Iowa Public Television

 

Oklahoma ranch bucks market swings

posted on April 28, 2000


SOME 260 ECONOMISTS, BANKERS AND ASSORTED RURAL ADVOCATES MET THIS WEEK IN KANSAS CITY TO DISCUSS THE FUTURE OF RURAL AMERICA. THE FACT THEY CONVENED IN A LARGE CITY MAY BE COMMENT ENOUGH ABOUT THE FUTURE OF RURAL AMERICA.

AT THE SESSIONS IOWA STATE UNIVERSITY PRESIDENT MARTIN JISCHKE ISSUED THE CALL FOR A MODERN HOMESTEAD ACT AND INDICATED HIS UNIVERSITY MAY LAUNCH A CENTER FOR RURAL REVITALIZATION TO HELP DEVELOP SUCH A STRATEGY.

CRITICAL TO SUCH A REVIVAL IS AN APPROACH THAT EMBRACES THE DEVELOPMENT OF THE TOTAL RURAL ECONOMY, NOT JUST THE AGRICULTURAL SECTOR. TO THAT END THE EMERGENCE OF SO-CALLED "LOCALLY OWNED VALUE ADDED" VENTURES MAY OFFER THE BEST HOPE. A CASE IN POINT IS AN OKLAHOMA COUPLE WHOSE DIRECT MARKETING EFFORT IS GENERATING NOT ONLY MORE PROFIT FOR THEIR RANCH, BUT ALSO HELPING FRIENDS AND NEIGHBORS IN THEIR COMMUNITY. TYLER TESKE REPORTS.

FIVE YEARS AGO, THE MARKET PRICE FOR CATTLE WAS LOWER THAN CATTLEMENS' PRODUCTION COSTS. THAT SCENARIO SEEMED RIDICULOUS TO ROGER SKELTON. HE KNEW INDIVIDUALS WHO WOULD BE WILLING TO PAY ENOUGH FOR HIS CATTLE TO ALLOW HIM TO RECOVER HIS COSTS.

ROGER AND HIS WIFE JANE MADE A FEW PHONE CALLS AND FOUND PLENTY OF BUYERS. THE REALIZATION OF SUCH A MARKET FOR THEIR MEAT LED THE SKELTONS TO TAKE THE PLUNGE INTO DIRECT MARKETING.

ROGER AND JANE MADE A SMALL CHANGE TO THEIR OKLAHOMA PANHANDLE RANCH AND BEGAN PRODUCING SOME OF THEIR CATTLE WITHOUT STEROIDS, ANTIBIOTICS OR FEEDING THEM ANIMAL BY-PRODUCTS. THE SKELTON'S ALSO BUILT A FEED LOT ON THEIR RANCH TO FATTEN THE ANIMALS BEFORE PROCESSING THEM AT A SMALL PACKING PLANT IN A NEARBY TEXAS TOWN.

JANE SKELTON: "And I like being an entrepreneur I like doin' something a little different, a little challenging and this is definitely challenging and I like that. I like to know that I can go out and learn something. We're both over 40 and we think it's kinda neat that at 40 we can go out and do something different and make it work."

THE SKELTONS NOW SELL ROUGHLY 100 HEAD OF NATURAL BEEF A YEAR, HALF OF THEIR ANNUAL CALF CROP. AND THOUGH THE BEEF IS PRIMARILY SOLD TO INDIVIDUALS BY THE HALF OR QUARTER CARCASS, THEIR FROZEN MEAT IS FOUND IN A NUMBER OF RETAIL OUTLETS AS WELL.

ROGER SKELTON: "Gettin' people use to the idea of you know buying a carcass section, half a beef or a quarter of beef. Gettin' 'em convinced that you know it was it might save them a little bit of money to do it that way. And make a little money for me at the same time givin' them a good uniform product and...It's all been a little, you know, a challenge.

TO DISTINGUISH THEIR PRODUCT FROM OTHER BEEF ON THE MARKET, ROGER AND JANE WENT THROUGH THE ARDUOUS TASK OF ACQUIRING NATURAL CERTIFICATION FROM THE U-S-D-A. THEY RELY ON BREEDING TO PRODUCE CATTLE GENETICALLY PRONE TO QUALITY CARCASSES, ENSURING LEANNESS AND A CONSISTENT PRODUCT. THE CATTLE FINISH ON CORN GUARANTEEING BOTH WEIGHT GAIN AND TASTE, AND THE BEEF IS AGED FOR AT LEAST TWO WEEKS AT THE PACKING PLANT BEFORE CUTTING.

THE SKELTON'S QUEST TO EXPAND THEIR CUSTOMER BASE WAS ONE OF TRIAL AND ERROR.

THE PHONE WAS THEIR ORIGINAL MARKETING TOOL. ADVERTISING ON THE RADIO WAS MOSTLY UNSUCCESSFUL WHILE NEWSPAPER ADS PRODUCED SOME BUSINESS. BUT, TO THEIR SURPRISE, ADVERTISING ON THE CABLE TELEVISION SCANNER IN NEARBY TOWNS AND CITIES PRODUCED NOTICEABLE RESULTS.

ADVERTISING WAS NOT THE ONLY CHALLENGE.

