When the going gets tough, the tough get marketing! Now is not the time to back off on our marketing. Rather, as an industry and as individual producers we need to accelerate our efforts to develop new and expanded consumer demand for our elk products and services.
How we got into this mess
In its thirty-year history, elk farming has never been so down as in the past year. How did this situation come about?
A major driver behind the rise and success of the elk farming industry has been the demand in Asia for quality elk velvet antler (EVA) produced in North America. When the Asian economies were booming, EVA demand was very strong, and profitability was exceptional. This caused many people to enter the industry without the usual preparation, research or business plan.
The elk industry and its producers had little incentive to do any marketing or develop new products/markets during this period of prosperity. After all, the buyers would literally come to your door and take all the velvet you could produce at a very good price. Aw, those were the good times!
However, this one product (velvet), and one market (Korea), would come back to haunt us.
In 1996, the “Asian flu” caused all major Asian economies to slip into recession, where they remain. Consumer spending in those countries drastically slowed. Most antler buyers could not get a letter of credit nor take any cash out of their home countries to buy North American velvet.
The second major problem developed in early 2000 with the discovery of Chronic Wasting Disease (CWD) in farmed elk in Saskatchewan (Canada). By early 2001, Korea had banned the import of all cervid products from North America. This ban is still in place. Since Korea purchased about 70% of EVA, this effectively dried up the demand and markets for this velvet.
The CWD issue has also raised concerns in the minds of consumers as to the safety of elk antler and venison products (even though there is no evidence that CWD poses any danger to people or other species).
The CWD issue was jumped on by the opponents of game farming who argued that elk farming threatens wildlife cervid populations. Many states and provinces have used CWD as an excuse to place import bans on cervids, thus significantly reducing markets for breeding animals.
Montana voters closed down game farming in that state. Opponents to the industry in many other states and provinces are trying to get legislation through that will ban, restrict or regulate the industry out of existence.
In 2001, the North American economies also experienced a slow-down. These were further exacerbated by the events of September 11, 2001. Consumers were buying less. People were also watching their money more closely, so less capital from investors and banks was available to the elk farming industry.
A final issue is the strength of the US dollar. Due to currency exchange rates, velvet that is produced in New Zealand, Australia and Canada is significantly cheaper than EVA produced by American elk farmers.
All of these factors are collectively responsible for the depressed state of the elk farming industry in North America as it exists today.
Strategies for increasing markets
There are 4 major ways elk farmers can increase their sales:
- Sell more to your existing customer base. This could be more of the same products, or value-added products and services. However, since we only have one major customer (Korea), who currently can’t even buy our product, this approach is not going to get us very far.
- Take away customers from competitors. Remember that your competitors are trying to do the same. To get customers to switch, you have to offer something of greater perceived value than they are getting from their current supplier. Raiding customers is a common strategy during difficult times. Unfortunately this approach is often counter-productive for the entire industry. Farmers trying to increase their sales of velvet or venison products often do on the basis of price. This drives prices (and profits) down, reduces quality and service and leaves a bad impression of the industry.
- Expand your customer base. This could be new customers in your area, or customers nationally or internationally. This is a preferred approach and is being done to some extent. North American produced velvet is now being sold by major supermarkets, health food stores and pet supply outlets. Much more needs to be done on the consumer awareness and education levels to increase demand for these now available products.
- Add new products and services. These can be sold to your existing customers and to new customers. I believe this offers the greatest potential for the industry. Some ways this can be done will be discussed later.
What we market
The elk farming industry markets many products and services. These include:
- Breeding animals, e.g., bulls, cows, calves
- Elk velvet antler, e.g., raw or processed products
- Hard antler
- Semen and embryos
- Trophy bulls for hunting ranches
- Hunting preserves
- Venison and value-added meat products, e.g., jerky, smokies
- By-products, e.g., hides, leather, antlers, urine, etc.
- Eco/agri-tourism e.g., bed and breakfast, photo safaris
- Consulting, training and other business/production services.
As a reference point regarding the relative importance of each product line, here are the sales percentages from New Zealand, where the deer farming industry is mature:
- Venison sales account for 76% of export revenues
- Velvet antler accounts for 12%
- Co-products account for 6%
- Miscellaneous 6%
The foundation of the New Zealand deer industry is meat. This makes it very similar to other livestock industries.
