Value-added are prominent buzzwords in the pork industry today – and for good reason. That’s where the product marketing future lies. If you don’t find ways to add value or fill a niche market, another producer or packer will. Either option is valid, but you do need to evaluate your preference and the route you need to take to secure your future.
New business opportunities are surfacing. But sorting the wheat from the chaff is more challenging. Having access to a network of shared experiences among producers would be a real bonus. That’s one objective of the National Pork Board value-added technical assistance team. It is available to meet with producer groups that are considering value-added opportunities. The goal is to help evaluate the pros and cons, using successes and failures of other similar ventures.
Brian Buhr, University of Minnesota agricultural economist and team member, says the idea for every value-added venture is to tap into a particular market and capture the consumer.
“A lot of people think that value-added means if pork chops typically are $2.20 per pound, you will get $2.50 per pound,” says Buhr. “But it’s really about brand equity and that has to be built over time.” Only about 5 percent to 10 percent of the value-added groups get to the point of selling a product. Of those, Buhr warns success rates will be the same as any other small business just starting out, which means the fall out can be high.
“Most producers want to look at products right away, but the first thing we try to get them to think about is the market they will supply,” says Buhr.
The team works on a request basis. On the first visit, the team checks the producer group’s progress. In the second visit, the team offers ideas and works more as a consultant. Evaluations are free to producers– a service that would cost you about $750 to $1,000 per person per day, not counting preparation time or travel expenses.
The NPB team also provides literature to help the group with future decisions. Two of the guidebooks include Case Studies in Value-Added Pork Products and the Front-End Guidance Manual. The case studies outline the similarities and qualities of value-added groups that have already been successful. The guidance manual includes consumer preference data as well as niche market demographics and preferences.
“You have to be able and willing to differentiate your product,” says Buhr. “That may involve raising organic pork, antibiotic-free pork, some kind of meat quality specifications or something else.”
There are a few “must haves” as you evaluate which (if any) value-added ventures might be right for you. The group should have a business plan that meets auditor standards, a solid marketing plan and preferably pre-existing market commitments.
If lenders and government agencies that evaluate the group start backing away from a particular business, that’s a bad sign, says Buhr. He also warns that inactivity for the first two or three years may show that the venture will never get up and running.
If you are interested in gathering more information on the value-added technical assistance team, call the National Pork Board at (515) 223-2600 and ask for the value-added assistance team.