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Wholesale marketing?

 
Jake Black
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Hello im trying to understand better about what wholesale marketing is and what exactly it entails. Say i have 100 Hogs that are ready to be sold. who will buy them in a mass amount? And what is the average Market value per pound for a hog
 
Alice Tagloff
Posts: 53
Location: Newfoundland
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Loosely, wholesale marketing is exactly what it sounds.
1) You have already grown a certain amount of something and you want to offload that certain amount in one shot, rather than try to retail it to individuals. A little risky, because you might not be able to find someone who wants or can handle the entire lot all at once, so you have to carry the costs of how long to maintain the remaining herd till you find another buyer or until the first one can buy and process the rest.
2) Or, you find your contact first, sign a contract agreement to provide that much meat in a certain time-frame, for a certain cost, so you know how many pigs you need to rear up and breed out all at once, rather than after the fact. There's generally less risk than trying to offload something you already have if you can't find buyers. However, you've signed a contract agreement to sell the meat to them at a certain rate, if the costs of feed for example have gone up, or you get injured and have to hire someone else to cover the work, you then generally can't raise your asking price to cover the extra expenses.

That enmasse and you'd need probably need to contact a slaughter house to do the deed to certify the meat for sale, most likely. Your slaughter house would likely know who around would be buying in bulk.

Average Market price for hogs and who will buy them in that amount depends on your local area.
You have to calculate your bottom line, of how much money for feed, labour, other costs and vet care, calculate how much it takes to maintain the 'herd' and then divide up by how many heads you have to sell, and that's the bare minimum that you'd need to take in to break even, per head. Sometimes that's below local market costs, so you can ask for a higher mark up to, make up your profits, sometimes, and often, it's more expensive than what the supermarket for example is asking for, and you tend to loose out, so you have to figure out a different way to market it to make the difference.

Ie. Here to me, no one would buy that much hog at once, we don't have private butchers in the area, and all the grocery stores are big-box corporate who wouldn't touch unincorporated farm meat. So you'd have to sell privately. We have a local farm that does it by the whole pig, or half pig, and delivers precut and packaged in trays and tied bread bags, roasts, rump, hocks, riblets, bacon cuts and a variety of options that include prepared sausage. They take out a flyer(printed on their own laser printer) and get it passed around, to pass customers and word of mouth, it's usually about 150$ for half a hog, and 300 for a whole, cdn. Now that we have a lot of ethnic people moving into the area, directly marketing to these folk often gets them to buy the entire hog, whole, it just needs cleaning, for whole hog-roast parties.
Ie. But if in your area you have a lot of ethnic markets going on, they would be the ones to approach.

It does all depend on who you could possible sell to. But wholesale usually won't get you the amount of prices you could demand for individual cuts of meat you've processed yourself, but processing meat for private retail does take time and freezer space, and possible government inspections of the kitchen and storage areas. But, for example you have a good recipie for sausage, you can process all the unpopular cuts into sausage instead, and charge generally more than what you could ask for the individual cuts. You have all that bacon, all at once, and hame/home smoked and cured, you can generally ask for more than the stores retail price.

If you don't have a local slaughter house, I recommend approaching game-meat preparer places, or at least, looking at their business model. These are places usually associated with hunting stores, that offers cold freezing and butchering services. For a price, they'd butcher your meet into cuts, then portion them and hard freeze them for transport home. They've very popular in rural areas. Tho be careful, some of them are professional and have pride in their butchering skills, others just freeze the body and go at it with a band saw, so when the cuts get thawed, the cut looks nothing like what you'd buy in a store. Many of them have their own instore specials that they then prepare the meat into sausages, jerky, seasoned and smoked cuts, and they have their own market based on that.
 
Jake Black
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Wow that was a lot of great information, so if a farmer can make 300 a head how can a farmer make any income.
 
Alice Tagloff
Posts: 53
Location: Newfoundland
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Again, it all depends on the cost's it takes to raise your hogs. That's just what the local guy is charging in my local economy for example, on an island province, in Canada.