Strengths to build on
What is the long-term prognosis for the elk farming industry? I believe it is pretty good based on the following reasons:
- Native species. The elk is native to North America and is well adapted to our environment. It is an extremely cost-effective animal to raise, and very efficient in its feed conversion.
- Multi-product. Of all the alternative livestock species, elk provides the most possible revenue streams, e.g., velvet, meat, hunting, by-products, etc.
- Environmentally friendly. Elk farming poses much less risk to the environment that other intensive livestock operations.
- Organically compatible. Elk venison can easily meet the requirements to become “certified organic,” the most rapidly growing sector of the food market.
- Health benefits. EVA has been used for 2000 years for a good reason – it works! Research is now showing that EVA does have many health benefits, with very few negative side-effects. Pet health markets have enormous potentials.
Market segment analysis
Let’s discuss each of the major product groups and assess what can be done to expand these markets.
- Breeding stock
- Live animal movement is likely restricted for the next few years. It looks like most states/provinces are instituting 3 to 5 year CWD monitoring requirements on elk before they can be imported. This will certainly decrease markets for breeding stock.
- As a result, there will be an increase in interest in A.I. and embryos as a way to enhance herd genetics. If you are looking at the breeding stock market, this may be the only way to sell genetics outside your jurisdiction.
- Low prices provide an opportunity to upgrade genetics, get new farmers started and attract investors. There are always a few individuals that will see this period as a great opportunity to make some smart investments. Seek them out.
- Now is a good time to initiate selective breeding programs for different product lines, e.g., antler vs. venison. Rather than just breeding for large antlers, farmers may want to consider breeding for the venison market – large, tasty animals. Those extra pounds in a meat market will mean greater profits.
- Elk velvet antler
- Pent-up demand is coming. My prediction is that Korean farmers will not be able to keep up with the demand for velvet in their own country. When the import ban is lifted, the buyers will be back. My hope is that by then we will have diversified our markets sufficiently to prevent a repeat of previous economic cycles in the industry.
- Velvet needs better market positioning in North America, e.g., different products for arthritis, for athletic performance, for sexual well-health, etc. Because EVA has so many potential health benefits, it creates a credibility gap with the general consumer. Some companies are now starting to offer different products.
- We must explore and develop new markets, e.g., pets, livestock. Research and field trials have shown that EVA works well in relieving arthritic symptoms in dogs. There are over 60 million dogs in Canada and the USA – a huge potential market. I am aware of an unpublished study where mice fed with EVA doubled the litter size of the control group. Maybe we don’t need more mice in this world, but using EVA to increase fertility rates in hogs could be a whole new, profitable application. Also, I have had a request from a researcher to test EVA in increasing dairy milk production.
- Quality assurance and standards are in place. Reputable companies sell velvet antler products that are tested, safe and that follow strict QA procedures. This needs to continue. We don’t need home produced velvet products entering the marketplace.
- Consumers have to be told (again and again) about the procedures we have in place to ensure the quality and safety of the EVA products we sell to them.
- A plan and more research alliances are required to undertake research projects to scientifically demonstrate the health and nutraceutical benefits of velvet. A few years ago, I prepared an EVA research plan and compiled a list of Canadian and US researchers who were interested in doing work on velvet. I even have a number of research proposals ready to go. As an industry, we don’t need to fund or do all this important research ourselves! We have friends!
- Hunting preserves
- Hunting preserves face considerable opposition from animal rights activists, wildlife departments and wildlife associations. In many states and provinces, they are expressly forbidden by laws and/or regulations.
- Hunting preserves can provide attractive revenues from older bulls who are nearing the end of their productive lives. If they have a great set of antlers, then they will be in demand as shooters.
- Preserves meet consumers’ demands for a quality hunting experience without the hassles associated with public hunting. More and more people who love to hunt are interested in private, affordable hunts. Despite all the opposition, there is a significant and growing market for paid hunting.
- Hunting operations must be run properly, otherwise they will negatively impact all operations. This is both from a “valued experience” perspective – the consumer had a great time and really valued the experience, and from the public’s perspective, e.g., fair chase, humane treatment, etc. Unfortunately, I keep hearing of farmers who figure this is a quick way to make some significant money. They may provide a good trophy animal to hunt, but cut corners and service on the rest of the experience. This will ruin the whole industry in that jurisdiction as word gets out.
