Collaborative Business for Local
Sustainable Meats
Part 2
Slav Heller
St. Paul, AB
November 2012
Farmer’s cooperative options in the
mainstream meat business
A.Form livestock production cooperative
and seek mainstream meat processing
and retail partners
1. Potential for good returns
2. Meat volume matching problems
3. Not easy to find reliable meat slaughter and
meat fabrication industry partners
4. Pressure from retail to cut prices
5. Fragile relation with large retailers
Farmer’s cooperative options in the
mainstream meat business
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 cooperative options in the
mainstream meat 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 cooperative options to
participate in the local meat business
1. 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 foods
3. Joint processing and marketing with other
farms
This is still only about horizontal cooperation
(farmers with farmers)
Farmer’s cooperative options to
participate in the local meat business
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)
Problems
with all food supply (value) chains;
big and small, mainstream and local
 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”
Problems
with all food supply (value) chains;
big and small, mainstream and local
 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
Problems
with all food supply (value) chains;
big and small, mainstream and local
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”
Problems
with effectiveness of
cooperative organizations
Making cooperative organizations
working effectively is another problem
and a
big one
But this is a different topic that
we will not be addressing today
Marketing is all about people
Business cooperation is also about
people but there are some important
differences
Marketing is
a reciprocal
but linear
relationship …
… focused on
consumer’s
values and their
feedback
Business cooperation is about a web of
relations and reconciling different values
and beliefs
There has been developed
a new business scenario
that offers a new alternative for
Local Sustainable Meat initiatives
It incorporates some new and unique
concepts in organization of food supply
What is the new scenario about?
 New local sustainable meat brand
 Selling to an Alberta city
(Edmonton)
 Local meat (food) supply chain
 Independent small local
enterprises with balanced sizes
 May incorporate multi-location
slaughter
The single chain will consists of:
Livestock farmers producing variety of
sustainable livestock & poultry forming a
cooperative
Slaughter and meat cutting facility
Alternatively, multi-location abattoirs
operating with a meat cutting facility
Processed meats operations (can be part
of meat cutting, urban retail or independent)
Urban retail centre(s) that can be operated
by a consumer cooperative
Characteristics of the proposed
new sustainable local meat brand
 Meats and processed meats from broad
range of Alberta livestock and poultry
 Capacity of a chain will be defined by
slaughter and meat cutting capacities of the
chosen meat plant, possibly a mobile abattoir
 Each part of the chain can operate as
independent business but various vertical
ownership arrangements are possible
 Processed meat formulations will follow
sustainable processing principles