ps of marketing…product, place, price and promotion. These strategies should be based on your goal and objectives and the needs and values of the customers you are trying to reach.

Marketing Mix/Strategy Product
Live Animal Breed Type of feed Age of animal at harvest Weight of animal at harvest Condition of animal at harvest Gender of animal Timing of harvest to meet demand Meat Harvest procedure (Kosher, Halal) Fabrication specifications Fresh vs. frozen What product will you produce? Who is your target customer? What product characteristics do your customers want? What are your goals? The first component of the marketing mix is “Product.” There are several decisions to be made for a product strategy. What product will you produce? Live animals and/or meat? What type of live animal will you produce? What breed, type of feed, age of animal when harvested, weight of animal when harvested, condition of animal at harvest, and gender of animal will you harvest? When will that animal be marketed? Will meat be harvested using a ritual harvest method? What processing specifications will be used? Will product be offered fresh and/or frozen? These questions should be answered based on who your target customer is, what product characteristics do these customers want, and what your goals and objectives are for your enterprise.

Marketing Mix/Strategy Place -- Marketing Channels
Meat Goat Producers Brokers/Traders Local Auctions Individual Consumers Marketing Cooperatives Processors Regional Producers can also serve as processors, wholesalers and retailers. The marketing channel options for meat goats and goat meat are similar to marketing channels for other livestock species and meat products. The meat goat producer has several options. He or she can sell the goats to a broker/trader, take them to a local auction market, or pool them with other goats in a marketing cooperative. The goats will then be moved down the line through processors, wholesalers and retailers to individual consumers. Producers may choose to market live goats off the farm to individual consumers, or producers may choose to be involved in the processing, wholesaling and retailing of goat meat to individual consumers. Auctions Wholesalers Meat/Grocery Stores or Restaurants Retailers Individual Consumers

Marketing Mix/Strategy Place
What market channel will you use? Which method would help you best meet your goals and objectives? Who is your target customer? Where can you reach the target customer? The market channel chosen should be the method which… Helps you best meet your goals and objectives Helps you best reach your target consumer and meet their needs.

Marketing Mix/Strategy Price
Prices for Selection 1 kids at TN auction range from $99.10/cwt in October 2003 to $152/cwt in April 2005 Ohio study (2003) found Somali customers paid $ /lb. live weight or $60/hd Willing to pay $1.99/lb frozen or $2.99/lb fresh goat meat While prices are a function of supply and demand, you can control what you supply (type of product and product quality) for a certain demand (target audience). Historically, prices at Tennessee auctions for Selection 1 kids have ranged from $99.10/cwt in October 2003 to $152/cwt in April 2005. A 2003 study in Ohio found Somali customers paid $0.80 to $0.85 per lb. live weight or about $60 per head for live goats. They were willing to pay $1.99 per lb. for frozen or $2.99 per lb. for fresh goat meat.

Marketing Mix/Strategy Price
What price will you seek or charge? What product are you providing (quality, value-added)? How widely available is your product? What market channel are you using? What is your target customer willing to pay? What does the product cost to produce? The price you can seek or charge will be based on a number of things. What product are you providing (quality, value-added)? How widely available is your product? What market channel are you using? What is your target customer willing to pay? What does the product cost to produce? (What do you need to earn to cover costs?)

Marketing Mix/Strategy Promotion
Advertising Word-of-mouth referrals/reputation Public relations/publicity Web site It is also important to develop a promotion strategy. You may need to advertise the sale of goats or goat meat to individual consumers. In any case, you want to develop positive word-of-mouth referrals and a positive reputation among buyers/customers.

Marketing Mix/Strategy Promotion
How will you promote the product? What product are you producing? Who is your target customer? How can you best reach your target customer? What is your marketing budget? How you will promote your product will depend upon… What product are you producing? Who is your target customer? How can you best reach your target customer? What is your marketing budget?

Direct Marketing Considerations
Considerations for Direct marketing of goat meat On-farm harvesting Some producers may consider direct marketing goats or goat meat to individual consumers. Let’s discuss some issues that go along with these practices.

