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Bergey Family Farms reach "turning point"

Sun, Oct 15th, 2000
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$8 hogs inspire new ventureBy Wayne PikeMonday, October 16, 2000

Jerry and Jodi Bergey of rural Lanesboro have been farming long enough to have seen lots of changes in the pork industry. Jerry grew up on the farm that he and Jodi now call home. Part of the farm has been in Jerrys mothers family for three generations and part has been in Jerrys fathers family for four generations. Jerry farmed with his father, Gerald, until 1996, when Jerry took over on his own. Gerald still works with Jerry on a daily basis. Their homestead reflects the pride of a long history of family ownership and care.

Although each generation suffers its ups and downs, Jerry and Jodi hope that they have been through the worst in the hog business. Prior to December of 1998, they felt that their farming operation consisting of 150 sows, 75 beef cows, 120 acres of pasture, and 350 acres of cropland was working well for them. Then, in December of that year, the hog market fell apart. Jerry found himself delivering hogs at eight dollars per hundredweight or just twenty dollars per head. That price is about a hundred dollars per head below what many consider a reasonable profit level. Jerry says, "It was like getting up in the morning and throwing a five-hundred dollar bill out the window. I said that I would never get in that position again."

Attempting to avoid low hog prices is not easy. Jerry was already using standard hog contracts and more sophisticated hedges. Both of these techniques proved inadequate protection against bottom dollar prices. Soon after the December 1998 hog price debacle, Jerry and Jodi acted on an idea that had been in their minds for some time. They signed up for a course to learn how to market their pork directly to the people who were going to eat it. Lorentz Meats, a federally inspected livestock slaughtering, processing, and meat retailing business near Cannon Falls, Minnesota, conducted the course.

Students quickly learned that direct marketing meat is not an easy road to riches. Jerry says, "There were a lot of farmers in the class for the first session, but only three came back for the second." All the time consuming rules and details of direct marketing were too discouraging for most. Jerry persevered. Jodi says of Jerry, "He talked about doing it (direct marketing) for about a year just playing with the idea, knowing what a good product we had and wanting other people to experience it. Once he kicked into action last summer, he just took the ball and ran with it."
Working with Lorentz Meats and others knowledgeable in direct marketing, the Bergeys set up their own direct market pork and beef business. They learned that marketing the meat, not raising the animal, is the biggest challenge. They implemented a marketing strategy using newspaper advertisements and word-of-mouth recommendations based on customer satisfaction. They called their new venture Bergey Family Farms Premium Quality Meats. While selling both beef and pork, they focus more on pork due to the seasonal nature of the beef business.

Quality, flavor, safety and convenience are foremost in the Bergey Family Farms quest for customer satisfaction. It all starts with a healthy hog bred and fed for superior meat quality. Baby pigs are born either outside in huts during summer or inside a farrowing building. After weaning, the baby pigs selected for direct marketing are finished outdoors on concrete. They are not fed or injected with antibiotics. About every six weeks, as the select hogs near market weight, Jerry makes an appointment with Lorentz Meats for a slaughter date. This takes quite a bit of planning. Jerry explains, "Inventory control is hard because Lorentz only slaughters for us at certain times. If you dont take your slot you lose it." Bergey hogs are so well accepted for quality that Lorentz Meats often buys their live hogs to sell in their retail shop under the Lorentz label.

Soon after taking a load of live hogs to Cannon Falls for slaughter, Jerry returns with a refrigerated van to pick up the frozen meat. Lorentz Meats has quick-frozen and wrapped the meat in plastic with the Bergey Family Farm label attached. This is where the food safety issue enters the picture. Because workers at Lorentz Meats, a federally inspected plant, and Jerry himself are the only people to handle their pork, Jerry can guarantee his customers the very safest product possible. The meat goes practically "from farm to freezer", avoiding opportunities for contamination from grocery shelves and unknown handlers.

The meat stays on board the refrigerated delivery van until delivery. The van keeps contents frozen and serves both as a delivery vehicle and warehouse. A walk-in cooler on the farm, although convenient, would be expensive. It would require a separate building meeting federal inspection standards. The van is large enough to hold the meat from twenty hogs and is frequently inspected by a federal inspector at the farm.

Jerry and Jodi take orders over the phone and have taken some by e-mail. Jerry tried doing door-to-door sales and was surprised by what he found. "I went door-to-door in Rochester to forty or fifty homes one day. That was a real learning experience," he said, "Three of them had freezers. We knew then that we had to sell in smaller amounts. A store in town would be the best thing." Currently, customers call with their orders and Bergeys make deliveries at nights and on weekends. Jerry has experimented with other sales techniques. One afternoon, he was invited to bring their delivery van to an implement dealership at closing time. Jerry sold a large amount of pork to the workers as they went home. Such efforts, while sometimes successful, interfere with Jerrys attempt to accomplish his other work at the farm.

The Bergeys are catching on to what it takes to make direct marketing successful. Jodi explains, "One of the drawbacks (to direct marketing) is that we cant have a sale like the grocery stores, but weve been happy with peoples responses that say that after trying our meat they dont question the price any more. We cant compete with sale prices, but we deliver a quality product." Jerry and Jodi are also aware of changing consumer attitudes and cater to those attitudes. Jerry says, "Quite a few people lately want to know how our hogs are raised. People are more aware. They tell me they dont want hogs raised in confinement. They bring it up and they ask me."

Based on what they have learned, they have also broadened their packaging options from a single 30-pound package containing roasts, chops, ribs, sausage, links, bacon and a ham, to having more of each of these products available in smaller amounts.

The Bergey Family Farms brochure contains a written money-back guarantee of 100% customer satisfaction. So far, they have exceeded their promise. "Its kind of fun," Jerry says, "We had a lady from the Cities who tried our meat and wasnt even done eating yet, and left her good meal to order more right away." The Bergeys try to develop a good relationship with each customer to build customer loyalty. Jodi provides a personal touch by sending hand-written thank you notes to each customer.

The Bergeys see potential for growth in direct marketing their pork. They have heard from potential customers from out-of-state who would like to have Bergey pork, but shipping costs can equal the cost of the meat. There is also no insurance for perishable products, so if there is a shipping delay and the meat spoils, the Bergeys would lose the value of the meat. Route sales are another method that Jerry thinks might be profitable if they had the time to pursue it. Jerry and Jodi have a growing family that deserves much of their time. They have four children: Courtney, age 10; Joshua, age 9; Lucas, age 6; and Katrina, just over a month old. Jodi also has a career as a registered nurse with Good

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