How to Retail your Lamb and Goat Meat Cuts
by Martha Goodsell
(taken and edited with the author's permission from the Resource Guide for Direct Marketing Livestock and Poultry)
Sometimes farmers are confused about the difference between retail and wholesale marketing of meat. When marketing to a retail outlet directly the farmer becomes a wholesaler. Another example of wholesale marketing is when selling to another wholesaler who then sells product to a retailer. Still another example of wholesale marketing is when a food broker handles the sales between the supplier and another wholesaler who then deals directly with the retailer is. A distributor is a business that handles the transportation of the finished product from one physical location to another but generally does not facilitate contracts between buyers and sellers. If a farmer sells his/her product to a retail store or wholesaler either directly or via a distributor, then they are also selling wholesale rather than retail.
This article will discuss retail or direct farm marketing of meat cuts to consumers. The benefits of this direct transaction are the flexibility and economic returns it provides. It allows producers to become price setters, selling "products"; as opposed to being price takers, selling "commodities". Direct marketing provides farmers interaction with their customers. Through direct interaction, farmers can adjust their product lines for specific consumers demand. This is known as market driven agricultural production.
There are a number of direct marketing options available. A farmer will need to decide whether to market live animals, carcasses, or retail cuts. If marketing retail cuts direct to consumers, the farmer will need to determine which channels will work best for their farm business. They will have to find a profitable market for all cuts in a carcass regardless of whether they are high-end or low-end cuts.
The factors mentioned below will all need to be considered:
- the products available for sale and whether you will be able to utilize the entire carcass for this market or will have trim that needs to be disposed of elsewhere,
- a farmer's location relative to the people who will buy the products,
- the processing options available,
- the farmer's time available for marketing relative to the time spent on production for each market option,
- the cost which may be assumed for each market option,
- the level of customer interaction required by each market option,
- the risks the farmer is willing to be accept, and
- the level of support from the local community.
Retail Markets: From the farm stand to the upscale grocery store
A farmer may choose to operate a retail market himself or market his products to a non-related retail outlet. Retail outlets can range from the very simple to the very elaborate. When selling meat in a retail outlet this can be anything from a freezer kept separate from the family's personal use freezer on the back porch, to an upscale, gourmet grocery. Retail outlets tend to be fixed physical locations, although selling from a freezer truck, which is regularly parked at a specific location, may be considered a retail outlet. The best example of this type of outlet is a parked freezer truck offering fresh fish for sale. At this type of outlet, there are no other vendors and the market is not run on public property or by a public authority.
Local zoning must be consulted before starting a retail outlet to ensure that the operation of such does not violate any local, county, or state zoning or planning ordinance. In addition, some municipalities have strict signage requirements on the number, placement, size, or type of sign allowable. The products requiring tax collection as well as the tax rate may differ from county to county. Anyone operating a retail operate must contact their local and county health departments.
Retail sales of meat in New York require that cuts of amenable red meat and value added products be from carcasses that have been USDA inspected. Some states such as Maine and Vermont also have the option of "USDA Equivalent" State inspection of carcasses. New York currently does not.
If a farmer sells meats from animals not raised by their farm, the farmer will need a 20-C retail license. If there is any further processing of the inspected meat or carcass a producer had slaughtered at a USDA (or USDA Equivalent State) slaughterhouse, then a 20-C license is needed and the farmer will need to do this processing at a 20-C facility while operating under the farm's 20-C license. If eggs, dairy, or cheese is sold in addition to meat, then the New York State Department of Agriculture and Marketing (NYSDAM) requires a 20-C license. If a farmer is simply selling meat from animals that they raised and had appropriately USDA inspected and USDA processed in addition to selling baked goods, jams, jellies and other non-hazardous products then this license is not needed.
Back porch/Classic Farm-stand
Roadside stands and on-farm outlets are not considered by NYSDAM to be "retail food stores", rather, they are considered an extension of the farm. As such, these market outlets are not required to meet the strict sanitary guidelines required by regular retail food stores or food processing establishments. Such stands and on-farm outlets are permitted to sell farm-produced foods such as fresh whole fruits and vegetables (uncut), eggs (cleaned and refrigerated at 45 degrees or less), grains and legumes, honey and maple syrup.
As long as the red meat is appropriately inspected, a farmer may sell it from a freezer from his/her home. Storage of product may be monitored and inspected by NYSDAM. If the product being sold comes from animals being raised by other farmers rather than the farmer who is doing the selling, then the farmer must have a wholesaler's license regardless of volume.
The Department permits businesses (including farms) with a 20-C retail licenses to sell other foods, including perishable products like meat and dairy if products are:
- Processed at an approved processing facility
- Prepackaged and properly labeled
- Kept at the required cold temperature (below 41º F) to prevent spoilage or contamination.
