Cattle and credit cards — one would seem to have little in common with the other. But a new venture called VeriPrime Inc. aims to use the VISA credit card business model as a way of guaranteeing quality assurance to consumers while adding another revenue stream for beef industry segments.
VeriPrime is the brainchild of Scott Crain, a large-animal practice DVM and entrepreneur who also helped birth eMerge Interactive several years ago. Serving as chairman and CEO of the Meade, KS-based VeriPrime venture, Crain describes his vision as “a food consumer assurance organization comprised of membership made up of food producers, processors and marketers.”
Under his plan, this diverse membership plans to — as a cohesive, cooperating unit — determine, develop and implement standardized and verifiable pre-harvest consumer assurance standards. Such standards could cover anything from animal welfare for livestock to genetic modification in crops, or handling standards for vegetables and fish.
What's gives VeriPrime a particularly different wrinkle than other market-clout efforts, Crain stresses, is that it will operate completely separately from the cattle and beef trade. Its members will retain their right to market their own cattle to whomever and however they wish.
What VeriPrime seeks to do is market the “consumer assurance attributes” of those cattle to retailers interested in having those guarantees as a marketing enhancement to attract consumers. Such firms would then pay VeriPrime a per-head fee for those guarantees, and VeriPrime would share those revenues with its membership.
“Rather than seek new ways to redistribute current industry margins, the VeriPrime model brings an entirely new revenue stream to the industry,” Crain says. “This is a revenue stream that exists apart from current margins.”
And that's where the VISA comparison comes in. VeriPrime intends to essentially perform a function much like the VISA credit card service does for retailers. Much like VISA provides — for a fee — credit services to retailers, VeriPrime wants to be the universal, food-assurance organization that will negotiate, collect and distribute to its membership the per-head fee that food retailers would pay to acquire VeriPrime's guaranteed, farm-to-fork, food assurance attributes.
Such an assurance system is possible, Crain says, if the VeriPrime membership can encompass the entire food chain. It would be a consumer-driven organization owned and directed by the individual members of the food supply chain who are VeriPrime members.
Such a partnership, he says, will allow an entire food industry, from production to merchandizing, to function as one in developing and implementing the value-added food safety assurances that consumers are demanding and appear to be willing to pay for.
It sounds like a tall order, and many entities within the beef industry have chased that kind of industry-sized cooperation and clout through the years, with varied success. But early results from VeriPrime's initial membership drive do look promising.
The organization is just wrapping up Stage 1 of a four-stage strategy it hopes will culminate with the organization's launch in summer 2003.
Stage 1 consisted of a four-week membership drive to line up feedlots interested in the concept of marketing consumer assurance rights on their fed cattle. And thus far, the membership effort has signed up a list of feedlots that represent a total of 9.2 million head of fed cattle — almost 40% of the total U.S. fed cattle supply.
The next step of Stage 1 is to invite producers, beef processors and distributors to get behind the VeriPrime effort.
In Stage 2, the membership will develop the organization's charter, which will spell out how the organization will do business.
In Stage 3, estimated for spring 2003, that charter will be voted up or down. If adopted, VeriPrime will be open for business.
Stage 4 is the organization launch, slated for summer 2003.
There is no charge for VeriPrime membership, Crain says. Membership is open to all beef business participants in the form of irrevocable, non-transferable rights. It's expected that retail users of the VeriPrime Seal will pay a fee in the neighborhood of $3/head, which likely would be passed on to the consumer at approximately an added cost of ¼% markup on a hamburger meal.