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KJ's avatar

This is a fascinating thought experiment and one that we can play out on our farm. We are cow-calf producers who retain ownership of our animals through the feedlot and sell directly to the packers. This works for us as we work to raise high-quality cattle that can benefit from the grid system and often pick up premiums for prime and choice animals. That being said, the idea that we would "own" our beef clear through to the grocery store shelves makes me a bit nervous - for the reasons you mentioned. I'm not an expert on retail and consumer demand. That also makes for an extremely long pay out period for an industry that is constantly running off very tight margins and uses one profit to finance the next purchase. However, your proposed model would solve a lot of the traceability and supply chain transparency issues you have discussed in previous columns. I believe the growth of the direct-to-consumer market, at least in our state, has allowed those that want to control their product clear through to grocery store shelves can do so while others who want to market an animal and not an end product, can still do that through traditional feeding and marketing methods.

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Judson's avatar

It's an interesting concept but from a retailer perspective, you wouldn't get the buy-in. Moving to a retained ownership model would mean that the retailer merchandising strategy needs to be aligned with the packer's supply. The merchandising model for most High-Low retailers is built around driving customers into stores with constantly changing ads. The volume off ad compared to on ad can be significantly different such as your 8 winged chicken comment. The concept could work with an EDLP retailer who has a much more steady demand signal but the retailer has to be willing to give up control. Too often the Meat department is asked to invest to drive customer acquisition for the rest of the store. That change in the merchandising plan would blow up any alignment that was previously agreed upon.

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