Running a business is like flying a jet

by Allan Nation

Pioneering is a high risk proposition in any endeavor including new product marketing. This is because all new markets are both unknown and unknowable. The only way to know how deep the water might be is to just dive in and see.

This means that all new industry pioneers must be people who have both the financial wherewithal and mental stamina to withstand risk. While the very early pioneers in grassfed meats have proven there is an enthusiastic market out there, no one yet knows just how big it is.

Harvard professor, Michael Porter said in his finance textbook Competitive Strategy that such pioneering markets offer significant opportunities to smaller producers.

"In an emerging industry there are no rules to the game. This is both a risk and a source of opportunity," he said.

"No rules and no advantage to scale allows very small players to participate in the market. Large players will not participate until the market size has been clearly demonstrated and proven."

The beauty of being a market pioneer is that you get to be the first harvester. This means you get to pick the high margin, easy to pick, low hanging fruit.

I define the low hanging fruit in meats as any market that will accept a frozen meat product.

Some of these markets are:

* Farmers' markets

* Alternative food co-ops

* On-farm store customers

* Direct delivery customers

* Internet and mail order customers

With a frozen product we can limit our harvest to fall and mid-summer. This allows the use of perennial forages which keeps agronomic costs low and requires only moderate grazing skill.

From what I have personally seen, most farmers' markets still don't have a grassfed meat purveyor yet and graziers on the West coast get frequent calls off of the eatwild site from New York City, so there is still a lot of easy-to-pick fruit out there. But it is not limitless.

Some health stores will buy a frozen meat product. The problem is that consumers do not look for meat products in the frozen food section and the sell-through has been poor.

There are a lot of restaurants who would like to feature a grassfed product, but they want it fresh and delivered on a daily basis.

While it make take years, eventually we will harvest all of the low hanging fruit. Once there are three or four purveyors of grassfed meat at every farmers' markets watch what happens to the prices.

This is why the complacency I see among today's early grassfed beef producers is so scary. Those who plan on surviving this first mini-shakeout need to be planning now to be selling fresh meat in the future. Fresh meat has a far bigger market and will take us much higher up the metaphorical fruit tree.

Peter Drucker in his book Managing in the Next Society said we must always be planning our businesses for the world as it will exist five years from now and not today. This is because it takes a minimum of five years to learn and perfect a new skill or technology.

Running a business is like flying a jet. You have to be thinking way out there to keep from crashing. If you wait until you can clearly see the mountain, it may be too late to change direction.

So if frozen meat is the first stage of the market and fresh meat is the second stage, what skills are we going to need in the second stage?

To sell a fresh meat product, our grazing and agronomic skills will have to increase immensely. As Anibal Pordomingo has said, creating a year-around supply of fresh meat is a business limited to the highest skilled graziers.

To do this we are going to have to learn how to plan forage sequences and transitions. We cannot rely solely on perennial pasture. We must use annuals to produce the high average daily gains that perennials can't produce in summer and winter.

I know some of you are opposed to annuals on philosophical grounds. My recommendation to you is to get over it if you want a career in grass-finishing. A steer grazing annual ryegrass is a lot more environmentally friendly than one in a feedlot. We are going to have to be able to sort and sequence cattle by degree of finish for frequent harvest. This means we will have to perfect leader-follower grazing or something that replicates it.

The animal nearest to harvest needs to be given unlimited choice in what he chooses to graze. Such lax grazing is very wasteful unless there is another class to follow the lax grazer. A two grazer system requires a lot of attention. So learn to pay attention.

Get out of your truck and walk your pastures. You will be surprised at how much you will learn and how much weight you will lose.

Do whatever it takes to keep a legume in your pasture mix. A legume/grass mix is a much more balanced energy/protein diet for the cattle and results in a higher average daily gain at a lower cost.

Learn how to part, sort and load cattle quietly. There is no sense in spending two years growing an animal and having it all result in naught because we stress the animal loading it on the truck going to the abattoir. This means plan go to a Bud Williams school.

You are going to have to learn how to make pasture silage. This is the only stored feed that is high enough in quality to produce gains high enough to finish an animal. Luckily, it is cheaper and easier to produce than hay.

If you are not currently producing grassfed beef, the best way for you to practice and learn these skills is with custom grazing. The beauty of custom grazing is that it allows you to totally concentrate on the grass and the animal's gain without having to worry about the market.

I believe within five years, grassfed meat producers will be willing to pay a good premium to custom graziers who know how to produce finishing gains in summer and/or winter. This is because custom grazing is the lowest capital way to expand a grassfed product.

Of course, the ultimate in planning for the future is to bite the bullet on your herd's genetics. The correct genetics can add a couple of hundred dollars in pure profit per head at today's high grassfed prices. If you want to finish your cattle at less than two years of age, you will need a combination of smaller cows and very easy fattening animals to do it.

Keep in mind that with today's BSE related abattoir regulations concerning animals older than 30 months, many of us no longer have the luxury of using too big or slow gaining genetics. Many small volume abattoirs are just going to stop killing older animals rather than add the expense the new regulations require.

Yes, getting your herd's genetics right is a slow process and will take a minimum of five years. But, if you wait until five years from now to start it will still take you five years.

Genetic change is like growing a tree. The best time to plant a tree is 20 years ago or today.

I know I just put a lot on your plate. Think of it as being like swallowing a big grassfed steak. The best approach is to cut this big task into lots of small bites and chew each one well before moving on to the next.

by The Stockman Grass Farmer


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