No packaging, cutting, slicing or portioning of fruits, vegetables, meat, dairy products or ready to eat foods is permitted unless proper retail food store or commercial kitchen sanitary facilities are provided. These facilities must include running hot and cold water, equipment cleaning and sanitizing facilities, hand-washing facilities and toilet facilities. NYSDAM will sometimes consider a variance from the requirement for toilet facilities if the farm household's toilet facilities are easily accessible.
Farmers' markets are considered an extension of the farm; therefore, only the farmer or his/her employees can sell the meat or poultry products raised on the farm. The only exception is in the case of meat products that are both slaughtered and processed under USDA inspection (or USDA Equivalent State Inspection if you state has such). These products can be sold at a shared stand when the owner of the meat is not present assuming that the market allows joint or group ownership of booths.
Meat, poultry, and farm-raised game offered for sale at a farmers' market must be slaughtered and processed at an approved source. The sale of custom slaughtered and/or custom processed cuts of meat is forbidden. Fresh, frozen, and processed meats are allowed to be sold at NYS Farmers' Markets, but the cold chain must never be broken when selling meat. Fresh meat must be kept below 41º F. Frozen meat must be kept below 32º F. This requirement can usually be met at a Farmers' Market by 1) keeping the meat in a plugged in freezer on the back of a pickup or delivery truck if the market has electrical outlets or 2) keeping the meat in highly efficient coolers (check the rating) with cold packs or dry ice.
Cleanliness is also important and most market protocol (enforced by market managers) will require farmers to have a hand wash station at a minimum if any sampling is permitted. Some markets may prefer that samples (for example, summer sausage) be precut rather than being cut up at the market itself. A farmer must use inspected product when selling cooked product at this farmers' market stall. If selling meat by the pound farmers will need a NYS Department of Weights and Measurers Certified scale unless the meat is marked prior to the market or sold by the package.
Hotels, Restaurants and Institutions (HRI)
Farmers are allowed to sell meat directly to hotels, restaurants and institution in some cases and within specified parameters. These sales are allowed under specific exemptions listed in the Federal Meat Inspection Act.
A farmer can sell USDA inspected red meat quarters, primals, cuts or value added product directly from a USDA slaughter and/or processing facility to any HRI establishment without limitations. The farmer can also take USDA inspected carcasses and quarters of red meat to the farm's own 20-C licensed facility for further processing for HRI sales. Sales of red meat from a 20-C facility to an HRI kitchen is limited to normal retail amounts and cannot in aggregate exceed one-half a carcass. For cattle one-half carcass equates to 300 pounds, for calves 37.5 pounds, for sheep 27.5 pounds, for swine 100 pounds, and for goats 25 pounds. In addition, less than 25% of sales in terms of dollar value, can be sold to HRI customers and HRI total annual sales cannot exceed the dollar limitation set by the USDA Food Safety Inspection Service Administrator for a given year.
Meat processed at a 20-C facility and sold HRI is limited to products that are sliced, trimmed, cut or ground. Adding spices to ground meat to manufacture a fresh sausage is allowed. Products that have been cooked, cured, smoked, marinated etc. at the 20-C facility can only be sold to a household consumer. The seller has to hold the 20-C license.
If a restaurant is located on a particular farm and such restaurant is operated by the same farm entity that is licensed to operate a 20-C facility then the USDA slaughtered red meat processed by a farm at their own 20-C establishment may be used at their own restaurant. The meat may also be used at their own farmer's market food stand – for example, if they sell lamb sausage sandwiches made from their own USDA slaughtered lambs and processed at their own 20-C facility.
If a farmer is selling their own meat only HRI, no wholesaler license necessary. If a farmer is selling red meat from other farms to HRI, then he/she will need a wholesaler's license. A wholesalers license (Article 20 – Farm Products Dealer License is required if annual purchases of livestock, meats, poultry from other New York producers raised by them and sold wholesale exceeds $10,000). If livestock is purchased at posted livestock auction markets (regulated by Packers & Stockyards) and/or product is sold wholesale interstate (constitutes a flow in commerce), the producer is subject to USDA-Packers & Stockyards (P&S) as to their payment and any unfair trade practice requirements. There are no filing and bonding requirements unless annual purchase volume exceeds $500,000.
Farm to School
Currently, Farm to School efforts are competing with the USDA Commodity Program. It is exceptionally difficult for small, local producers to compete with this program in terms of both volume and price. In addition insurance requirements and third party audits may pose barriers. However, limited opportunities may exist for banquets, fund-raising dinners or in the a-la carte line via snack sticks or jerky. Products must be labeled, including nutritional guidelines, and be approved by both the school administration as well as the cafeteria manager. Price must be competitive and the product should fall within "Wellness Policy" guidelines for nutritional content.
