The importance of the people component in livestock marketing is often overlooked. Ever try to make a deal with someone you didn’t like or agree with? It’s kinda like bread without butter, or cake washout frosting. It can be pretty unpalatable.
The difference between pro t and loss is often determined by the relationship of buyer and seller, as there is a subjective component to every transaction. Even the objective part is often a matter of interpretation.
This is why most niche marketing groups have failed. They have simply tried to force a product or concept down someone’s throat. Just because you’re in love with Betsy just the way she is, doesn’t mean everyone else is; translated, this means produce in accordance to demand. When others want what you have, there’s a good chance you’ll find a market for it.
The following e-mail reminded me of just how true it is that the principal of supply and demand is overlooked in marketing equations. It reads as follows:
Re: Column from December 2012 Farm And Livestock Directory
From : Eric Bousman, Sat, Aug 16, 2014 10:07 PM
Subject: Re: ARTICLE FROM 2012
To: [email protected]
I do hope that this is your work email still. I recently read your article in the Farm And Livestock Directory from December of 2012 regarding the credit due to the National Farmers Organization for the immense sacrifice that their producers gave in order to, as you put it, “have the market we do today”. As I read your article, I felt a great sense of pride for one reason. That reason is because I was recently hired on as a eld representative for the National Farmers Organization in Indiana. The NFO is still very much alive, and thriving, within the dairy and all commodity business.
In Indiana alone, we have nearly 80 dairy producers and 20 grain marketers alone. I just wanted to point out that NFO is seeing the fruits of their labor nearly 70 years later with the price of milk at $23 per hundred weight. This is an amazing accomplishment only set forth by the NFO. I am proud to be a part of such an amazing and historic organization that is still true to producer and only the producer.
Congratulations and best wishes in your new job, Eric. You’re with a good organization that has yet to reach its full potential. Maybe new blood, like that of yourself will help fulfill their mission. I am reminded of how they have fallen far short of their objectives, simply because of people issues.
My point of reference is that of livestock commodities, which no longer exists. When I reflect back upon their marketing strategies, it is no wonder that they were, for the most part rejected. Their approach of threats, boycotts, ultimatums, and demands got the doors shut to most markets, before they were ever opened. Had they gone to the meat packers in the spirit of befriending an industry with a consistent, compliant supply of livestock, they would have developed a marketing relationship that would have with stood the test of time. It could have been the most significant marketing alliance ever developed within the industry.
A packer’s greatest need is that of a competitive, consistent, and compliant source of livestock, the very thing that the NFO had to offer. But after many unsuccessful attempts to deliver, their reputation was tarnished beyond repair. Again, it was more about the people than it was about the livestock. Their philosophy was to get something for nothing, short-change the packer with something less than that which was expected; like fool me once, fool me twice, but don’t expect another chance. They soon ran out of chances in the livestock industry, and were destined to focus on their greatest strength of growth and survival.
If they had simply gone to the packer and asked what they could do to become a major supplier of livestock they would have become the major suppliers of livestock in this country!
So Erik, build upon their strengths and learn from their mistakes, as there is plenty of room to grow in the marketing world. May the sacrifices of their past continue to be the strength of their future. These are the lessons that were learned the hard way by most organized marketing groups. Marketing, to them was more about deception, averages, and misrepresentation—those factors that determine value, such as sort, grade, and yield were not fully understood.
Pricing livestock on an individual basis, one animal at a time, seemed incomprehensible. It’s called value-based pricing where the price is determined by weight, grade, and cutability—but all of these seemed vague and far too much work. Weighing and grading each animal as it goes on the truck seemed like a waste of time, and, yet, that’s exactly how a packer determines value. If it makes cents/sense for packers at the rate of hundreds of thousands of animals, why would it not be just as important to the producer who is selling one truckload at a time?
Marketing is about knowing the value of that load of animals before it leaves the farm, leaving nothing to chance. It is this kind of understanding between buyer and seller that leads to good relationships and more pro t for both parties.
It can never be one sided, as suggested by Eric, as it takes people understanding people to bring trust and integrity to the market place. Without the people element—everyone on the same page, there can never be the best possible solution to any marketing plan. And without a marketing plan negotiated by both parties sitting at the bargaining table, you might as well go to Vegas and shoot Craps. Just as you should know the value of every load of livestock before it leaves the farm you should know the bottom line before you invest your first dollar in any livestock venture.
This is where contracts and price protection become key components to putting together a marketing plan. If ever there was need for dialogue, it’s in these critical marketing stages. It’s not enough to simply raise top quality livestock, for if you don’t understand all there is to know about marketing, you’re leaving a lot of dollars on the table. Negotiating from a position of strength, means knowledge, and the benefit of experienced, seasoned livestock marketing personal.
To gain this kind of insight and expertise, I would suggest that you attend one of our livestock marketing seminars. It is here that you will come to understand everything there is to know about determining value and the benefits derived from mutual relationships of a common good. We do this by presenting and explaining both sides of a buyer/seller transaction. Having worked in the industry all my life for some of the largest most prestigious companies in the industry, I can assure you that there are two sides to every story.
The producer, not withstanding, is an important part of the entire livestock industry, but the industry is made up of many parts. It’s not ‘us’ or ‘them’ against the industry; It’s all of us in this thing together that gives us strength.
Eric, I encourage you to re-phrase your closing statement to read: An organization that is still true to the producer and the entire industry for which it stands.
Thank you, Eric, for your kind remarks and to all for whom we’ve become the voice of the market place of your choice.
(Editor's Note: For more in-depth information regarding the topics that have been touched upon in this report, Knightro conducts livestock marketing seminars on a regular basis. To schedule a seminar, auction, judging, or speaking engagement, please contact Ken Knight, Knightro, call or fax 715-262-8480; e-mail [email protected], or write him at: Ken Knight, Knightro Report, 136 Hillridge CT, Prescott, WI 54021.)