Collaborative Business for Local Collaborative Business for Local Sustainable MeatsSustainable Meats

Part 2Part 2

Slav Heller St. Paul, AB

November 2012

Farmer’s Farmer’s cooperativecooperative options in options in the the mainstream meatmainstream meat business business

A.Form livestock production cooperative and seek mainstream

meat processing and retail partners

1. Potential for good returns2. Meat volume matching problems

3. Not easy to find reliable meat slaughter and meat fabrication industry partners4. Pressure from retail to cut prices

5. Fragile relation with large retailers

B. Form their own cooperative meat businesses, own meat processing

plants

1. Lure of high returns and high level of control

2. Must seek new markets, competing often head on with big meat companies

3. Possibility of under financing, high debt

4. Management of meat plants a challenge

5. Possible conflict between board and operations management

Farmer’s Farmer’s cooperativecooperative options in options in the the mainstream meatmainstream meat business business

C.Sign on as contract producers with existing companies that

already supply the mainstream markets

1. Lower premiums but also low risk

2. Some guarantee of profitable sales

3. Need to strictly follow the marketer production protocols

4. Options most likely limited to beef

5. Reliability of the marketing companies vary

Farmer’s Farmer’s cooperativecooperative options in options in the the mainstream meatmainstream meat business business

Farmer’s Farmer’s cooperativecooperative options to options to participate in the participate in the local meatlocal meat

businessbusiness1. Buying (contract) livestock/meat from other farms and marketing their meats

• The same type of livestock and poultry• Complementary variety of different meats

2. Joint marketing with other farms of complementary meats, poultry and

even other foods3. Joint processing and marketing with

other farms This is still only about horizontal horizontal

cooperationcooperation (farmers with farmers)

Local supply chain vertical alliances

All kinds of link options are possible and have been tried

It all depends on relationships that can be built and integrity of participants.

Again, it will help building meaningful business relationships if one

understands properly what is important to other people (what they value)

Farmer’s Farmer’s cooperativecooperative options to options to participate in the participate in the local meatlocal meat

businessbusiness

Imbalance of power. Those on the top of the chain with close link to

consumer (retailers) control the chain. Tendency to squeeze supply chain to be

competitive

Imbalance of vested interest in functioning of the chain. Farmers may have much higher stake than retails as to these farmers can be “disposable”

ProblemsProblems with all food supply (value) with all food supply (value)

chains; big and small, chains; big and small, mainstreammainstream and and locallocal

Possible problems with understanding and accepting by

farmers and processors what the upper urban part of the chain wants and

needs (what is really valued)

Matching volumes. Do farmers have the capacity to deliver what

retail needs?

Quality assurance. Ability to consistently deliver what is expected

ProblemsProblems with all food supply (value) with all food supply (value)

chains; big and small, chains; big and small, mainstreammainstream and and locallocal

ProblemsProblems with all food supply (value) with all food supply (value)

chains; big and small, chains; big and small, mainstreammainstream and and locallocal

For farmers vertical cooperation too often means “putting all eggs in one basket”. This is not a good business

strategy

For upper parts of the supply chain (retailers), this may just be a “one small egg in their big basket”

ProblemsProblems with effectiveness of with effectiveness of

cooperative organizationscooperative organizations

Making cooperative organizationscooperative organizations working effectively is another problem

and a big onebig one

But this is a different topic that But this is a different topic that we will not be addressing today we will not be addressing today

MarketingMarketing is all about people

Business cooperationBusiness cooperation is also about people but there are some

important differences

… focused on consumer’s values and

their feedback

MarketingMarketing is a reciprocal

but linear relationship …

Business cooperationBusiness cooperation is about a is about a web of relations and reconciling web of relations and reconciling

different values and beliefs different values and beliefs

There has been developed There has been developed a new business scenarioa new business scenario

that offers a new alternative that offers a new alternative for for Local Sustainable Meat Local Sustainable Meat

initiativesinitiatives

It incorporates some newnew and unique unique conceptsconcepts in organization of food

supply

New local sustainable meat local sustainable meat brandbrand

Selling to an Alberta cityAlberta city (Edmonton)

Local meat (food) supply supply chainchain

Independent small locallocal enterprisesenterprises with balanced

sizesMay incorporate multi-multi-

location slaughter location slaughter

What is the new scenario What is the new scenario about? about?

Livestock farmersLivestock farmers producing variety of sustainable livestock & poultry forming a

cooperativeSlaughterSlaughter and meat cuttingmeat cutting facilityAlternatively, multi-location abattoirs operating with a meat cutting facility

Processed meatsProcessed meats operations (can be part of meat cutting, urban retail or

independent)Urban retailUrban retail centre(s) that can be operated by a consumer cooperative

The single chain will consists The single chain will consists of:of:

Meats and processed meats from broad range of Alberta livestock and broad range of Alberta livestock and

poultrypoultryCapacityCapacity of a chain will be defined by

slaughter and meat cutting capacities of the chosen meat plant, possibly a mobile

abattoirEach part of the chain can operate as

independent businessindependent business but various vertical ownership arrangements are possible

Processed meatProcessed meat formulations will follow sustainable processingsustainable processing principles

Characteristics of the Characteristics of the proposed new sustainable proposed new sustainable

local meat brand local meat brand