Carving A Grass-Finished Niche

If you expect grass-finished beef to save the family farm – preferably by next week – you might want to temper your expectations.

Yes, the Wall Street Journal is talking $25 burgers in New York. And, yes, with elevated levels of conjugated linoleic acid (CLA) and Omega 3 fatty acids reported to help in the fight against cancer, diabetes and heart disease, grass-finished beef is made-to-order for the health-conscious consumer. And, yes, again, grass is generally cheaper to produce than corn. But …

“It's been a real challenge to keep it [a grass-finished beef operation] floating,” says John Wood, who, with six other entrepreneurs, officially started Grassland Beef, LLC, in September 2000. “We're trying to carve out a whole new industry.”

Grassland Beef envisioned peddling its product within a 50-mile radius of its Monticello, MO, headquarters. But because freezer beef is a common commodity in Northeast Missouri, the firm started a Web site on Nov. 7, 2000, to reach consumers coast-to-coast.

“We thought the orders would come pouring in, but it was real quiet,” he recalls. “Until then, we'd put little energy into marketing.”

Now, Grassland Beef ships the equivalent of four to five animals a week from California to New York to Florida. But Wood says marketing the product has been challenging and expensive.

“You have to learn a whole lot about things you don't know anything about,” he states.

Take their Web site. “A Web site is a black hole,” Wood says. “We'll soon be on our fourth Web provider. Every time we make a move, it's a several-thousand-dollar experience.”

Then, there's cold storage. “That's a big deal — the rent is $12/pallet/month,” Wood says. Add to that, another $7/box to get it ready for overnight shipping.

“Freight is a real challenge,” he adds. “You have to ship the meat overnight or you'll deliver thawed meat.”

And tracking their beef is a chore. Harvested at PM Beef's Windom, MN, plant, the carcasses are cut into wholesale cuts at PM's Northwest Iowa facility, then fabricated into retail cuts and cryovac-packaged at their Richmond, VA, plant. Next, the beef is shipped to cold storage in Virginia, California and Illinois.

Little wonder then that Wood says the breakeven on Grassland Beef has pushed close to $7/lb. That includes the beef itself, processing, warehouse charges, shipping and marketing expenses.

On the return side, he ships a 60-lb. box of assorted cuts and hamburger patties to the doors of his customers for $6/lb. On the other end of the scale is the box of four fillets at $37.50/lb. “Half of that cost is packaging, shipping and handling,” Wood comments.

“It's 2½ years before you make the first dime.” he says, adding, “but once we get things cooking, it will be more profitable.”

James Fudge is on the other end of the spectrum. The Colquitt, GA, producer has a small, no-frills freezer locker trade as a sideline to his purebred and commercial Angus operation. Fudge sells his grass-finished Angus steers for a dime over the market, live weight. Still, the Southwest Georgia cattleman says it hasn't been easy, especially last year when four of the 10 customers he'd lined up backed out.

“I beat on doors to sell it; I literally asked everyone I knew,” he recalls.

With no USDA-inspected plant in his area, Fudge uses a state-inspected facility, whose regulations require him to sell live cattle to his customers which means the customer must buy either a half or a whole steer. The customers then pay the processing.

“A lot of people don't have freezers anymore,” he remarks. “They have to pay $600 for a half a beef and $400 for a freezer. We're selling in a rural market and not many people in this area can afford that.”

This year, he's dropping back to finishing and marketing five steers to his regular customers. That's due to the marketing challenges, as well as weather that hasn't been kind to his forages.

While marketing grass-fed beef can be a challenge, the market is there. Three years ago, University of Nebraska ag economist Dillon Feuz teamed up with meat scientists to conduct a blind taste test with 144 consumers in Chicago and San Francisco.

The beef, standardized for tenderness, was either USDA grain-fed beef or Argentine grass-finished beef. They also gave the participants money to bid on the products. Last year, they repeated the study in Chicago and Denver, but used Australian grass-fed beef rather than Argentine beef.

“In general, the majority preferred corn-fed beef,” Feuz says. “But there's a segment out there, 15 to 20%, who prefer grass-fed beef and are willing to pay for it.”

Auburn University meat scientist Chris Kerth did a preference test with 150 consumers in Auburn, AL. He gave participants a sample of both grain-fed and grass-finished beef and showed them pictures of a typical feedlot and pasture-finishing situation.

Overall, the consumers preferred the grain-fed beef, he says, but demographically 45% of those 30 years and younger preferred pasture-fed beef,” Kerth says. “With almost half of a group preferring pasture-fed beef, that says there is a market out there.”