Direct Marketing Considerations… for Goat Meat
Must be harvested, processed and packaged in a USDA-inspected facility Must be labeled with product name, ingredients, source name and address, net weight and USDA seal Packaging must include safe handling information If you are considering direct-marketing goat meat, there are several regulatory issues that need to be considered. In Tennessee, goat meat processed to be sold for human consumption must be harvested, processed and packaged in a USDA-inspected facility. The product must be labeled with the product name, ingredients, source name and address, net weight and USDA seal. The package must also include safe handling information.

If selling meat directly to consumers (retailing)  need retail permit If wholesaling meat (like to distributors, stores or restaurants)  need wholesale permit If storing meat other than at USDA-inspected facility  likely need a warehouse license …from TN Dept. of Agriculture Regulatory Services If you are selling meat directly to end consumers, you will likely need to obtain a retail permit. If you are wholesaling meat (like selling to distributors, stores or restaurants), you will likely need a wholesale permit. If you are storing meat other than at a USDA-inspected facility, you will likely need a warehouse license. These permits and licenses, along with affiliated regulations and inspections, fall under the jurisdiction of the Tennessee Department of Agriculture Regulatory Services. If you are considering any of these activities, you should contact the department to learn about regulations specific to your operation.

Direct marketing food products introduces farmers to additional liability risk Risk management methods may include the purchase of food product liability insurance Direct marketing of goat meat and other food products introduces farmers to additional liability risk. Risk management methods including the purchase of food product liability insurance should be explored.

Not all slaughter facilities are USDA-inspected Custom-exempt facilities slaughter/process animals when the animals will not enter commerce Example – A customer may purchase a live goat from Farmer Smith. Farmer Smith delivers the goat to a custom-exempt slaughter facility where the customer pays to have the goat slaughtered and processed for their use at a holiday celebration. Inspected by TN Department of Agriculture Must meet Good Manufacturing Practices like USDA-inspected facilities A bit more explanation of slaughter facility may be helpful. Not all slaughter facilities are USDA-inspected. Some plants are custom-exempt facilities that are allowed to harvest and process animals when the meat will not enter commerce (be sold.) The meat is used for the customer’s own use. These plants can also play a role in your enterprise. For example – A customer may purchase a live goat from Farmer Smith. Farmer Smith may deliver the goat to a custom-exempt slaughter facility. The customer pays the facility to slaughter/process the goat to their desired specifications for their holiday celebration. Custom-exempt plants are inspected by the Tennessee Department of Agriculture and must meet Good Manufacturing Practices.

Direct Marketing Considerations… for On-farm Harvesting
When selling live animals from the farm, farmers may be asked Can the farmer legally harvest the animal for the customer? Can the customer legally harvest the animal on the farm? When direct-marketing live goats, farmers may be asked if they will harvest/slaughter the animal for the customer or if the customer can harvest the animal on the farm. Let’s take a look at the considerations for these questions.

Can the farmer legally harvest the animal?
No, not without meeting regulations required for custom-exempt slaughter To learn about specific requirements, contact the Tennessee Department of Regulatory Services Can the farmer legally harvest the animal? No, the farmer cannot legally harvest the animal without meeting the facility and sanitation requirements for custom-exempt slaughter. To learn about these requirements, contact the Tennessee Department of Agriculture Regulatory Services.

Can the customer harvest the animal on the farm?
??? No known regulations exist for slaughter or inspection in this case Environmental regulations for disposal of offal? Implications for product and landowner liability if customer is injured or becomes ill? Can the customer legally harvest the animal on the farm? Well, this situation has some gray area. There are not known regulations for slaughter or inspection in this case. It is unknown, however, what environmental regulations may come into play. There could also be severe implications for product and/or landowner liability if the customer is injured or becomes ill.

Summary Topics covered the definition and importance of marketing
the market situation for goats and goat meat consumer preferences for goat meat considerations for marketing strategies direct marketing considerations Today, we have covered a variety of topics related to goat and goat meat marketing including the definition and importance of marketing the market situation for goats and goat meat consumer preferences for goat meat considerations for marketing strategies direct marketing considerations Marketing is an important consideration in the planning and implementation of a meat goat enterprise and can greatly enhance your potential for success.

Tennessee Master Goat Producer Marketing
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Tennessee Master Goat Producer Marketing

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