Although Ben Campbell is a third-generation rancher, he didn’t have an operation he could take over.
And when he looked at the math for starting his own ranch, it was worse than ugly — he figured he’d need $3 million in assets to generate an income of $50,000.
“I didn’t have enough money to do a commercial ranching operation,” said Campbell, who started ranching in 2013. “The margins on commodity beef are super low, like $100 per cow on cow-calf ranches.”
So Campbell, then 28, and wife Steph started small on their operation near Black Diamond. Real small.
“I had nine animals — they cost about $9,000 to buy since they were about $1,000 apiece,” said Campbell. “But I already knew what I was going to sell them for. It’s really low risk for a guaranteed small profit.”
The couple knew what they were going to make because the meat from those nine cows would be sold directly to customers.
“With direct marketing, you can have higher margins, so you can make some money without having millions of dollars.”
The operation is, by the standards of conventional farms, still small — a herd of 35 cattle that are direct marketed, 16 pigs and 150 laying hens. But it’s profitable enough that Campbell was able to quit his engineering job in Calgary in 2016 to ranch full time.
“The challenge with direct marketing is the opposite of commodity beef,” he said. “With commodity beef, you can scale up if you want — (it’s) not really a problem to find the sales.”
But when selling direct, you need to line up customers first. That prompted the Campbells to add pigs and chickens in the last couple of years because they could sell more to the same customer base.
“The pigs and chickens aren’t that much more work,” he said, adding he purchases the pigs in the spring and butchers them in the fall, so they are only around for part of the year.
“They are really fun.”
The couple sells into the Calgary area, which was hit by the recession pretty hard. This affected their sales.
“High-end specialty meats are a luxury item, and that has resulted in people buying less,” he said. “But direct marketing has been successful and I think we’ll continue with it.”
The Campbells sell to customers from their website or to people they know. They did farmers’ markets for two years, but quit because the margins weren’t enough to make it worthwhile.
“We’d sell $1,000 worth of product and we’d make $150 to take home. It would be about 10 hours to do that so we were making about $15 an hour, which isn’t very good.
“But we got advertising from that by meeting people. So once we had done that for two years, then we stopped.”
Most of the farmers Campbell knows who are direct marketing are selling everything they produce. But don’t take the wrong lesson from that, he added.
“It’s not easy and it’s definitely not for everyone,” he said. “Most producers like producing, most producers are not great at selling. Most of the value in direct marketing is from marketing, it’s not from production.”
That not only means spending a lot of time talking to customers and emailing back and forth, but also dealing with things such as maintaining the website and keeping up with the accounting.
There are two ways to be successful in direct marketing food products, he said.
“Either be really small or be really big,” he said. “There’s a pretty big space in the middle that is no man’s land.”
A smaller operation or selling some beef on the side doesn’t require a freezer truck or a government-inspected beef storage facility, he said.
“That’s how I started out,” said Campbell, adding a lot has changed since then.
“When you’re medium size like we are, then you have a ton of expenses. I’ve got a $20,000 walk-in freezer, and I’ve got website fees and credit card transaction fees and insurance on my meat and all sorts of overhead costs.”
But there’s also a third option.
Instead of selling directly themselves, farmers might want to sell what they raise or grow to someone who is. That way, they can capture part of the direct-marketing premium without all of the work and expenses that producers like Campbell face.
“There’s more room for people to grow beef to a certain standard and sell it to someone and then they mark it up and sell it again,” he said.