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Pricing

Pricing for our local products is usually dictated by what the market will bear. For example, prices at the auction will go as high as bidders are willing to pay, so tomatoes will be extremely cheap when they are at peak growing season in the end of August. Local produce is often cheaper than what we could buy through a conventional distributor, because the market in our area is flooded with produce and there are no added costs from transportation and middlemen. Other products, such as yogurt, are more expensive to produce locally because of the labor involved that cannot be absorbed by an economy of scale, as it would be in a conventional food system, and above all because we want to offer the producer a fair price.

Just as our meat processing is more complicated than the processing for any other type of food, meat pricing is also more involved. Marsh works differently with Ervin Raber, our local hog producer, and the Conards, who raise our steers, in order to accommodate their needs. For Raber, Marsh pays a fair price that he calculates, whereas the Conards generate their own asking price, which Marsh compares to what he calculates as fair.

The calculation process is relatively similar for both types of meat. Marsh researches the prices for steers or hogs from livestock auctions in Ohio, Pennsylvania, and Michigan as well as the Eastern Corn Belt report published daily by the USDA, and averages them over three days to find a baseline for hogs. It’s important to know the meat market in our area, because the college has to offer competitive prices so that producers will choose to sell to us instead of the auctions. For example, Marsh adds in a smaller local auction in the winter, because in central Ohio many people purchase hogs to butcher privately in the winter, raising the market price. Because meat markets vary so much by area, institutions will have to determine the process that works best for them, considering their demand and the market in their area.

Once he has established a baseline price for the live animals based on the livestock auctions, Marsh accounts for the high quality of the meat and the fact that it is locally, naturally raised. Over time, he has developed “factors” that adjust for quality. These factors grew out of trial and error, and each institution will have to develop their own. This pricing process is cumulative, and it only works because Marsh has been developing it for so long. He is able to use data from the last kill to help him calculate the prices for the next set of animals.  Marsh places an adder on each animal purchased primarily as a means of compensating our producers for dealing with us—Marsh often must have the animals processed on demand, which gives the supplier an incentive to keep us in product.

Once the animals have been processed, Marsh examines the butcher’s yield ratings, or the percentage of the live weight of the animal that remains after butchering. Marsh then uses weight ratios to determine what the individual cuts of meat would cost per pound, which he compares to Sysco’s prices to calculate how much extra we pay for our local meat. Marsh’s method is circular: he determines prices for whole animals based on his extrapolations of the prices of each individual cut of meat, and his calculations for individual cuts rely on the price of the whole animal.

Although local beef costs about five to ten percent more according to this comparison, the local meat we buy is often higher quality than any meat we could get from Sysco. In fact, if we tried to buy meat of comparable quality from an industrial distributor, the local meat would be much cheaper. Marsh’s calculations, therefore, are intended to determine a competitive price to pay the farmers. Farmers who sell their livestock for the local market do not produce meat of the same low quality as what Sysco sells, so institutions that want to buy local meat must be willing to pay for the higher quality meat they receive.

As mentioned above, there are some challenges involved with purchasing whole animals rather than individual cuts. Usually the chefs in Peirce use ground beef and chuck roast, leaving the higher-end cuts because they aren’t feasible to produce for 1600 people. One way to get around this is to form a relationship with a specialty market such as a restaurant that can use up cuts like the steak and tenderloin. At Kenyon, we save these cuts for special occasions and catering events.

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