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Organic meat costs rise, but consumers willing to ante up
 
By TIM ALEXANDER
Illinois Correspondent

PEORIA, Ill. — It’s a given that pork products made from hogs raised organically cost consumers more than pork raised conventionally; they have been paying that premium for years. Projected increases in costs for producers who raise hogs organically in 2013, however, might persuade consumers to consider a return to purchasing traditional pork products.

Or, maybe not.

“Where we are at the demand is actually higher than the supply,” said Scott Bittner, owner of Bittner’s Eureka Locker and Meat Co. in Woodford County, which became the only meat processing facility in the state of Illinois to receive its organic processing certificate in 2005.

Though prices for organic pork are “two to three times higher” than conventionally raised pork products, according to Bittner, the current demand is too high to worry about consumer reticence, within reason. 

As of Oct. 26, organic ground pork was selling at “around $5 a pound,” said Bittner, who deals directly with a dozen or so organic meat producers around the state who transport their hogs, beef cattle, poultry, goats and lambs to his locker for processing, including packaging and labeling.

“A product must be processed organically if raised organically” to be considered truly organic, said Donna O’Shaughnessy, co-owner (with husband, Keith Parrish) of South Pork Ranch LLC near Chatsworth. It is the only farm in central Illinois to hold organic certifications for pork, beef and dairy by the Midwest Organic Services Assoc. (MOSA).

Organic processing includes “a lot of paperwork (and) scheduling organic meat cutting as the first process of the day,” according to Bittner. For those reasons and others, organic processing can create additional production costs for organic farmers. “Processing (costs are) extremely high for us,” said O’Shaughnessy, who maintains a blog about her farming experiences at http://midlifefarmwife.blogspot.com

“We are paying more for the packaging and labeling of individual cuts of meat for sale at our store.”

But it is not the cost associated with organic meat processing and packaging with which the owners of South Pork Ranch are concerned. Like conventional livestock farmers, they are most concerned about feed sources expected to send production costs soaring next year.

“What we are going to be seeing is an increase from 2012 to 2013 projected at $60 per head of hog in feed costs,” O’Shaughnessy said. “Our organic supplier has told us to expect that the grain alone will go up 50 percent. He’s advising us to budget 50 percent (more) for hay as well.”

Because the couple – both first-generation farmers – do not raise any of their own hay, grain or straw, the expected increases in feed costs carries a heavier weight.

“Because we are so small, my husband grinds all of our organic feed; we do not buy pre-mixed grain. He decides what goes into the feed and buys it from another organic farmer in Chenoa, and it is trucked over to our farm,” O’Shaughnessy explained.

“A new requirement effective last June is that you have to (provide) organic straw for bedding. That has certainly increased costs for organic livestock farms.”

As with feed products, the couple purchases straw for bedding from another organic farmer and has it trucked to South Pork Ranch. Other variable costs affecting their bottom line could include health costs, repairs, fuel and utilities.

O’Shaughnessy and Parrish are far from discouraged by projected production costs for 2013, instead planning on increasing sales of their market hogs, breeder hogs (including the critically endangered Red Wattle), feeder and roaster hogs by 30 percent next year.
Part of the plan is to increase the per-pound charge for half and whole market hogs sold directly to consumers at Eureka Locker, from $2.75 to $3.25 per pound.

“After doing market research and comparing to similar-type setups with pastured organic hogs, we found our per-pound price to be lower than most,” said O’Shaughnessy. Increasing the number of half and whole hogs sold directly to consumers from the farm is also part of the strategy for success in 2013, as is increasing the number of feeder hogs sold.

“Last year we sold only 19 feeders, without marketing them. When we realized the cost to feed these youngsters as compared to the market hogs was less and the profit margin more, we decided to increase this number. More individuals want to raise their own backyard hog than we’ve ever seen in our 19 years of farming,” she said.

Red Wattle breeding stock will also be increased, as will the asking price, according to O’Shaughnessy. “Again, when we took the time to examine our costs we discovered we were charging less than the national average. We decided to sell at least twice as many (as in 2012) for approximately 30 percent more.”

In addition, the couple plan to increase the number of roaster and suckling hogs they sell, with profit margins faring greater for this type of hog. Like Bittner, O’Shaughnessy feels the market for organic meat products will only increase, even as retail prices do.
“There is profit in (organic meat production) because people want good, healthy meat” that they can trace to its origin, she said. “Our No. 1 customer is the young thirties (age) mom with several kids, so there is plenty of room for growth.”
11/7/2012