Finding opportunities | Sheep producers can make direct sales, but it isn’t always easy
NISKU, Alta. — Lamb producers don’t often get into business because they love marketing, but it’s one of the most important parts of their farming operation.
To help lamb producers make the right marketing decisions, the Alberta Lamb Producers brought together four different marketing specialists at a Sept. 6 event in Nisku.
“It may be the most important part of your operation to make the right marketing decision and a lot of producers are good at raising lambs or doing field work but might not be strong point in marketing,” said ALP chair Ronald den Broeder of Barrhead, Alta.
“We hope to give them more insight and information on making marketing decisions.”
When they moved to Stavely in 1994, it didn’t take long for Warren and Norine Moore to realize 45 cents a pound for lamb wasn’t going to pay their bills.
Since then, the southern Alberta lamb producers have delivered direct to customers, restaurants, a wholesaler and small grocery stores in Calgary, with varying degrees of success.
“If you don’t like going the extra mile, then marketing is not for you. It will take a lot of time from your regular farming routine. If you don’t have a large land base or a large flock and if you have the time to invest, specialty marketing may be for you.”
Moore said he avoids the farmers’ market to protect his weekend family time.
The stress of producing a premium product for picky chefs and the loss of his meat cutter convinced him to end deliveries direct to restaurants.
“They were premium prices but demanded premium service and it proved more nerve-racking than I needed in my life. It seemed like every chef wanted his lamb at 2 p.m. Thursday afternoon.”
Moore now regularly supplies eight stores with fresh lamb. He’s also a dealer with Highwood Auctions and searches for sheep for the auction and his own business.
In addition to raising 300 purebred sheep, Moore and three other consignors have a yearly ram sale.
The Innisfail, Alta., lamb plant has traditionally focused on buying finished lamb, but new infrastructure and marketing plans mean the plant will now buy light lambs and cull ewes for slaughter at the plant, as well as lambs for their new Canada Gold feedlot in Picture Butte, expected to be open in October.
Beaton said producers who sell their lambs to the plant or to the feedlot would be eligible for preferential pricing and premiums.
“We’ll pay the top market for quality feeders with no commission,” said Beaton, who wants to build long term relationships with producers to help secure year round access to sheep and lambs.
“We’re trying to move forward and develop long term relationships and this is proving more challenging than I thought it would be. We want to enter into long term win–win relationships with producers. The rationale behind this is the industry has to be sustainable and it can’t be sustainable when, from year to year, a number of producers drop out because they say it is not sustainable.”
Beaton said SunGold wants to have at least half of its supply to the plant covered by relationship contracts. If the plant can make $10 a head profit on each lamb contracted, the excess profit will be distributed back to producers.
A premium price grid was developed to reward producers for delivering the quality that customers want.
“We hope by rewarding the producers who meet those attributes that over time we will gradually get a more consistent higher quality carcass. It’s about hoping to have a positive impact on the whole industry.”
During a recent survey of Calgary and Edmonton residents, almost half the people surveyed believed local food was better than imported food. The same people said they would be willing to pay more for that product.
That’s incentive for producers to look at direct marketing, said Tony Legault of Nanton, Alta.
The direct connection helps producers build relationships with their customers and, hopefully, earn more money than selling lamb through an auction or direct to the slaughterhouse.
Direct sales are not for the faint of heart or for those who don’t know their exact cost of production.
“Another thing you’re going to get back is feedback and you’ll get it back good or bad and you better have thick skin for this. They’ll say your quality is good or your quality is junk and they’re going to tell you. Make sure if your quality isn’t there, don’t be offended when someone tells you it is not. Work towards getting a better quality.”
Direct marketers need to know every single cost to raise and sell their lamb, including how much it cost to put in the ear tag and pack the lamb to the trailer, as well as labelling, delivery and marketing expenses.
“All these things need to be added into your cost. Even going to the farmers’ market has a cost. Somebody wants $20 for the table. The time commitment to get all this done is a lot. If you all work for free, there is not a cost, but if you want to put a value to your labour you better put that in the cost as well.”
While consumers are willing to pay more for local produce, they aren’t willing to pay any price.
“The quality, the honesty and the consistency of your product is what’s going to make that customer be a repeat customer. You miss any one of those and you’ve lost why they want to buy it from you directly.”
Honesty is the best policy when selling to a feedlot operator, said Roger Albers.
Feedlot operators can’t make a fair price without knowing a little history of the sheep and lambs.
Albers said he needs to know if the lambs have recently been weaned or are on creep feed, as well as an accurate weight.
“We can’t quote you a price on 80 pound lambs if they’re 60 pounds,” said Albers.
He also wants to know if a producer’s farm dogs are on a deworming program to prevent C. ovis, a parasite that is transferred to sheep by dogs and contaminates the sheep meat. About three percent of Canadian lamb is condemned because of C. ovis.
Before selling sheep, Albers recommends spending time at an auction market to get a feel for the sale price of animals. Producers should know who’s buying lambs similar to theirs and at what time of the sale.
“Prices at the start of the sale are always higher and drop off as the sale goes on.”
Producers need to know the cost of commission, shrink and overnight auction costs if they plan on selling to an auction market or asking a feedlot operator to bid on the sheep directly.
Albers said they are looking for big, aggressive sheep ready to eat and fight to the feed bunk. With 600 lambs in a pen, they don’t want shy sheep.
All lambs must be a minimum 60 pounds before entering the feedlot. The rams don’t need to be castrated, but need to go into the feedlot before they begin to breed.