If the dinner is a free will offering, then the meat does not have to be either federally or state inspected. However, if tickets are sold at a set price all meat, poultry and game must be appropriately processed as legally required for sale to restaurants or caterers. However, it is advisable – based on inherent risk – to use the appropriate inspection channels.
Donations of Product
With the exception of whitetail deer donated from hunters after delivery for inspection to custom processing plants, all donated meats to food banks and missions must comply with legal requirements for selling that particular species of meat. The FDA has proposed revising the requirements for processing of donated foods. It would require multi-state processors to enter into National Processing Agreements and would permit processors to substitute donated beef and pork with commercially purchased beef and pork of U.S. origin and of equal or better quality than the donated food for use in value added products.
Fairs and Festivals
Fairs and festivals are different from Farmers' Markets in that most products sold are in the ready-to-eat form. Cooking can be done at an on-site facility or at an off-site facility and then appropriately transported to the location. Vending permits as well as appropriate County Health Department Permits are required. In order to receive such a permit some counties may require specific training, a HACCP plan, or other documentation as requested. All red meat must have been appropriately inspected and processed as legally required for sale to caterers or restaurants.
Refrigerated foods must be mailed cold or frozen in a foam or heavy cardboard box with a cold source included. The package must be labeled "Perishable: Keep Refrigerated". The package should be mailed for next day delivery. When mailing by private carrier, do not use a postal address, use a house or apartment number to make sure the package is received in person. Keep tracking records and shipping records. It is best to alert the customer that the package is in the mail and to remind them to promptly refrigerate or freeze upon receipt. All red meat must have been appropriately inspected and processed as legally required for retail sales.
Direct marketers in this market channel will need to investigate the cheapest and safest ways to handle payment (including credit cards and/or paypal accounts), shipping materials and containers (including labels), and shipping costs (including getting the product to the shipping point). An accurate real-time inventory system is essential.
Community Supported Agriculture
Farmers first offered Community Supported Agriculture (CSA) shares in 1985, revolutionizing direct marketing possibilities for small-scale farmers. Typical CSAs provides vegetables to a group of customers who have paid a "subscription fee" in exchange for receipt of a share of farm product, each week throughout the "season". Subscribers assume some of the risk for a small harvest, but many are willing to do so in exchange for knowing exactly where their food comes from, how it was raised, and the farmer who raised it.
Offering meat as a CSA share or in partnership with a CSA farm, presents marketing and processing alternatives to livestock raisers. Farmers might use the CSA subscription base to attract freezer trade customers, allowing for use of a custom exempt facility. Individuals of the CSA can get together and decide to "share" an animal that they purchase from the farmer prior to having the animal processed per their instructions. However, it is up to these individuals to ensure that the portions are "equal".
If a farmer has USDA inspected retail cuts (but not custom exempt product), they may be able to partner with a CSA by setting up a stand to market their individual retail cuts where the CSA pick-up is scheduled. Remember that meat from animals processed at a custom exempt facility cannot be resold as retail cuts to consumers but is only for consumption by the owner of the animal at the time of processing.
Still other producers have decided to offer meat and poultry as part of the CSA share itself. A farmer who secures subscriptions in the early spring can have the cash on hand to purchase feeder animals in time for the grass flush, and the peace of mind of knowing that the animals have already been sold.
Farmers offering meat shares may have pre-designed splits, and therefore, they are able to describe how much of each cut will be in a box based on a 4-person or 6-person share for example. Others have creatively offered high-end shares (with steaks and tenderloins) and low-end shares (of stew and ground). Some shares are multi-species and farmers are able to offer meat and poultry when it's the freshest; like lambs in spring, chickens in the summer and beef in late fall and winter
Farmers who operate large CSAs caution those considering this venture not to underestimate the time needed to maintain continued contact with CSA customers. Other problems arise with CSAs; the biggest concern is if a CSA member goes on vacation and therefore does not pick up his/her share. Farmers are not allowed to restock left-behind-product and must instead donate it to food kitchens or eat it themselves.
The issue of who actually produces the animal or the products in question is not a primary consideration. The main concern is in insuring the safety of the products being marketed and protecting the consumers from food safety risks and misbranded and adulterated products. To the extent that producers try to circumvent or avoid inspection requirements or other food safety rules that apply to their meat and meat products, creating the potential for public health risks, they can expect government officials to enforce the rules.
There are many CSA types and contracts and each would need to be read carefully and thoroughly to determine exactly the risks and entitlements of the shareholder. In most true-to-form CSAs, the burden of risk is shared equally between the producer and the consumer. However, if the CSA contract states that the shareholder does not legally own the animal in any way, then custom cutting options are not available legally to either party and the product must be slaughtered and appropriately inspected at either a USDA or state equivalent slaughterhouse.