Cover Story: Niche Marketing - A venture still in its infancy for Ontario producers
Friday, May 30, 2008
Producers, packers and retailers are starting to respond to consumer demands for specialty pork. But the industry is still far from the potential 15 to 20 per cent of provincial pork production that industry experts believe could go to niche markets
by DON STONEMAN & MARY BAXTER
For old-order Amish and Mennonite farmers in western Ontario's hog belt who still raise pigs like they did 50 years ago, there is a modern-day payoff.
While conventional producers are suffering tremendous losses and the industry appears to be shrinking, these niche producers are paid premiums on top of the Ontario ministry of agriculture's published cost of production figures when the pigs are shipped to duBreton packing plants in Quebec. The meat is sold as a Certified Humane product, mostly into the United States.
"It's very easy for old style Mennonite-Amish farmers to come on the program," says Germain Camiré, hog procurement officer for duBreton and head of sales for Génétiporc, a sister company. They already use straw bedding. There is more space per pig than in conventional barns. They may have to change their farrowing crates, he says. They do have to stock their barns with Génétiporc gilts and boars; antibiotics, growth promotants and animal byproduct feeds are banned.
Certified Humane is one of a number of so-called "niche" pork marketing options available today. Producers, packers and sometimes retailers are meeting specific consumer demands for meat which has been raised humanely, fed differently or provides a more sensual eating experience. Some packers, like duBreton, are willing to allow details of their programs to be published. Others aren't. Everyone is reluctant to spell out the premiums involved for producers. The reason: intense competition.
"We are not alone in the market," says Camiré about duBreton's Humane Pork program.
Programs that aim to put more money into producers pockets get ruined by "people trying to pile in," says Dan Cohoe, head of hog procurement for Toronto-based Quality Meat Packers. Quality Meat Packers supplies meat to a President's Choice line of foods for Loblaws. He further cites "standards being dropped by people and companies trying to get economic advantage by being cheaper."
Low commodity prices make marketing to niches tough. One such small group of Berkshire producers in Ontario who market to high-end restaurants, retailers and discerning customers, is feeling the pinch. "If commodity pork were at a normal level, then it would make our lives a little easier," says Fred de Martines, leader of the Black Bow Farm co-operative, based in western Ontario.
Ontario appears to be in its infancy when it comes to niche marketing pork. Only a small portion of production is devoted to so-called niche markets. Katie Sinclair, industry and producer relations officer for Ontario Pork, says that some industry people think that niche markets might take as much as 15 to 20 per cent of Ontario's pork production. Niches won't fit everybody's style of production, Sinclair says. And, she notes, "yesterday's niche may become tomorrow's commodity."
DuBreton claims to be the largest organic and natural pork producer and processor in North America. The pork from such a program commands a premium price. The company's website explains that "vegetable grain diets" are more expensive to feed than animal byproducts and pigs raised without growth promoting antibiotics take 15 days longer to get to market weight than conventionally raised pigs.
Per pig premium
Though Cohoe is reluctant to talk about Quality Meat's niche marketing efforts, one niche it has established is so-called Story Pork. Pork produced from specific Ontario farms is sold in Japan packaged with descriptions and photos of the farm where the pigs were raised. Cohoe says that program takes "many thousands of pigs" weekly.
Quality works with Cambridge-based Grand Valley Fortifiers which provides feeding programs and works with producers. Marketed under the trademarked "Free From" label, packages of meat boast that pigs were raised "without the use of antibiotics and animal byproducts" and ate a "vegetable grain diet."
Producers get a per pig premium on top of commodity pork prices. Cohoe volunteered little more information for fear of jeopardizing marketing efforts. "There is a tremendous amount of effort taken to make sales and develop protocols," Cohoe says.
Camiré says the amount of the duBreton premium is "confidential."
DuBreton follows the standards set by the American organization, Humane Farm Animal Care. Gestation stalls are disallowed. Sows can only be restrained when they are inseminated. Producers must bed with straw in farrowing pens that are a minimum of six-by-eight-feet long and must have a side that opens. Sows must be able to turn around. Growth promotants such as Paylean, Tylan and Posistac are disallowed, as are antibiotics and animal byproducts. Feed grown from genetically modified seeds is permitted.
DuBreton demands that producers use very specific genetics – F20 gilts bred to G Performer terminal boars.
Camiré says that there are about 100 certified Humane producers in Ontario. "We know we are paying a lot of money," Camiré says. "We want to keep producers for a long time."
Farmers sign on for three-year contracts. Contracts in Ontario are filled now, but Camiré is hoping there is room for expansion into Europe. The key to that market is Canadian Food Inspection Agency approval of a protocol that guarantees pigs aren't fed Paylean, a sometimes controversial repartitioning agent approved in the United States for years and in Canada recently.
There's a yet more lucrative premium for organic pigs sold to duBreton. (Again, Camiré won't discuss specific numbers about premiums.) Pig feeds must be made from organically-produced grain from seed with no genetic modifications and grown in fields which have not been sprayed with commonly used chemical weed controls for three seasons.