JANE SKELTON: "That's something I knew nothing about was looking at something through the consumers eyes. And that's something we've really had to learn learn to do. I thought everybody knew how to cook beef. It amazed me the people that didn't know or didn't know about a cutting order. Growing up as a rancher's daughter I though everyone knew about cutting orders."

THE SKELTON'S WILLINGNESS TO GAIN INSIGHT INTO THEIR MARKET HAS RESULTED IN SOME EASILY UNDERSTOOD GAINS...MOSTLY IN THE FORM OF PROFITS. ROGER CALLS SKELTON'S NATURAL BEEF AN EXAMPLE OF SMALL-SCALE VERTICAL INTEGRATION, A STRATEGY THAT CAPTURES ALL THE POTENTIAL PROFIT FROM A PRODUCT BY OWNING IT AS LONG AS POSSIBLE.

ROGER AND JANE ASSUME MIDDLEMEN ROLES WHEN THEY FEED AND SLAUGHTER THEIR CATTLE AND MARKET THE FINISHED PRODUCT UNDER THE SKELTON'S NATURAL BEEF LABEL. IN THE CURRENT CATTLE MARKET, THE INVESTMENT OF EXTRA TIME AND MONEY RESULTS IN AN AVERAGE OF 183 ADDITIONAL DOLLARS FOR EACH ANIMAL SOLD. WHEN CATTLE PRICES SAG, THE MARGIN EXPANDS BECAUSE THEIR BRANDED BEEF IS UNAFFECTED BY MARKET FLUCTUATIONS.

ANOTHER ADDED BENEFIT OF THE NATURAL BEEF BUSINESS IS A MONTHLY INCOME. WHEN THE SKELTONS WANT MORE MONEY, THEY WORK A LITTLE HARDER TO SELL AN EXTRA ANIMAL.

THE SKELTONS AREN'T THE ONLY ONES TO BENEFIT FROM THEIR DIRECT MARKETING VENTURE. LARRY MOORE AGREED TO PUT THE BEEF IN HIS FARM AND RANCH SUPPLY STORE IN GUYMON, OKLAHOMA WHEN HE HEARD THE LOCAL GROCERY DIDN'T WANT TO SELL A LOW VOLUME PRODUCT LIKE THE SKELTON'S MEAT.

Larry Moore, owner B&B sales: "We don't go into making a lot of money on it. It's mainly a traffic builder and getting people to see what we do have in the store. But it has increased traffic and it has been a positive."

THE SKELTONS HAVE ALSO FOUND A PLACE FOR THEIR PRODUCT IN CONVENIENCE STORES. THE 54 GAS AND GO IN GOODWELL, OKLAHOMA WAS THEIR FIRST RETAIL OUTLET. OTHER STORES HAVE FOLLOWED SUIT INCLUDING A SMALL GROCERY IN TEXHOMA, OKLAHOMA WHERE AN ENTIRE FREEZER DOOR IS DEDICATED TO THE SKELTON'S BEEF.

ROGER AND JANE ARE CONTINUALLY EXPANDING THEIR MARKET REACH. THE EMPHASIS ON PROVIDING A HIGH QUALITY NATURAL PRODUCT HAS MADE THE SKELTON'S BEEF A NATURAL FIT FOR NATURAL FOOD STORES. FOUNTAIN OF HEALTH IN AMARILLO, TEXAS STARTED SELLING THE BEEF IN JANUARY. JUDIE BOOTHE OWNS THE STORE AND WAS IMPRESSED WHEN JANE MENTIONED SKELTON CATTLE DO NOT EAT ANIMAL BY-PRODUCTS.

JUDIE BOOTHE: "And I knew that but I'd not ever heard by another company that had this kind of beef talk about that. And so when Jane Skelton came and visited with me, I liked the level of knowledge that she seemed to have."

THE SKELTON'S CHILDREN ALSO HAVE HELPED TO EXPAND MARKET REACH TO MORE DISTANT LOCALES, SUCH AS DENVER AND HOUSTON, BY SELLING THE BEEF TO FRIENDS AND ACQUAINTANCES IN THE CITIES WHERE THEY LIVE. AND ROGER AND JANE RETAIN THEIR CLIENT BASE BY SENDING THEIR CUSTOMERS A CHRISTMAS CARD EACH YEAR WITH A RECIPE THEY HAVE DEVELOPED FOR THE BEEF.

TO MEET THIS YEAR'S DEMAND, ROGER PLANS TO RAISE A LARGER PORTION OF HIS HERD FOR USE IN THE NATURAL BEEF BUSINESS. HE ESTIMATES THEY COULD SELL 200 HEAD IF THEY HAD MORE HELP. THE SKELTONS HOPE FUTURE EXPANSION WILL INCLUDE MORE BUYING OPPORTUNITIES AND DELIVERY SERVICES FOR THEIR CUSTOMERS.

ROGER SKELTON: "I think anyone that has the cattle that are already ranchin' or has the raw product can go out and find people that would buy that beef whatever he had that he was tryin' to add value to. You know, if you're sellin' a good product, word gets around."

FOR MARKET TO MARKET, I'M TYLER TESKE.

Tags: agriculture beef cattle markets news Oklahoma rural