To see the previous sausage scheme entry, click here.
In the previous entry, I talked at length about bringing pigs to market in a way that made the farm more money.
Kelly Johnson made a very astute observation, which I'll quote here (from the comments section of the first post)
"...Let me first say I have no experience in marketing pork to consumers
(yet). With that said I believe a major factor in your decision that was
not listed in your blog is what would you get for the hog without going
the extra step in making it into sausage...."
When you raise hogs, your choices become either wholesale, or retail.
I have advised many people not to take their pigs to auction; the results in this area are highly variable; and the market isn't big enough to even it out. A good pig at auction will get between $0.60 and $0.80 per pound, live weight.
So for a 280lb live weight pig I'd expect to get at auction somewhere between $168 and $224. If i had purchased feed and a piglet, that pig would have cost me at least $271 (see previous post) to produce. So selling at auction would net me a loss in raising that pig of between $103 and $47.
I have sold pigs at auction, and still do, from time to time. They are often animals that have some sort of issue that makes them unthrifty for my farm (slow to grow, inefficient gain, physical defect like hernia, or treatment that makes it unsuitable for sale at my farm), and it is possible to make money at auction sales, but in terms something that I would count on, I'd rule auctions out as a regular market for my pigs.
The prices at auction represent a recognition by the market that the pigs being sold may have some sort of issue. You see good animals at the auction, too -- but the market can't tell the difference and prices them accordingly.
I do not recommend that people plan on selling their production at auction except in limited circumstances. If someone told me that a farm was regularly selling at auction I would immediately think that they needed to change something about the farming to make that less likely.
Whole or half, direct to consumer
This is how I currently sell the majority of my production. I charge $2.25/lb hanging weight for the pig, and the customer pays the cut-and-wrap and kill fees.
A 280lb pig will yield a carcass that is 210lbs hanging weight, which I get $472.5 from. Subtracting the cost of raising the pig ($271) I get a gross profit of $201.5
This is where another comment from the previous post comes in. Bill Gauch said:
"Seems like you're missing a big cost item in your math. Labor cost is missing."
The additional labor required for this particular method of sale is very little. We select the pig to be marketed, schedule in the farm kill guy, and the farm kill guy and the meat shop handle the rest. Having many retail customers is perhaps the most stable sales platform you can build your business on.
Whole or half, direct to the meat shop
What happens with most of the area meat shops is that they get customers who want a whole or half pig, and call the meat shop seeking one. The meat shop doesn't have pigs; I have pigs. So I become basically the "house brand" pig. One of my pigs gets customer slaughtered for the customer, who picks it up at the meat shop. The sale is arranged by the meat shop and they pay a lower price than the consumer does; usually around 30% lower. Using the same 280lb pig, I'd have a gross profit of $140 per pig.
Each of those methods has its advantages and disadvantages. The auction is the most certain way to sell a pig. If you have a customer cancel an order and suddenly have too many pigs, if you have a pig you can't sell at your farm, if you need to liquidate some animals for cash, it's the pawn shop of farming.
Whole or half direct to the consumer involves marketing and salesmanship, which many people don't like; it often involves creativity, and can involve quite a bit of handholding. Customer expectations for levels of communication, questions, people who can't make up their minds; all of the stuff involved in retail sales come into play here -- and all of that is labor cost. You earn the extra money.
Whole or half to a meat shop gets you a profit, and the meat shop handles all of the customer interaction. I am now supplying pork to three meat shops in the area this way, and it is a relatively painless way for me to sell my pork; I can concentrate on my farm and practices and not so much on retail sales or customer care. Um, strike that. I go from many customers to a few. My customers become the meat shops. I still have to care for customers, just different customers. I don't have to explain my product to the meat shops. They know the value of meat, and they know I need to make a profit, and it's mutually beneficial that we treat each other fairly. There is also a risk in having fewer, large customers.
7 hours ago