The pork operations must be audited by Quality Assurance International (QAI) Organic and Certified Humane, a brand of Humane Farm Animal Care. (There is more information on duBreton's website http://www.duBreton.com/en/). Pigs must also be allowed access to the outdoors in the summer.
Omega-3 pork
Katie Sinclair says that producers are making money on organic pork, but warns that costs are high and the commitment to breeding and feeding is huge.
There are other programs. Progressive Pork Producers, operating through Conestoga Packers, markets antibiotic- and hormone-free pork and touts the connection to Ontario family farms.
Fieldgate Organics in western Ontario runs an organic program. Omega-3 pork is being produced on the Prairies and Sinclair expects to see Ontario-produced Omega-3 pork on store shelves this year.
Farmers who are getting into niche markets need to know their target consumer. And they may have to change their mindset, Sinclair says. There's a demand for highly marbled pork, and producers must set their sights on a completely different set of targets than with conventional production, which strives for lower backfat and fewer days to market.
Only Génétiporc hogs are allowed on the duBreton program. (Génétiporc and duBreton are branches of the same company). Pigs must also be allowed more space in the barn and access to the outdoors in the summer.
DuBreton aims to market pigs on a heavy grid and produce carcasses weighing 96 to 98 kilograms, Camiré says. Producers either buy or grow their own organic corn soybeans and peas. Even the premixes must be certified organic. There are no animal byproducts in the feed and sick animals treated with antibiotics are shipped to a conventional market.
Producers are limited to a maximum of 80 sows, farrow-to-finish. While a commercial barn allows for 35 square feet per sow in a crate, the organic sows get 90 square feet. In gestation crates, each sow gets at least 30 square feet. Space requirements are generally double that of commercial pig farm standards.
Berkshires a marketing challenge
Producers involved in selling Berkshire pork to high-end markets are finding overall market conditions are causing difficulties for this niche market venture.
"Everybody loves the product," says Fred de Martines. While customers don't mind paying twice as much for a niche market product, they hesitate to fork over three to four times the current price for hogs for the Berkshire breed, he says.
The venture has its roots in a heritage breed program launched by Ontario Pork a few years ago. The program looked at developing a niche market for a heritage breed product by putting together producers, processors and the high-end food service industry.
The board helped with the initial research, facilitating meetings of interested producers and helping them to connect with high-end consumers. Ridgetown Campus, University of Guelph helped to recruit producers who funded the project themselves.
This summer, the venture celebrates its first year. Many of the seven producers involved also have other hog operations. De Martines finishes about 3,000 to 3,500 hogs annually in his conventional farrow-to-finish operation and raises wild boar. De Martines farrows and finishes Berkshires while other producers split breeding and finishing responsibilities. The co-operative buys all weaner pigs when they reach 55 to 60 pounds. These arrangements are for tax purposes and make it easier for others to join or leave the co-operative, de Martines says. At present, they slaughter 15 to 20 animals a week. "We want to be very careful with what we're doing" and not start producing without the right markets for it, de Martines says.
He says the meat is earning high praise from restaurateurs. "It's definitely in a class on its own." He attributes an "unbelievable" taste to the pigs' marbling, something that he says has been bred out of commodity pigs.
The costs of raising the animals are significantly higher than commodity pigs. The animals must be raised on straw bedding to eliminate any taint of ammonia. They are fed barley and they mature at a slower rate. In order to ensure production is standardized, the feed for all seven farms comes from one mill.
To enhance market appeal other restrictions are introduced. No growth promotants are administered, pigs get access to the outside and herd sizes are kept low. Breeding herds range from 10 to 45 sows. De Martines says that the customers don't like to see big herds. "I'd much rather see 10 farmers with 30 sows," he says.
Wholesale prices for their product have rallied somewhat since hog market prices bottomed out in the fall of 2007. Right now, the co-operative is breaking even on costs, de Martines says.
Marketing the products takes a lot of de Martines' time. Along with selling the product at his on-farm store, he sells to stores and restaurants, mostly located in Toronto, Windsor and Niagara Falls. The group has a distributor in Ottawa and de Martines would like to move more product through distributors, which would cut down the time he has to spend in promotion. "But you have to find the right distributors as well," he notes.
With a specialty product such as Berkshire pork, the money is in the loins, de Martines notes. "Then you can sell the trim or other parts for a lower price, but it doesn't matter."
There are some bright spots for Black Bow. Competition from producers in Saskatchewan and Manitoba for southern Ontario's high-end restaurants – the main target for Black Bow's venture – is slowing down. De Martines attributes the decline to changes at a main plant that processes Berkshire pork in Saskatchewan. The rise in grain prices is causing others to leave the market as well, he adds.
There also seem to be fewer animal health issues, he adds, noting that sows are vaccinated. "There are lots who would love to be a part of it (this venture) but we need the markets to be there first before we want to expand."
