Wednesday, February 29, 2012
Comparing Apples to Great Big Grapefruits
Every time about this time of year, except when we are 2 months behind like this year, Keith and I do a market review. We decide who our main competitors are, we look at all their prices for any products similar to ours and then we adjust our prices accordingly. At the end of this time consuming process we do indeed hope to increase our revenue enough to offset our costs, yet the process is a bit grueling.
The problem is always this. There is no one just like us. We are..what is the technical term?
Yes, oddballs, we are oddballs. If we lived on either coast in the lands of the aging hippie or "Hippiactric" ( I just invented that term) we would fit in just fine, but most farmers here are very different from us.
Apples to oranges ? More like comparing apples to great big purple grapefruits. How to begin comparing? We start by looking at the 3 farms near us who sell meat direct to customers off their own farms. None of those three are certified organic or 100% grass fed (beef). All three had per piece prices much higher than ours.
Next we looked at the five farms who sell to the same four grocery stores we sell to. Some of those farms are small, some are big. Some are local, some are distant. Some were organic, some were grass fed. Only one was both. We also looked at two locker locker plants who sell other farmers meat in their retail stores. This group of competitors had prices MUCH MUCH higher than ours were. For example Rib Eye Steaks were being sold at $18.99, (organic) $21.99 (non-organic, grass fed) and the most shocking $29.99 per pound! (Organic and not even grown by the person selling it in their store))
Our current price for Rib Eye steak which is both organic and grass fed? $8.99 per pound.
Our new price will be ...$12.99 per pound.
Why are we increasing at all ? Because of course our feed prices have gone up, organic hay and organic straw primarily. As of last June it became federal law for organic farms to bed all our animals with certified organic straw. Our straw supplier's farm was 90 miles away (Round trip) so hauling costs have to be added to actual cost per bale of straw. In addition to direct costs such as feed and minerals we figure in the cost of all indirect costs such as labor, fencing, marketing, trips to Cancun, (just wanted to see if you were paying attention) fuel, health care , ear tags, blah blah blah.
Thus our new Rib Eye price must be high enough to cover costs and allow for a small profit. Low enough to ensure folks feel that making the drive out to the boonies will be worth their time and gas.
After agreeing on a price for rib eyes we go to the next cut, then the next . We offer 27 cuts of beef and 24 cuts of pork. When that task was complete we moved on to pricing in our store for non -meat items as well as roaster and suckling hogs and Red Wattle Breeding stock.
We also spend time deciding what we would not increase selecting items that are commonly purchased and can be stretched to feed large families or small couples. We feel strongly that young families with growing children, as well as folks on fixed incomes should be able to afford healthy food.
This year we did increase our prices on any of the following: ground beef, ground beef patties, hot dogs (nitrate free) soup bones, stew meat, BACON, ground pork, plain or Italian sausage.
Then it all goes into the different word documents on our computer and then handed to number one son who will update our website. Copies are made for the store and my desk. More copies are taped to the store walls so folks know the prices of our products. Many more copies are made for customers who do not have the Internet and/or prefer hard copies in their hands to keep at home to help with ordering. Finally, letters are written to the grocery stores we serve so they are informed. They have budgets to live within as well.
So the next time someone says to me "How come we never see you working outside with Keith?" and I dump a load of manure in their trunk...you might understand the motivation behind that gesture.