- Offer “catch and release” hunts. I had never heard of these until recently, when someone explained they offer tranquilizer hunts. The hunter shoots the trophy with a tranquilizer gun and gets his photo taken. The animal is reversed and goes on to participate in another hunt. The ultimate idea would be to have your prize bulls trained to lay down so people could take their photos. If your hunt clients want a trophy, perhaps you could include last year’s antler sheds as part of the package. Elk farmers should seriously look at “catch and release” hunts. You can get a lot of money from the same animal, it appeals to those who like to hunt, but not to kill, and probably can be done in states/provinces that prohibit paid hunting.
- Elk is one of the most efficient producers of meat and, as such, is an ideal candidate to provide venison for the markets.
- Elk venison remains tender well into older animals according to a recent research done at the Lacombe (Alberta, Canada) Agricultural Research Station. This gives the elk farmer greater flexibility in disposing of their animals.
- Venison fits well into the explosive demand for natural, organic food products. The organic food market is growing at 20% per year. As described in last month’s edition of the Digest, elk venison can easily meet the requirements for organic certification.
- Price competitive with other meats. One of the advantages of low animal prices is that elk venison is now much more affordable. It is a great time to introduce chefs, restaurants, delis, gourmets and the public to fine North American ranch-raised venison.
- The challenge for the industry is to ensure consistent quality and taste. This may require grading standards to be developed, and producers may need to explore finishing feed-lots much like the cattle industry.
- We need several large organizations (private or co-ops) that can do the branding, provide the supply, and maintain the quality to service the retail and institutional sectors. Help start one up in your region and/or support existing ones.
- We need to develop new, convenient products for today’s consumer. One of the downsides of venison is that it is difficult to cook properly. Given that nobody is interested in cooking today (40% of meals are eaten in fast-food restaurants), elk meat needs to be made convenient for the consumer. This means the development of a wide range of “boxed-food” products, e.g., prepared, frozen food that can be popped into the oven for 30 minutes and is ready to serve as a special treat. Another good idea is individually packaged, marinated elk steaks for the barbeque season.
- Farm-gate sales and farmers’ markets are a place to start to expand the consumer’s awareness for venison. This gives farmers an opportunity to learn consumers’ wants and reactions, and gather market intelligence. Offer a variety of raw, pre-cooked and finished products to see what customers like.
- Use special events to give the public a taste of elk. We have had tremendous success in selling elk burgers and smokies at food festivals. Food festivals happen in every community. Become an integral part of them. Be sure to sell elk venison for off-site consumption, or at least have a list of where the public can buy elk venison locally.
- Explore the pet food markets. It seems a shame to sell such a fine meat as pet food. However, if it brings a fair price, and maybe gets rid of some of the trim, why not? One of the hottest trends in the pet food market is raw meat. Some “experts” are saying the reason dogs have so many illnesses and problems is that they are served processed food – something they were not designed to digest. Therefore, elk venison – raw, cooked or packaged – may offer some significant market opportunities.
- Other elk products
- There is a consistent demand for sheds and hard antler for use in medicinal powders, handicrafts and taxidermy.
- A market exists for elk ivories, which are usually used for jewelry.
- Deer urine is a big market for deer producers; elk urine is not since very few North American hunters have the opportunity to hunt wild elk. However, there still may be a small niche market.
- I do have an occasional request for deer and elk milk. I’m not sure how you feel about milking a cow elk on a regular basis.
- Elk droppings may be another revenue source. It is probably a good project to keep the kids out of mischief over the summer.
- Bones can be sold at pet food stores or ground up and sold as fertilizer.
- Elk hides and leathers are always in demand by specialty shops. You need to prepare and store them properly.
- Elk brains for Phosphatidylserine (PS). PS is the only known supplement proven to prevent/treat age related memory loss in seniors. PS shows phenomenal results while products such as Gingko were shown to be ineffective. PS is derived from the fatty substance that surrounds all nerve cells.
- You can sell related products to other farmers – posts, fencing, feed, etc.
- Related service revenues
- Eco- or agri-tourism such as farm vacations, bed and breakfast, farm tours, photo safaris, school trips, etc. can be a considerable part of your farm’s revenues. A very significant benefit of this activity is that it makes many people aware of elk farming, and leave them with a positive image and support of our industry.