Most recent producers
Kevin Rivers and Allyson MacDonald are the most recent producers to join the Black Bow Farms ventures, signing up last November. They finish as many as 3,000 conventional hogs a year and house roughly 75 Berkshire weaners "of all sizes" in an older barn on Kevin's parents' farm next door. A sow producer near Wheatley supplies them.
Kevin says that Berkshire premiums need to be higher and blames the state of the commodity pork industry. "(People) want to pay some more, but when there's so much commodity pork out there so cheap, it holds everybody back."
With barley being the main feed source and the ratio of feed to pound gain is higher than found with commodity pigs, the animals are more expensive to raise than commodity pigs.
He and Allyson point out that the animals are bedded in straw and that the co-operative's branding protocols prohibit tail docking. By February, 2008, however, they had not seen any tail biting. Both observe that the breed seems to be quieter. They're not sure, however, if that is due to the treatment – the animals have more contact with humans than most – or to the breed itself.
He says he's learning "lots about the meat industry" that he didn't know before and credits this new-found knowledge to getting involved in Black Bow. He says the venture "is not going as well as it could," that it is too soon to judge the merits of the venture.
"We're going to stay with it until it pays back," says Allyson. "Currently, the way the pork market is, you have to find almost a niche market or try to find something that makes you separate you from the herd, right?" BP
SIDEBAR 1: Proximity to local markets the key to success
"Separate from the herd" is a choice that Dennis and Denise Harrison made for their farm north of Bradford. They think that they may never feed conventional pork again.
The Harrisons used to contract-feed 1,000 pigs at a time on their farm north of Bradford, in Simcoe County. After BSE hit, they began marketing grassfed beef and lambs and, last year, acquired five Berkshire pigs from Leeway Farms in Manitoba, which they house for the winter in a 150-year-old bank barn. They personally deliver sides of meat 40 minutes away to Toronto restaurants serving $30 a- plate meals and expect to feed and sell 60 Berkshires this year.
Why go this route? Denise says that it started out as a means of feeding their family in a healthy way. Dennis cites another reason for converting to "sustainable" local markets – "$2 corn, $5 soys, $3 wheat, and waiting two years for CAIS (Canadian Agricultural Income Stabilization) payments." Now, the Harrisons aren't waiting for CAIS cheques any more. "The market is there," Dennis says.
Hanging carcasses weigh 180-190 pounds. Feeding a Berkshire pig to market weight takes 40 per cent longer than a regular pig. Some freezer customers question the price that is charged but, says Dennis, if they have to ask about the price of the meat "they aren't your customer anyway." More painful is turning away customers when they are out of meat.
The Harrisons cite proximity to their market as key to their success but also the biggest danger to their farm. Developers, leapfrogging over the Greenbelt around the Greater Toronto Area, have bought property on both sides. The Harrisons want to be able to stay in their location to retain their access to markets. Their marketing plan wouldn't work somewhere else, they say.
The Harrisons think that their Berkshire business can be sustainable with four to five restaurants as customers and selling freezer meat as well. Dennis says that the chef from Cowbelle, an upscale restaurant in Toronto, spent three hours on their farm "just looking" before agreeing to buy their product.
The pigs live outside in reasonable weather and inside an old bank barn in the winter with no penning or crates. There are casualties because of mothers rolling over on babies. Denise hopes that with experience they will be better mothers.
Pigs eat onions and cull carrots from Bradford-area vegetable farms. The Harrisons compost manure from the sheep, cattle and pigs and from vegetable waste, and work with Cookstown Greens, an organic vegetable and greens grower. Marketing materials make note that the manure from the Harrison's pigs fertilize Cookstown Greens which supplies produce to the same restaurants as the Harrisons. As well, the Harrisons sell their brand of compost through a chain of stores in Toronto.
They've been growing 2,000 plus acres of cashcrops for about 10 years. Dennis says he is excited by $200 a tonne corn and $600 a tonne soybeans "but $600 urea is impressive, too." BP
SIDEBAR 2: A market opening for ready-to-cook products
Meat industry consultant Denis Dineen disagrees when Fred de Martines says selling the trimmings and poorer cuts doesn't matter in a niche market. The former Tesco grocery executive (Tesco is the largest retailer in Britain) says selling the top cuts for a high price is the easy part. Niche marketers bog down because they get a lower price for the trimmings and shoulder cuts, so even more of the value of a specialty-raised animal must be put on the top cuts. "That is a big issue. You have to be innovative in the products that you make. I think that is the barrier to growing niche markets."
Product innovation doesn't have to come solely from raw product from the farm, Dineen says. It can be in areas such as ready-to-cook items, which are very popular in Britain and which are replacing traditional meat counters in supermarkets that cater to the 25 to 40 age group shopper.
In Canada, these products are limited and are dominated by chicken and ribs, he says. Pork processors and retailers have to appeal to these shoppers, Dineen says, otherwise they'll just buy a pizza. BP