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Value Has Many Shapes And Sizes

As cattle producers there are a lot of arguments around what exactly it is that we sell. There is a class of argument that says we sell beef, and consumer demand for our product drives the industry. This is true. There is also an argument that most of us don’t sell beef, but sell live calves in a commodity system, so the most weight for the lowest cost wins. Also a valid and true argument.

There is another argument that I prefer and it revolves around providing value to the customer. I suppose this can encompass value being defined as low cost, but it also requires defining of the customer. Value for a feedlot would be providing healthy calves that grow fast and hit the target market. Value for a processor would be producing calves that meet their customer specs on the dates that they need them. This is an example of why we see fat cattle trade at a premium in certain months of the year. There is value in producing them for these targets, because they are not readily available.

Health, genetics, weight and timing of product availability are pretty easily understood value attributes and fully embrace our well-trained production mindset. There is however a different class of value and it is one that we are often pretty poor at recognizing, and even worse at capturing. That value lies in “nonfunctional” value attributes.

To frame out what I mean by this, let me start by saying that things have value because we say they do. Most of us would not find a lump of gold particularly useful, yet we ascribe great value to it. Likewise the consuming public places great value on items that often escape our production mindset. For example, while the public may not care about the growth rate of a calf, they do care about antibiotic use. Organic or non-implanted beef are other perhaps more volatile examples of “non-functional” value. People assign value to these attributes and may be willing to pay more for the product.

While I think that on farm food safety should be part of standard operating procedure, proper documentation of processes, following label directions and recording of treatments can have both functional and nonfunctional value.

On a less beef-related scale, a good example of value is wildlife and landscape beauty. This is a pretty ethereal concept, but most people highly value “the great outdoors” even if they never venture into it. This is something that farmers and ranchers “produce” and it represents a new way to add value. In its’ current form a lot of this revolves around carbon credits, but it is also moving into providing a full suite of environmental goods and services (EG&S). This list could include improving water quality, sequestering carbon, providing wildlife habitat, encouraging endangered species, preserving ecosystem structure, or a wide variety of other services. How to capture value from that is still a matter of large debate. Some projects are working to create a direct marketplace (eg: buy a pound of carbon or an acre of wetland) and others are obtaining value by pricing it into their product (eg: buy our beef and support the environment). We are currently engaged in trial projects that are working to directly market EG&S both directly and through our beef.

The story surrounding the product is also a value attribute. Most of us don’t appreciate the touchy feely aspect of this and often see it as a waste of funds, but making a customer feel good because of a non-production attribute is a great value add. The best examples I know are the direct marketers of beef. They literally sell their story and create goodwill in their customer base by providing a real relationship to all the things the customer values. Supporting families, the environment, knowledge of food and farmer, local economies, etc. are all things that it is easy to value. On a larger, less personal scale, the story is behind promotions such as “Alberta Beef” and the work of the Beef Information Centre and Canadian Beef export Federation.

Finally, the very best and the least expensive way we have ever found to add tremendous value to our product (any product) is by saying a simple “thank you” to the customer. We always appreciate a thank you when we buy something, and I am certain whether you sell your calves through a pre-sort sale, direct to a feedlot or packer or even a consumer they appreciate it too.

Thanks.

SeanMcGrathisarancherandconsultant fromVermilion,Alta.Hecanbereachedat [email protected] or(780)853-9673. Foradditionalinformationvisit www.ranchingsystems.com

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Sean McGrath is a rancher and consultant from Vermilion, Alta. He can be reached at [email protected] or (780) 853- 9673. For additional information visit www.ranchingsystems.com.

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