So, say for example,
You have existing solar power and your not spending any money on electricity to run their barn.
You have your own well/creek water, your not paying anyone to get your water from anywhere.
Your not buying any feed for the pigs because they're eating the leftovers from your fields and rooting around in their pens.
Your providing your own hay.
Your not counting the cost of the sows & boar that you bred the pigglings from to begin with.
And your not counting your own time and effort, the labour, that it takes to care for them.
Okay, the more expensive bits are taken care of, your not paying for those.
But your still using gas to run your vehicles to get around and maintain their enclosure. So how much gas are you running thru, taking care of just the pigs? Lets say it's $50 a week,
Then you have an $25 a week on average on misc(light bulbs, containers, feeders/waterers)
4 weeks a month, and your rear your pigs for 9 months before deciding to slaughter them.
That's 75$ a week, times 4 weeks = 300 a month, times 9 months. = 2700.
You do your own slaughtering/processing and it somehow costs you nothing.
So it takes 2700$ over 9 months to rear your hogs for slaughter, and your going to kill 100 of them, this isn't counting any of the ones your keeping for future breeding, etc.
Then it costs you $200 in packaging materials to prepare/bag the meat, and another $100 to ship/deliver these to market.
$2700 + 200 + 100 = $3000(Cost of Production), to get the meat to market.
$3000/100 animals =$30. It costs you $30(Break Even), over the span of 9 months, to raise one Head. That means, you have to sell One Head at $30, just to break even.
You then sell this Head for $300(Retail Price), minus the cost of rearing this head = $270(Mark Up Price). That's your after cost of production, this is your profit, per head.
270 * 100 for the entire herd, equals $27,000, total profit.

Now, that's just a rough, best case example of cost of rearing your 'herd' and it's not real world costs.

It's the same for anything else. It's just basic economics.

You have to calculate how much it's costing you to raise/grow/rear this bunch of things, how much it costs to prepare/process/package your product, how much it costs to ship/deliver your product, including labour If your not doing everything yourself and have to pay other people, for this amount of time. Cost to Rear + Process + Package + Deliver = Cost of Production.

Cost of Production / the number of products = Break even cost, per individual retail product.
COP / Production# = Break Even Cost
Unless you absolutely have to move the product, you never sell at Break Even. So you Mark Up the price, ideally, you want to make a 100% return on your product, but depending on competition and demand for your product/what your customers are willing to pay, this will vary. Basically, what can you get away with asking your customers to pay?
So the price that you charge the customer, is the Retail Price. The difference between your Break Even and your Retail Price = Mark Up/Profit.

Also, these are probably not what economics officially call these things, just the easiest ways I've ever remembered them.

On a farm, especially in permaculture where everything is linked and stacked together for production, calculating your COP is pretty hard to do. If you have to ad cost of labour into that for any hired hands, then it can get fairly complicated. Plus on top of that, at the end of the year, your probably going to have to pay out taxes 'to the man', it's something to keep in mind.
 
Walter Jeffries
Posts: 1085
Location: Mountains of Vermont, USDA Zone 3
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I would not suggest trying to sell into the commodity markets. Instead raise a premium product and sell to the niche of customers who appreciate it and will pay for quality.

88% of our business is our weekly wholesale deliveries to local stores and restaurants who have standing orders with us. They get a discount for bulk buying on a regular basis for resale. This makes it so I don't have to man a store myself.

We also sell direct to individuals, also weekly year round. We get a lot more there per pig but there's more servicing of the customer for each order. A trade off.

I don't bother competing with the commodity pork. That's a different product. Different quality, different raising, different market.

I figure the cost of getting pork to fork breaks down to three primary areas:

30% piglet

30% feed

30% processing

10% overhead like fencing and such.

The rest is pure profit. Do the math... I'll wait. So... You take on as much as you can of those first three items. We have our own breeding stock, produce almost all of our own feed and do our own processing - we built a USDA/State inspected meat processing facility a.k.a. butcher shop. ( http://SugarMtnFarm.com/butchershop ) This minimizes our costs on those big parts of the pie keeping more of the money in my pocket. It does mean more work but how else am I going to keep busy and out of trouble?

Figure out what works for you and do the things you can that make it so you can produce your product at a profit. Otherwise it's a hobby. I'm aiming to get rich. It's a good goal.

-Walter
 
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