Profits from a ”Lamb Hub” — Hi-Ho Sheep Farm
From sheep! September/October 2016 — Subscribe for More Great Stories!
By Jacqueline Harp
Buying local is a substantial and growing trend among consumers, restaurants, small grocers and now, even an emerging online shopping option. Direct sales of lamb to local buyers captures more of the retail dollar for the farmer.
Many sheep producers, however, may not have the time or expertise to capture the profits to be had from direct local sales. This is why so many market-sized lambs end up at auction, where the farmer is at the mercy of below wholesale pricing and is isolated from consumers.
One profitable real-world business model allows growers to benefit from supplying plenty of lamb year-round to local consumers: A lamb “hub,” which is simply an enterprising grower who does the sales legwork for his or her own output and fills excess demand through local lambs from others’ nearby flocks, and getting a nice share of the retail price.
In the gently sloping hills of Oak Grove, Missouri, Craig and Nora Simpson operate Hi Ho Sheep Farm. What makes Hi Ho Sheep Farm special is that not only does Craig raise and locally sell his own lambs successfully, he also acts as a local distribution hub for lambs from other local farms.
What began as Nora’s sheep hobby in Colorado became a full-time pursuit for Craig when he found he could make more money direct-selling lambs instead of sending them to auction. When he first began selling lamb, demand quickly outstripped the supply from their farm. To keep up, Craig bought lambs from other nearby Colorado growers.
Six years ago, life took Hi Ho Sheep Farm to the Kansas City area of Missouri, where Craig has been able to duplicate his Colorado model with great success.
Quality Control: Balance & Attention
When it comes to flock care, Craig calls his approach one of “balance and attention.” In terms of “balance,” he makes sure the sheep have a balanced diet, with access to pasture in summer, and hay in winter. He finishes his lambs with grain to achieve results preferred by his customers.
When speaking of “attention,” he keeps his flock numbers at a manageable scale, so he can spot problems and resolve them quickly. His level of care makes it easy to be antibiotic and hormone free.
Craig’s flock consists of mainly Suffolk and Hampshire cross-bred ewes, for which he keeps one ram. He doesn’t buy and sell feeder lambs, but may consider buying a few in the future as demand for lamb continues to rise. He doesn’t mind procuring hair sheep lambs for sale through his “hub,” but when it comes to his own flock, he enjoys his wool sheep, finding them aesthetically pleasing to the eye and consistent in flavor. He saves money by shearing his own sheep.
Craig works to use most of the lamb profitably. He sells raw wool by the pound as a seasonal product: It does move, albeit slowly. Slow sales can cause bottlenecks with some products. Craig used to carry and sell dried pelts, but their saltiness led to corrosion problems. And while a few customers do enjoy organ meats, any organ meats and bones that don’t sell within a reasonable time are given to a local food pantry, a goodwill gesture that makes sure that nothing is wasted.
Systematizing The Lamb Hub
“Finding farmers is a lot like finding the customers: It’s work,” says Craig, who created a new lamb hub from the ground up, in Missouri. He began by acquiring a list of farms from the Missouri Sheep Producers Association and found a few that were interested in his proposal. He outlines his approach and requirements to fellow sheep farmers and provides advice to help producers achieve them.
Craig sets no minimums and has done business with shepherds who had as few as two lambs to sell. The growers he works with get satisfaction knowing their lambs will go to consumers in the Kansas City area.
Word soon spread among flock owners. Some began to seek him out. He’s happy if after everyone gets paid a fair price, he can at least match conventional market prices for carcasses.
Craig hauls the lambs from the farms, handling everything from there. He works with his growers to plan harvests that meet customer needs, saving everyone time and money.
Typically, a supply glut occurs in the spring from farmers who provide lambs for showing and for springtime demand. But Craig spreads out his purchases over time, in order to provide lamb for customers year-round.
When lambs reach a live weight of 100 pounds or more, Craig picks them up and delivers them to USDA-inspected processors he’s found willing to fulfill any special requests from chefs and other customers. Having fresh lamb year-round allows him to accommodate not only more customers, but also their last-minute wishes.
Satisfying Local Chefs
Restaurants have provided Hi Ho Sheep the biggest share of sales volume. They’re the easiest clients to serve, says Craig. “Chefs know exactly what they want when it comes to buying lamb and they have a fondness for getting menu items locally.”
To reach restaurants, Craig says a combination of e-mail and cold calling works well: His chefs really love to talk with local producers. Craig’s restaurant sales aren’t limited to “farm-to-table” and “tip-to-tail” establishments. Hi Ho Sheep Farm sells lamb to all kinds of restaurants.
Craig sells mainly individual cuts to chefs, although a select few insist on purchasing whole carcasses. Craig frankly states his business model can’t work if selling solely by carcass. He stays competitive in the lamb meat market by capturing value in the cuts.
