Editor's note: This is the second in a series of stories about specialty meat businesses. Part 1 discussed Yordy Turkey Farm in Morton, Ill., a business that targets the Thanksgiving market.

Yordy Turkey Farm is an 80-year-old business with buildings, a processing facility, retail outlets and an established customer base.

“They know how to do it, and they do it well,” says Nic Anderson, Illinois Livestock Development Group. “It’s an established business.”

But what if you’re a farmer or entrepreneur trying to break into a specialty meat market? What then? “If you’re looking at organic, natural or non-GMO, the challenge is you have to have a consistent market,” Anderson explains.

Illinois Market Maker can help with that, says co-found Darlene Knipe. Illinois Market Maker is a database website that connects consumers seeking grass-fed beef, cage-free eggs, non-GMO-fed pork or other farm-raised products with the farmers who market them, and vice versa. Farmers marketing a specialty product can reach consumers, boutique butcher shops, restaurants and caterers.

“Niche markets can only be profitable if they still achieve some sort of scale or if there’s enough efficiency to make money,” she explains. “The purpose of Market Maker is to help facilitate those connections and help organize supply chains where the cost of getting a product to market isn’t cumbersome and expensive. That can make a difference between a viable endeavor and a nonprofitable one.”

Illinois Market Maker can also help new specialty-product business owners line up a critical business partner, like a processor who can handle a separate line of meat products.

“The problem is not so much in finding quality meat processors as it is finding one that can work you into their business,” explains Richard Knipe, Market Maker co-founder. “The ones you want to work with are too busy to take on more. Without the local meat processor, there are no local meat sales.”

Finding a customer base willing to pay a premium may also present a challenge, he adds. Smaller processors charge more, and farmers pass those additional fees on to their customers.

Marketing options
Illinois ranks third in the nation for farmers markets that offer small-business owners an opportunity to reach customers looking for locally produced products, says Kim Hamilton, Illinois Department of Agriculture international marketing representative, including the Illinois Products Farmers Market in Springfield. Nearly 40 venders, including local chicken, pork and beef farmers, gather weekly at the Illinois State Fairgrounds from March to October and market their locally produced products.

The Illinois Product Expo in March is an opportunity to put new products in front of 10,000 weekend visitors.

“Illinois is such a rich ag state,” Hamilton says, adding that new specialty-product business owners should look at IDOA as a resource that can offer contacts for processing, packaging and branding.

Handling sales and marketing while farming was a real challenge for Mark and Kristen Boe, who own a custom beef and pork business that caters to Chicagoland restaurants and butchers.

Check back tomorrow for more details and their advice for starting a new specialty meat business.

Plan it out
“My job is to make sure [producers’] eyes are wide open,” says Anderson. The potential to earn a premium price for specialty meats may sound appealing, but farmers need to factor in higher production and processing costs. “Knowing your cash flow and expectations, that’s part of the planning process,” he adds. 

Feed is the most expensive high-cost input. Non-GMO or organic grain will cost more, Anderson notes, and rate of return comes into play. Pasture-raised livestock may not gain as much as commercial livestock when weather becomes a factor.

Processing costs will be more expensive compared with commercial operations.

“With higher processing costs of smaller processors, you have to charge more for your product, and you have to find a market for the entire carcass,” says Richard Knipe. “It’s a challenge, so you have to be creative in selling lower-quality cuts.” 

Will the premiums for specialty meats outweigh the higher costs of production?

Commercial contracts offer 8% to 10% returns. For a specialty meat business to work, Anderson says returns need to be equal to or better than commercial operations. The only way to know if a business plan will work is to do the math. “Everyone needs to know cash flow and rate of returns,” he adds. “You only have to be better than the next guy, whether you’re organic or commercial. In the end, the best producer is going to sell the products.”