From West Coast to East Coast and Texas to Minnesota, the local food movement is growing by leaps and bounds every year. One of the rapidly expanding segments of that movement is pasture-raised meats including chickens, pork, lamb, and America’s favorite: BEEF.
Ten years ago the only one talking about grass-fed beef was your weird cousin from Portland. You know, the one who was also raving about craft beer from the local microbrewery. From the lunatic fringe to cutting edge cuisine, grass-fed beef was a $2.5 billion dollar business in 2014 according to Dr. Allen Williams, president of Livestock Management Consultants LLC. While that is still small potatoes compared to the overall US beef industry, grass-fed beef is quickly becoming more than just a small niche market. In most parts of the country, demand currently outstrips the available supply of quality beef coming from America’s millions of acres of pasture and rangeland.
With growing markets come growing opportunities for farmers and ranchers wanting to do something a little different on their place. While grass-fed beef seems to be the general catchall phrase, there are actually different levels of beef quality being produced from pasture and rangeland. The top end product is more accurately referred to as pasture-finished beef. This beef should meet a minimum of USDA High Select grade with the majority of carcasses extending into the Choice grade.
One thing we need be clear on up front. True pasture-finished beef has received no grain or grain by products whatsoever.
The marbling and fattening is all accomplished with high quality forage. There are some producers who say their beef is ‘finished on pasture’ meaning the cattle are out in a pasture but may be receiving a full feed of grain. From a fat composition and nutritional standpoint, these are two very different products.
Many grass-fed outfits promote their product as being leaner than feedlot beef. If that is the case, the USDA quality grade is likely to be mid-Select or lower. If you have heard that grass-fed beef needs to be cooked differently from conventional beef, this is the product they are talking about. If the beef from pasture grades high Select or better, there is no need to cook pasture-finished beef any differently from grain-finished beef.
What does it take to be able to consistently produce Choice grade beef entirely from pasture? We have three areas we need to focus on regardless of where our ranch is located in the US. The first is having an abundance of high quality forage in our pastures for as long a period of time as possible. Second is having the appropriate type of cattle for your particular forage environment. Third is developing our grazing management practices to consistently achieve high rate of gain.
If you think you can produce the type of beef the market is clamoring for, its time to decide what your business model will be. The business model needs to cover everything from breeding the cow to delivering the meat to the end consumer.
One common approach is the conception-to-consumer model. In this model, you raise the livestock from birth to harvest. The big advantages with this approach are you control the animal genetics, all of the health care aspects of raising the animal, and you know just what it has been fed every day of its life. This is what a lot of consumers trying to reconnect with their food supply really want to know. If you can give them the full story on the life of this piece of beef going to their plate or freezer, that is worth an additional level of premium price.
The downside of this model is cows eat a lot of grass. On a typical conception-to-consumer ranch, over 60% of the forage raised is consumed by the cow herd. When you add in the replacement heifers and the bulls, usually less than 20% of the forage production is actually going into feeding the cattle you are finishing as your value-added product.
If your ranch is large and you are running several hundred or thousands of cows, this in not a big deal. But if your ranch is small and the carrying capacity is only 30 or 50 cows, then the amount of finished beef you can generate is relatively small. There may not be enough income to cover all of your expenses.
Another approach is to not own any cows, but buy heavy feeders at the beginning of your high quality pasture season for finishing. This model has some distinct advantages. Number one is all of your forage goes to producing the directly salable finished product. You can generally count on at least three times as much finished beef produced per acre with this finish-only model compared to the conception-to-consumer model. The second big advantage is you don’t have to carry any animals through the winter so there is a huge cost savings there. Lastly, you can buy animals on the commodity market and sell them on the premium market, thus adding value to every pound of your initial purchase. That is something that rarely ever happens in the beef commodity market.
If this is such a good deal, why isn’t everyone doing it? There are some significant challenges to making this model work. The first logistical challenge is being able to buy the right weight of cattle at the time of year you need them. You can overcome this challenge by contract purchasing cattle months in advance of the delivery date. This comes with inherent market risk as with any forward contracting. On the marketing side, you lose your ‘story’. You no longer can claim full-life cycle control of the animal. You can no longer offer your personal guarantee of what the animal has been fed and what medications it has not received. With that loss, a premium level for your product has dropped a notch.
Marketing models include everything from just selling quarters, halves, and wholes to individual consumers to providing an entire supermarket chain with your branded product. With each further level of processing and packaging, storage and transportation, and building a branded label there are additional costs added to the enterprise.
Many grass-fed beef outfits have brought their cattle to the packing plant with a profit in hand, but lost everything on the product and marketing side of the business. Others have been able to carry an increasing level of profitability through each added layer of the product chain. It is doubtful that any outfit ever brought their cattle already in the red to the packing plant and turned it into a profitable retail product.
The key to having a successful grass-fed or pasture-finished beef program on your ranch is developing a business model that will work on paper. If it works out on paper, there is a good probability you can develop it into a profitable business. The demand is out there. The opportunities are great. Just be sure you have a solid business plan before you embark on your journey towards creating the best steak in America.
Jim Gerrish is an independent grazing lands consultant providing service across the US and internationally. He is an author of two books on ranch management and is a regular columnist for the Stockman Grass-Farmer magazine. Originally from Missouri, he currently lives in the Pahsimeroi Valley in central Idaho but has spoken and taught all over the world. http://www.americangrazinglands.com/