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Taking Ownership

Farmers have heard lots about value lately – value-added processing, value chains and supply chain partnerships. But quite frankly, the “how” of where these initiatives will add to their bottom lines has remained elusive.

Of course, value-added developments often mean additional or expanded marketing opportunities, but many of these tend to be small and selected, as in the case of nutraceuticals.

Only rarely has someone come along with a vision that average producers can see themselves buying into with real promise of seeing a direct payback to their family incomes.

Such was the vision presented to Manitoba cattle producers recently by Anne Anderson, a Texas-based rancher, entrepreneur and consultant on supply chain partnerships. Anderson dropped the usual lingo and asked her audience to imagine a new vision for their industry, one in which farmers’ response to the question of “Who determines what you get paid for your cattle?” can be answered with “We do.”

And she proceeded to lay out a scenario of how that can happen right here in cow-calf country – maybe not for all the cattle produced in this province, but significantly more than today when local cattle supply only a fraction of the beef market.

It’s a vision that capitalizes on this province’s strengths in cattle production – a corps of family-farming operations, good forage, a large urban market, and the pending development of a federally inspected beef-processing plant.

Anderson said it’s not good enough for producers in this province to simply supply cattle to that plant, operated by Keystone Processors, and leave the marketing to someone else. They need to own a piece of the retail chain so they can pull their product through the system, rather than push it.

She asks why a group of Manitoba cattle producers can’t own a “Mani-Meat Market,” a retail and restaurant supplier based on a busy corner in Winnipeg. It would sell premium-branded meats produced by local farmers for local families. But it would also operate an attached fabricating plant preparing cuts to chef’s specifications, brewing batches of soup broths, preparing table-ready products and even turning the scraps into premium pet food.

With a truck on the road delivering to restaurants, why not deliver fresh meats to private customers who place their weekly orders? Such a business could also be offering premium products outside of the province, such as kosher or halal markets.

Sounds like a whim? There are other similar successful ventures in North America. Making it a reality however requires something harder to find than money – a shared vision through the entire partnership. Anderson stressed it needs to be viewed as a business, first and foremost. “You are not looking out for every single cattle producer in Manitoba,” she noted.

The investors must be committed – and in it for the long haul, whether prices rise or fall. A typical scenario that kills budding ventures is the farmer suppliers want to back out if the price is better somewhere else.

“You can’t commit to try to do it, you have to commit to do it,” she said. It means a minimum commitment of five years and price attached to bailing out even then. It doesn’t have to be a commitment to sell all of a producer-investor’s cattle through the business, only a portion of them.

The venture needs a partner-processor that shares its vision. Producers don’t need to own their own packing plant, she said. They need access to one on a sustained basis, perhaps by buying a shift or leasing hook space. They might also lease retail space.

The partnership must be built on trust and transparency, concepts she freely admits are elusive in the “cannibalistic” commodity meat supply chains – where various players are hoping to do better at another’s expense. A successful supply chain partnership involves setting standards and information-sharing systems that assist all players with achieving the corporate vision as well as penalizing those who don’t.

Farmer-investors in this concept must be prepared to feed their own cattle to market weight, an idea that continues to be a hard sell in Manitoba. It’s an important component of the enterprise’s differentiation in the marketplace. Farmer-finished “I think is an integral piece to the story,” she said. “We have to provide something that the big packers can’t go to the cooler and find.”

Ultimately, it comes down to leadership. Anderson said the kind of person it takes to start such an enterprise is not always the same as those needed to operate it over the long haul, or position it for the future. The people behind this need to be risk takers, but also the kind of leaders who are willing to place the health of the business ahead of their personal aspirations.

The potential is real. But so are the challenges. Are there any takers? [email protected]

About the author

Vice-President of Content

Laura Rance

Laura Rance is vice-president of content for Glacier FarmMedia. She can be reached at [email protected]

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