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Starting a Small-Scale Livestock Venture: Understanding Market Considerations

Kelly Klober

Farmer sitting near pigsA number of years ago a neighbor called with questions about starting a purebred swine operation in our area. It was going to be based on a breed not already present in the area, but one that was well-regarded and had been used often to produce some good, rugged cornfield shoats across the Midwest.

I agreed that it was a good idea as the breed was one that we had once considered. I was about to advise a small, careful start when he told me that they had already purchased 30 gilts and two rather pricey breeding boars. Within two years they were out of the purebred swine business. It was a case of too much too soon.

MARKET RESEARCH
A livestock venture and the market for it tend to begin small, and it will take time for both of them to develop. Along with acquiring needed skills and experiences, the producer must determine to what level of production the venture can be grown and continue to garner good selling prices and returns.

Price is set by the quality of the output and the demand for it. The producer can certainly shape the quality and, to an extent, have control over the amount of output (at least from his or her farm into nearby markets where most direct sales are generated). Before selling a single boar of his chosen breed our neighbor had the numbers in place and the money spent to be producing them by the score.

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It is a mistake that we have all made, and some of us have made it several times. A young man of our acquaintance once ordered 50 quail chicks, grew them out with comparative ease and sold them quickly for a tidy profit. He next placed an order for 1,000 quail chicks, and the results were disastrous.

Small creatures though they may be, 1,000 quail chicks taxed his facilities, almost immediately problems began to arise that were beyond his level of experience, and a market that bought 50 and wanted a few more had no need for them by the hundreds. His losses of birds and dollars were substantial.

APPROPRIATE NUMBERS

Many of us have perhaps been made overconfident by early small successes or brought into such specious arguments as, “If 10 are good, 100 will be better,” or “It is just as easy to care for 200 head as 20.” I have heard both of these arguments made many times in my years in the feed industry and saw far too many who weren’t doing a good job with 10 head go on to do a really bad job with 100.

“I had a vo-ag teacher that would tell you straight away that more hogs were lost to “too many pigs disease” than perhaps any other reason. When reading of the success of others, too many overlook the fact that the most successful herds and flocks and the markets that they serve may have been decades — if not generations — in the making.

Markets can be quite unique and challenging, and among the hardest of sales to make are those to local folks. I left for college one Sunday after a weekend of horror stories about a particularly virulent round of rhinitis in the county adjoining ours.

That Wednesday morning, Dad called to say that he was putting all of the hogs on the next truck going out to the then still-in-existence National Stockyards. Fearing the worst possible scenario, I asked what had happened. He replied that the old bachelor farmer that lived down the road from us had just left the yard after buying a young Duroc boar. Try as we might, he said, we would never duplicate that feat again. In 35-plus years in the purebred swine business we sold hogs that close to home just once more.

The marketing radius for producers selling direct from the farm is believed to extend around the farm a distance of about one hour’s driving time. That converts to a distance of about 60 miles, and for every animal we sold in our township, we sold a score or more beyond it. There is a well-noted tendency in farmers that when making a major purchase they will look well beyond their local communities. If I ever needed any proof of this all I have to do is think of all the cold fried chicken Dad and I ate alongside the road when looking for bulls, boars and farm implements.

We lived along a county road with nearly a half-dozen other purebred swine producers, some of them with national and even international reputations. Our niche became sales to other small farmers, such as ourselves, that needed not purple-ribbon winners but animals bred for and grown out in the dirt. Such a niche still exists and, by many accounts, is again growing.

Yes, I have seen multiple potloads of cattle change hands on a single handshake, but most livestock sales are still small-lot transactions of sometimes as few as one or two head. The small farmer should not be daunted by the idea of direct-marketing and small-lot sales.

As the concept of a more artisanal-type of production grows, livestock production is becoming more focused on niche and direct-marketing. We live in very contradictory times, however. Our local sale barn, where potloads of cattle regularly change hands, heavily penalizes grass-fed cattle and those showing a lot of heirloom breeding. There are no futures contracts offered for range broilers or grass-fed lambs. And yet, few are the big three magazine press runs without at least one account of a farm family using social media to market wool for spinning, farm-fresh beef or other farm goods being offered for sale in small lots. And one of the most active marketing arenas online is given over to the sale of show pigs that are sold just one or two at a time.

A market can be built in many ways, but it cannot be willed and pushed into being or be forced to accept something just because that is what the producer wants to grow. By starting small, the producer can test the market waters without too great an investment risk.

I have been witness to several attempts at creating a poultry/hatchery venture and seen them stumble over many of the same early obstacles and missteps. They nearly all try to offer too great a variety too soon and position themselves before the public while still lacking needed background and expertise to do so. Many of the most successful and enduring hatcheries are family-farm based, but are operating with rather modest offerings and breed lists. A few specialize in turkeys or waterfowl, and others may offer as few as six or eight breeds of large fowl chickens.

