Case Studies of Value Added Production and Marketing

Merchandising and Seasonality
Regulatory Factors
All cases provide illustrations of the classic merchandising and seasonality problems which a
value added marketing effort will encounter. There are two overall components to the problem
(1) is the broad seasonality of hog production and (2) is the seasonality differences of pork cuts
within the total market and the fact that one hog will have a relatively constant proportion of
pork cuts.
In Goridto ’ s case, they experienced seasonality from the traditional Christmas and holiday influences,
but also from the seasonal aspect of migrant labor. They had mitigated part of this by
having flexible slaughter. Several individuals involved in the plant operations are also used to
promote sales of products in an effort to smooth the seasonality of sales. This has the dual
aspect of reducing seasonal employment problems and directly mitigating the seasonal sales
effects.
The Egg & I Pork Farm managed seasonality by vacuum packing and freezing many of its products.
In particular, hams are stored through the fall for winter demand. Creative marketing has
also been employed to move seasonal products. In the summer, when ham demand is low,
The Egg & I Pork Farm will use fresh hams for pig roasts instead of utilizing the whole hog as is
commonly done. This allows for gaining greater value by segmenting the markets for loins and
ribs during the summer grilling season.
Nahunta Pork dealt with seasonality by altering the types of cuts offered and by featuring pork
items. The method of country curing hams allows them a great deal of flexibility in storing and
selling a highly seasonal meat item.
In creating a business plan for developing a value added market, it will be imperative to
include seasonal sales attributes. Seasonality will be critical in developing pricing strategies,
merchandising strategies, production management (including employment surplus and deficit
periods) and certainly in managing working capital and cash flow aspects of the enterprise.
All three cases were consistent in their comments regarding inspection and other regulatory
issues. In fact, Jim Dougherty’s decision to build his own slaughtering system was to some
extent based on concerns springing from the new HACCP regulations. A particular problem all
confronted was in difficulty with inspection due to their size. All faced a rapid turnover of
inspectors and this created continuity problems. Inspectors seemed to have a large degree of
subjective latitude so that changing inspectors changed the focus of inspection.
None of the three saw HACCP implementation to be a serious problem to their continued success.
While it did increase costs through labor utilization for greater reporting and record keeping,
it wasn’t a determining factor in the continuance of their operations.
Another consistency across all three was their encouragement to use existing consultants and
government resources to manage regulatory issues such as labeling and nutritional testing.
Learning the systems and issues likely costs more than hiring this expertise.
-3-