- Maybe your elk can take part in special events – movies, advertising, etc. I get occasional calls requesting animals to be part of movies or ads.
- You can make money by offering construction services to other farmers, e.g., fencing, handling facilities, etc.
- You can make money by providing consulting and design services to new or existing elk/deer farmers.
- Opportunities exist to offer processing and manufacturing services for velvet and venison. These usually require significant capital outlay, but may be an appropriate ancillary operations for some producers.
- Marketing and brokerage services are another service that is required in the elk industry. Not everyone likes to sell their products themselves; some prefer to use brokers. Skilled brokers will do well.
Here are some critical issues that must be addressed in order to enable effective marketing to take place.
- Live animal test for CWD. I don’t consider CWD to be a serious disease, but more a public relations nightmare. Until we get a live-animal test, opponents are going to continue trying to shut the industry down. It is hard to market when you are constantly fighting for your survival. So let’s do whatever is necessary (fund-raising, lobbying, arm-twisting) to get researchers working on a reliable test.
- Position under agriculture. Elk farming/ranching is a legitimate agricultural activity. As such, it should fall under the jurisdiction of the state agriculture department, and not under the Wildlife Management Department. The wildlife people have a different set of values and agenda, that are not always supportive of our industry. If you are still under wildlife, lobby to change over. Talk to Michigan (see Dan Marsh’s article below) and Wisconsin, which are states that have successfully switched over.
- Resist over-regulation. As an agricultural activity, elk ranching should have to follow the same rules and regulations as bison, cattle, sheep and ostriches. Remember that more regulations result in increased costs. As an industry, we have to be profitable to survive. The least we can demand is a level playing field with other livestock.
- Public relations campaign. Mostly because of new cases of CWD being discovered in Colorado, Wisconsin and Alberta, the industry is getting hammered in the media. We need to do much more to get out our side of the story. We need a coordinated effort to get out positive news releases, letters to the editor, and complain about biased reporting. One idea is to hire well-connected free-lance writers to prepare and distribute positive articles about the industry.
- Increased collaboration. Because states/provinces regulate cervid farming industry, we have a plethora of associations representing elk farmers. Although these regional associations are essential to protect and advance the state of the industry in each jurisdiction, it makes national initiatives more difficult. And let’s not kid ourselves – we are all in the same boat in North America. Do you really think that Iowa elk farmers can get $50 a pound for velvet while Alberta farmers get only $20? The same is true for venison and other products. Provincial/state associations seem to have better access to government funding and grants. More coordination of projects and greater sharing of results is essential if the industry is to move ahead.
- More external funding. The entire North American elk and deer farming industry must have fewer than 5,000 members. Even in good times, this is not enough to fund the major initiatives that need to be undertaken. During these difficult times, there is simply not enough cash within the industry to do the research and marketing that is critical. So we must look at bringing in more outside money. How can this be done? Here are just a few thoughts. As indicated above, local associations should aggressively tap all government assistance that is available whether for research or product/market development. How about an Internet lottery to win a series of private preserve hunts in Canada and the USA? There are some 20 million Americans and Canadian residents that still hunt. A chance for a hunt of a lifetime for a $20 ticket could raise a lot of money. How about getting 4-H clubs, Boy Scouts, Girl Guides groups all raising money for CWD research? We need to take a few pages out of PETA’s book on fund-raising.
- Facilitate infrastructure development. One of the best things we could do is to forge some serious alliances with big players to distribute and market our products. Having a major retail player sell our products (EVA, venison) would be a great first step. Individually we can’t create these alliances. But you can support Qeva, Natraflex, AWAPCO and other similar companies that are working their butts off to develop the markets on your behalf. If these companies are successful, they will forge these alliances, and we will all benefit!
- Let’s have a plan. I have yet to see an overall comprehensive plan or vision for the elk industry in North America. Where is the business plan, marketing plan, research plan and human resource development plan that will enable us to reach our collective vision for elk ranching? If we don’t know where we are going, how the hell can we can all help the industry to get there?
So stop feeling sorry for yourself! Don’t sit around waiting for the Koreans or NAEBA to rescue you! Take one or two or three or more of the suggestions/ideas above, get off your butts, and go sell some elk!
Source: A presentation by Russell Sawchuk at the North American Elk Breeders Association 2002 Convention in Las Vegas, Nevada.