I remember one excited call from such a beginner relating how he had just acquired a breeding flock of White Faverolle large fowl. If you just said, “White what?” don’t feel bad because I did, too.

To get the birds, he had to travel a long way and spend a lot of money, and he did come up with some of the rarest of the rare. Simply put, some breeds are rare because there never was much demand for them. Such, I believe, was the case with the White Faverolle. In his acquisition he tied up a substantial amount of capital, invested a lot of man-hours, and I don’t believe he sold a single one before folding his business. His trade area was Missouri and adjoining states, and the white bird there was, is, and always will be the White Rock.

No matter how diversified the family farm may be, such a producer cannot be all things to all people. There are breeds and animal products to produce that do have stronger identities with potential buyers and the genetic depth that would indicate a continuing level of demand. And though you may begin with a reasonable expectation for demand and selling price, neither should be taken for granted. To the point they have to be grown just like each new generation of pigs, calves or baby chicks.

One must begin with an emphasis on quality over quantity and add numbers only after you have done well with initial numbers. As one old hand told me, the good ones eat no more than the other kind, often less, and they always sell for more.

We have found nothing in the small start that could be considered truly restrictive to success in the present or the future. Follow back the history of most legendary herds or flocks, and even the very breeds, and you will see that they began with but a handful of individual animals, sometimes just one or two.

For many, 4-H or FFA projects based on a single animal were their gateway into farming. I began a 35-plus year career in purebred swine with a single Duroc gilt bought in my junior year of high school with my share of that year’s soybean check. It had been a late harvest, and I had to wait until one of the very last swine sales of that season to have the needed funds for a single gilt. Dad built our cow herd one or two animals at a time during our early years on the farm. Our first heifers were bought as bucket calves and Dad walked many a mile down sale barn alleys looking for the best possible animal to buy with the money we had. For him, patience was more than a virtue, it was the way to build things to last.

The first calf born to our small herd was from a white-faced heifer no one would call pretty. She grew into a not-pretty cow until you learned she calved effortlessly every year, her calves were among the first on the ground, and they flat grew. Thanks to her, I soon learned the wisdom in my Scotch/Irish grandmother’s favorite saying, “Pretty is as pretty does.”

Being born into a calf crop of 1,000 head does not make a single calf among them one whit better. Still, the temptation, especially with poultry or small stock is to buy as many as you can as fast as you can. The only way that could possibly lead to success would be to live in an area with many others who are equally eager and equally inept.

Marketing is the most challenging aspect of production for most smallholders and family farmers. It is made no simpler by building up early, large numbers to be sold into a market still lacking definition. A niche market, by definition is always going to be small, is easily broken by overproduction, is generally quite exacting in its demands, will not be dictated to, and will best be grown by adding value to a rather modest level of production. Simply adding pounds or number of heads offered for sale is not value-adding and may well be market depressing.

TRIED-AND-TRUE

I have farmed through a great many fads in swine type, the exotic animal craze, the breed-of-the-month in poultry-keeping, and such fads as the Pigeon King debacle and the raising of chinchillas in your basement or emu in your front pasture. Some made some money with these enterprises, and a lot lost a lot of money. If it is a sound idea it will endure. It will be grown through modest investments and quality inputs, and most things agricultural will never stray very far from their historical roots.

The small farmer should always be open to new ideas and new enterprises to add further diversity to the home farm. The goal should be to add diversity, but to not change too greatly the character of that farm nor the beliefs and traditions of the markets it serves. The first Charolais bull in our area was sent to the local sale barn multiple times before it found a second owner. Nearly a half-century later, the Charolais is still something of a minor breed, having tried everything short of developing a black varietal to get into the game.

The Large Black and the Gloucester Old Spot are swine breeds garnering a lot of coverage in the alternative ag press. It’s good PR, but the four swine breeds with demonstrated superior meat quality are the Duroc, Berkshire, Tamworth and Chester White. They were the swine breeds known to your great-grandparents and maybe even great-great grandparents, and at least a few head of them have likely laid down cloven hoofprints on every farm in the Midwest.

The mantra of agriculture in the second half of the 20th century was go big or go away. They stopped teaching agricultural history in the land grant colleges to facilitate the ignoring of the lessons it had to teach. The legendary Dan Patch, the greatest pacer in history, was produced by a horseman with one mare.

What is giving animal agriculture greatest value in the 21st century is what the producer, the man or woman at the halter or in the fold, feels, believes, puts into practice, and then brings to town on four hooves or two good legs.

Kelly Klober specializes in raising livestock using natural methods. He is the author of Talking Chicken, Dirt Hog: A Hands-On Guide to Raising Pigs Outdoors … Naturally, and Beyond the Chicken, available from Acres U.S.A. Visit acresusa.com.

This article appears in the May 2016 issue of Acres U.S.A.

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