Today’s “buy local” trend helps him compete with overseas lamb when it comes to restaurants, but he recognizes chefs are extremely sensitive to cost. Restaurateurs operate in a highly competitive industry and have a price point that must be met, no matter who’s offering the product.
In Second Place for lamb-selling volume via the Hi Ho Farm hub are farmers markets. These bring in a steady stream of customers, but selling through that venue requires more effort over time. When they first moved to Missouri, Craig did an informal customer survey and found that one-third of the people loved lamb, one-third hated lamb for whatever reasons and the last third was curious about lamb. The key has been to build relationships with the customers, being available to answer questions, educating them about lamb.
Craig provides lamb recipes at the farmer’s markets. The fact that his family actually dines on lamb lends great credibility to his lamb products. People go to farmers markets so they can meet the farmers, talk to them about how the food was raised and make it an all-around social occasion. Not every interaction results in an immediate sale, but eventually many of the curious become customers.
Farmers markets each have their own rules for sellers; state and local regulations may also apply. Farmers selling direct to consumers must follow those regulations, most of which concern food safety. Craig is very proactive in knowing and following the rules and regulations. In fact, it was his county health department contact who helpfully encouraged him to provide food samples at the farmers market and who walked him through the regulations. Providing food samples has been a tremendous marketing tool for turning lamb haters into lamb lovers.
When it comes to choosing farmers markets, things like attendance fees, travel costs and time must be taken into consideration. Craig likes to attend medium-sized markets with many enthusiastic customers and low attendance fees. He advises against markets that are too small and to be likewise careful of the extra-large markets with their high attendance fees, high competition and a sheer volume of people that may prevent personal interaction.
Farm Sales & Online Grocers
Some individuals purchase lamb directly from the farm. People have found Hi Ho Sheep Farm online, through the farmers market and via word-of-mouth.
In addition, Craig supplies lamb to two online grocers: Fresh Connect KC (FreshConnect.com) and Door-to-Door Organics (kc.DoorToDoorOrganics.com).
Hi Ho Farm’s offerings always sell-out fast. The emerging, online organic grocers provide home or office delivery of organic and artisanal products. It will be interesting to see how this new shopping option will develop, especially how it impacts the demand for local lamb.
Must-Have Business Tools
A website is vitally important, lending a legitimacy to his products and making it easy for people to search for lamb online and find him. Hi Ho Sheep Farm’s web address is HiHoSheep.com.
Providing recipes on the website helps with direct market sales, since it helps customers who purchase lamb successfully prepare it at home.
Not every restaurant has been a cold call by Craig; many chefs have found the Hi Ho Sheep Farm through the website. (Facebook is another online tool people use to find farmers: Even if growers don’t have time to post a lot of updates, it could be worth maintaining a presence.)
Hi Ho’s customers can also sign up for a monthly e-mail newsletter, which includes a new recipe for lamb in each issue. Craig’s family helps him choose new recipes. First they try them out: Only after a unanimous vote by his family will a recipe be distributed. Showing the customers you enjoy eating lamb really encourages them to buy your products.
Craig has a walk-in freezer and numerous smaller freezers at the farm. Freezer storage capacity on-farm is important: Freezer space off-farm is only available at premium prices, if at all. Besides, having several smaller freezers instead of relying solely on one large walk-in freezer mitigates risks of loss due to blown circuits or equipment failures.
Transportation of lamb products using coolers avoids the substantial expense of running a refrigerated truck.
Pleasing Customers, Today & Tomorrow
Everybody thinks of chops when they think of lamb, but racks are very good sellers all year round. Whole roasting legs are popular during the holidays. Ground lamb is extremely versatile and helps get people to try lamb.
Demand for lamb is year-round, not just seasonal. But there’s a noticeable uptick in the fall, which Craig calls “restaurant season.” Lamb being so amenable to braising, it brings a special savory richness to hearty winter recipes.
Various religious holidays also produce spikes in interest throughout the year.
Craig is also always on the lookout for more flocks from which to buy lamb! With his local distribution hub, he’s done all the work of direct sales: Cold calling, building relationships and creating distribution channels.
Flock owners may find it profitable to seek out operations like Hi Ho Sheep Farm, to provide high-quality lambs and grow a reliable local consumer base. If no such local hub exists, consider starting one like Hi Ho Sheep Farm.
Craig says his lamb hub business is ever evolving and that there will always be room for improvement. A challenge Craig sees right now is most people still prefer to shop in a grocery store. Lamb consumers still go to big box stores to shop. Looking forward, the “buy local” movement is still growing strong, though it may become a shifting combination of farmers markets and online grocers. The bottom line for flockmasters is finding the channels for selling lamb that are both profitable and provide hope for expansion.