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<blockquote data-quote="Anonymous" data-source="post: 3870"><p>Omak,</p><p></p><p>If you have a good source of direct sales that likes what you produce then you are ahead of the game. The direct sales avenue is the most profitable nitch market bar none. Nitch markets as a rule do not hurt anyone in the beef business because they usually are filling a void that the other segments cannot. The concern that I was raising had to do with the fact that you may have extra animals that you would not be direct selling that could end up on the general market. If these additional animals do not meet industry specifications they do cause a lot of problems in the processing sector as they just do not fit the rest of the puzzle. This is a big problem in the beef industry because something like 80% of all beef animals are produced by herds of 25 or fewer head. Since AI is not widely used the genetic variation is "huge." In addition to making efficient processing more difficult it makes it very difficult to produce a uniform end product. Even in your small operation, if you can not guarantee your customer a good product then your venture will be bankrupt very fast. In the past, the problem has been that the "unacceptable" product (tough, dark cutter, inefficient gainer, etc.) were mixed in with animals from everywhere and effectively lost their identity. Producers of these type of animals had no idea that they were producing them as they could very well have been some of the best looking animals on the lot. Also, even if they did know, there was no incentive other than pride to produce a better product because everyone was paid "average" prices. Today, with grids, good cattle can produce premiums and inferior cattle get rewarded appropriately. One downside of this is that a larger and larger percentage of the "good" cattle are no longer sold on the commodity market each year, so prices in this market are dropping. I point this out because, if your direct sales avenue does not work out (if you only have a small number of cattle this is less of a problem) then you will probably have to sell to the commodity market and if your cattle do not "look" like they are premium animals and you do not have "hard" data (ADG, % choice, ultrasound) be prepared for a disappointment come sale time.</p><p></p><p> <a href="mailto:snefstea@conagrabeef.com">snefstea@conagrabeef.com</a></p></blockquote><p></p>
[QUOTE="Anonymous, post: 3870"] Omak, If you have a good source of direct sales that likes what you produce then you are ahead of the game. The direct sales avenue is the most profitable nitch market bar none. Nitch markets as a rule do not hurt anyone in the beef business because they usually are filling a void that the other segments cannot. The concern that I was raising had to do with the fact that you may have extra animals that you would not be direct selling that could end up on the general market. If these additional animals do not meet industry specifications they do cause a lot of problems in the processing sector as they just do not fit the rest of the puzzle. This is a big problem in the beef industry because something like 80% of all beef animals are produced by herds of 25 or fewer head. Since AI is not widely used the genetic variation is "huge." In addition to making efficient processing more difficult it makes it very difficult to produce a uniform end product. Even in your small operation, if you can not guarantee your customer a good product then your venture will be bankrupt very fast. In the past, the problem has been that the "unacceptable" product (tough, dark cutter, inefficient gainer, etc.) were mixed in with animals from everywhere and effectively lost their identity. Producers of these type of animals had no idea that they were producing them as they could very well have been some of the best looking animals on the lot. Also, even if they did know, there was no incentive other than pride to produce a better product because everyone was paid "average" prices. Today, with grids, good cattle can produce premiums and inferior cattle get rewarded appropriately. One downside of this is that a larger and larger percentage of the "good" cattle are no longer sold on the commodity market each year, so prices in this market are dropping. I point this out because, if your direct sales avenue does not work out (if you only have a small number of cattle this is less of a problem) then you will probably have to sell to the commodity market and if your cattle do not "look" like they are premium animals and you do not have "hard" data (ADG, % choice, ultrasound) be prepared for a disappointment come sale time. [email=snefstea@conagrabeef.com]snefstea@conagrabeef.com[/email] [/QUOTE]
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