After several years of planning, but less than a year in operation, Minnesota Certified Pork (MNCEP) has stopped selling its niche pork products.
MNCEP was the brainchild of former University of Minnesota (U of M) Leman Chair Thomas Blaha, DVM; former U of M director of the Swine Center, Jerry Shurson; and Hoffman, MN, pork producer David Starner. It was set up to help independent pork producers position themselves to remain a viable part of the industry.
Five Minnesota hog farms formed a producer-owned cooperative with the member farms operating under standardized production practices. The cooperative was incorporated in 1999.
In the summer of 2001, the group launched sales by offering certified pork products at Kowalski's Market, an upscale grocery store chain with four stores in the Twin Cities. Product was slaughtered and processed at the Swift plant in Worthington, MN, and packaged for sale at the Kowalski stores.
Product was well accepted and sales were brisk, recalls Shurson, U of M swine nutritionist who remains an advisor to the MNCEP program. But competitive pressure to go to a case-ready program led the retailer to buy from Premium Standard Farms.
Shurson surmises that part of the problem might have been that success came too soon for MNCEP. “Farms had just got certified and prepared, and all of a sudden the group had a market before they had finished their business and marketing plans,” he says.
Swift was not geared up to make the switch to producing case-ready pork from the MNCEP hogs, adds Blaha.
“For fairness sake, it must be said that the PSF product is also very consistent, which is appreciated by any retailer,” he says, noting the PSF product was more consistent.
Blaha says there was a lack of capital for a really effective advertising campaign. Retailers expect suppliers to pay for advertising and promotion, and MNCEP producers were cash-strapped after the down markets of '98 and '99.
Starner agrees, adding there are two main reasons for MNCEP's failure:
Despite selling MNCEP pork products in Kowalski's stores for about nine months, promoting products with in-store demos during 12 weekends and spending thousands of dollars on in-store point-of-sale materials, there was no apparent increase in product demand nor customer loyalty.
The concept behind MNCEP of producing an ISO 9000-like quality management system on member farms was not perceived to be of value to Kowalski's customers.
The state agriculture department provided funding to the project. Department official Paul Strandberg believes producers grew tired of all of the extra work involved in marketing and promoting their products.
“I think we all learned a lesson from this pilot project, and that is, you have to stay true to the pull-through system where you are responding to demand rather than trying to predict demand,” he says. “The normal process is you produce a product, put it out there and hope someone buys it.
“But in the pull-through system, there is demand for a specific product, you produce it for someone, it is certified, and the producer gets a premium,” Strandberg says.
Still, Shurson says the whole concept of Minnesota certified products is very much alive. Other food production groups are using the Minnesota Certified program in the state. Shurson has been working with several Minnesota ethanol plants to implement the program for certifying distiller's dried grains with solubles for their customers in the livestock and feed industries.
Meanwhile, the pork market “is kind of hibernating right now, but it's not dead and we are looking for opportunities,” he says.
Starner adds that MNCEP is working with the Minnesota Department of Agriculture to finalize a business plan to generate a premium for pork products for a niche market or export.
Blaha stresses: “MNCEP may be regarded as an economic failure, but all of us who did the work still deeply believe that the concept is right and that it will be the pork production model of the future.”