CALF_News_August_September_2020

17 CALF News • August | September 2020 • www.calfnews.net INNOVATION strong regulation on the terms of the claim, therefore private certification programs would need to be overseen by a third party and could be useful in definition clarity and statement accu- racy to support such claims. Another mechanism to be considered “locally raised” is to have the agricultural food be raised, produced and distributed within the state. A great example of this is Kentucky Cattlemen’s Ground Beef. When preparing your marketing plan, remember there will be over- sight of what is required to be placed on a meat label, but keep in mind the non-label marketing material. Non-reg- ulated marketing materials like videos, brochures and signs can more broadly help share an operation’s story. Sell local but be ready About 75 percent of beef plants are smaller facilities, but the majority of beef comes from the four major pack- ers who comprise about 25 percent of the volume. They have the economies of scale to handle mass cattle procurement and domestic and international meat sales. When considering creating a local plant, there are many realities that must be considered such as overhead, opera- tions, labor and sales. Many small plants fail for a number of reasons. The first is capital; it can cost hundreds of thousands or several mil- lion, depending on the scale and equip- ment upgrade needs. Second, getting through the state or federal regulation process and obtaining an establishment number is a hurdle. Also, finding labor is a huge issue as jobs in these facilities are hard and repetitive in nature. There are a series of federal programs to assist with labor, but again, you’ll be devoted to fol- lowing the red tape and will need more management personnel. Last, product sales can be quite an issue. Determining if you are selling beef as primals or retail cuts is key as you need to know if the labor is worth the time. Focusing on sales efficiency is also instrumental. Is it worth the cost to add freezer space for long-term, local consumer purchasing or is it more effi- cient to create a volume of fresh beef for trucking to distributors while keeping your overhead of freezer storage low? Don’t forget some states have farm- to-school lunch programs and state institutions that could be instrumental in handling the volume of ground beef. Still, that won’t balance out if you don’t have avenues to sell the fifth quarter or the excess fat, hide, internal organs, blood and bone. If you aren’t careful to find an avenue for everything but the “moo,” you could end up paying ren- dering services to haul away about 37 percent of each animal’s weight. Local beef sales Whether you want to be a small locker selling locally or a cattleman obtaining inspected product from a small plant to sell out of your farm gate, you need to understand how much cash there will be left on hand after covering your costs. To provide a general illustration of the effect that yield loss has on beef value, here is an example: If the live price of a steer weighing 1,435 pounds is $.96 per pound, the breakeven after accounting for the the 63 percent dressing percentage and the weight loss from offal, hide, variety Continued on page 20 