Dawson, Minn. — This month, a southwest Minnesota cooperative will begin processing its own pork in a $6 million packing plant.
Prairie Farmers Cooperative will slaughter about 65,000 hogs a year at the USDA-inspected plant, making custom pork products that can be traced from the dining table back to the farm. The new venture locks in a market for its 81 members, all small-scale swine farmers in southern and western Minnesota who expect more stable producer prices and investor dividends from the deal.
Small runs
With a slaughter capacity of just 290 hogs a day, Prairie Farmers hopes to make a virtue of being small, says manager Jack Hawk, former director of the Small Business Development Center in Marshall.
“Everybody says bigger is better. But we believe our size is a competitive advantage,” Hawk says. State-of-the-art technology makes the plant efficient, so Prairie Farmers can process at competitive prices. At the same time, it can produce small runs of specialty items, a service that’s not cost effective for larger packers, Hawk says. For example, “if a customer wants bacon a certain thickness or pork chops a certain way, we can do that.”
The plant’s sophisticated source tracking system preserves the identity of every animal throughout processing and distribution. This will let Prairie Farmers market the distinctive qualities of its meat, such as antibiotic-free production, humane animal treatment and on-farm food safety measures.
These features are important to a growing number of consumers here and abroad, says Prairie Farmers Marketing Manager Randy Wallerich, former director of meat operations for Fairway Foods and a 20-year veteran of the meat industry. “Today’s consumers want to feel good about the food they buy.”
Fresh out of the chute
Prairie Farmers plans to roll out its products in phases, Wallerich says. “We’re starting with a generic product — no brand, no claims, just fresh pork out of the chute.” This will give the new company time to establish a reputation for top quality and service, he says.
Later this year, the cooperative will introduce a premium line of bacon, smoked ham and picnics under the Prairie Farmers label.
The cooperative is also pursuing contracts to process pork products for small food companies.
At the retail level, Prairie Farmers will work with meat merchandisers to promote the co-op’s products. “We’ll tell about how it’s raised, how it’s produced,” says Wallerich, who plans to enlist co-op members as spokespeople. “They’re fantastic. This is their livelihood and they can really sell it.”
But as a new player in the meat industry, Prairie Farmers faces a tough challenge, warns Wallerich, who handled marketing for Red Oak Farms, an Iowa meat company. “There’s something like a 95 percent failure rate on new products. So it’s not enough to tell your story; your products have to fill a void.”
Nevertheless, telling the small producers’ story is an essential part of the co-op’s marketing plan. “Our logo says ‘From our family to yours,’ and we mean that,” Hawk says.
The seven-year pitch
The Prairie Farmers’ story began in 1995 during a time of rapid consolidation in the hog industry. Independent farmers, without contracts or pricing power, feared losing markets to larger producers.
To secure a market and to have more control over processing, growers joined to build their own packing plant, investing $2.6 million. More than a half-dozen public and private organizations contributed to the project, including USDA, the Minnesota Department of Agriculture, the Minnesota Department of Trade and Economic Development and AURI.
Co-op members will supply an average of 800 hogs a year to the plant. Payments on a cut-weight (rather than the common live-weight) basis will lend superior producers an advantage, Hawk says. “They’re rewarded for raising a higher quality hog.” Quarterly price averaging will even out commodity price swings, he adds, providing more stable farmgate revenue.
The new business brings other benefits, too. The plant, which employs 45, will pump an annual payroll of $1.3 million into the Lac qui Parle County economy. And producers will share the profits.
That is the most important benefit, says AURI meat scientist Darrell Bartholomew, who has worked with Prairie Farmers from the beginning. “Farmers will be able to carry their product further along the marketing chain and reap greater reward from the products that are sold.”