The demographics part is tricky, though. In Kerth's study, the percentage that preferred grass-fed beef went down as the age group went up. He attributes this to perhaps more concern about animal welfare among the younger generation, while the older generation may equate grain-fed beef with higher quality.

In Feuz's study, however, the older group was more likely to prefer the grass-fed product, as did non-Caucasians.

“We need to recognize that it's a niche market,” Feuz says. “The challenge is to identify the niche.”

Wood has identified Grassland Beef's market. “We sell to highly educated people — more-informed consumers with disposable income. We sell to retired people interested in good nutrition. We also sell to athletes,” he says.

The good news, at least for traditional beef producers, is these consumers are more than likely not coming out of grain-fed beef's market share.

“We sell a lot of beef to people who weren't buying beef,” Wood stresses. “Occasionally, we'll sell meat to a bona fide vegetarian. It's a new market.”

To learn more about Grassland Beef, LLC, go to www.grassland

Becky Mills is a freelance writer from Cuthbert, GA.

Finishing The Job While Fighting The Fat

If your idea of grass-finished beef is a stringy, old steer that makes tough beef with yellow fat, think again. With the right genetics and forages, today's grass-finished animals finish firmly in the Select grade; and, in some cases, all the way to low Choice. Throw in post-harvest technology, and you've got a darn good product.

Colquitt, GA, producer James Fudge collected carcass data on his Angus herd for 10 years before he felt like he had the right candidates for grass finishing.

“Until I could get cattle to finish with a 700-lb. carcass and a 12-in. ribeye, there wasn't any need to try it on grass,” he states.

He succeeded. Last year, the 10 steers he finished on forages ranged in carcass weight from 625-725 lbs., graded Choice minus, and had .3 to .4 inches of back fat. “I knew they were as good a quality as grain-fed,” he states.

The steers also finished in the same length of time, 15-18 months, as his steers on feed in Iowa. He adds, “The cost of gain was no greater — 40¢/lb. — or less.”

Jim Gerrish, University of Missouri agronomist, finishes cattle on grass both at the Linneus Forage Systems Research Center and on his home operation. Like Fudge, he leans toward British and British-cross cattle for grass finishing.

“An animal of 50% or more English breeding, Angus, Hereford, Shorthorn, South Devon, will finish better on grass than an animal more than 50% continental. A little Jersey breeding doesn't hurt, either,” Gerrish says.

Next on the list is top-quality pasture. “A forage base that can support 2 lbs./day gain for at least 60 days is fairly important. That's where you get your quality,” he says.

Fudge grazes his weaned cattle on peanuts in the summer — a very unconventional practice but it puts 1½-2 lbs./day on them. In the cool season, they go to high-quality winter annuals.

He warns, though, “The production end depends on the weather. There are periods when you're going to have to feed them to keep them from going backwards.”

In Northeast Missouri, John Wood and his partners (see main story) use a mix of forages to keep quality pasture in front of their cattle. They want “dairy-quality pasture,” or pasture that generates 1½-2 lbs. of gain/head/day.

In the warm season, Eastern gamma grass and a legume mix of red and white clover and birds-foot trefoil do the work.

In the cool season, the list includes orchard grass, bromegrass and some endophyte-free fescue. They also use annual and perennial ryegrass, as well as some fall annuals like turnips and canola.

“In the winter, we also have a source of high-quality alfalfa silage,” he adds.

He stays away from endophyte-infected fescue. “It affects the meat quality and performance,” he says.

Third on the quality making list is post-harvest technology, according to Gerrish. About 80% of the cattle they finish will grade Select, he says, with the other 20% split evenly in Standard and Choice grades.

If the grade is around Select range, there generally isn't a tenderness problem. “With less-tender beef, 14-21 days of aging makes it comparable to USDA Choice,” he adds.

Aging is a key part of the protocol at Grassland Beef, even though Wood says 65% of their cattle are the equivalent of Select and 35% are the equivalent of Choice.

“Our beef is aged a minimum of 28 days,” Wood says. “It's dry aged a minimum of four days, then vacuum packaged and wet aged for three weeks or more. Wet aging retains moisture, which improves cooking since grass-finished beef cooks faster than its grain-fed counterpart.”

Auburn meat scientist Chris Kerth says electrical stimulation can also help on the tenderness side.

As for yellow fat, it doesn't seem to be a big deal. “We've never seen yellow fat,” Gerrish says. “We think it's due to the rate of gain prior to slaughter and the fact the animals are less than 20 months old at slaughter.”

“The fat color was a surprise,” Kerth says. “Side by side, we could tell the difference in the grain-fed versus pasture-finished beef. But the cattle that came off ryegrass didn't look like an old dairy cow that came off pasture.”

He also says it appears that closely trimming the beef helps minimize the color differences.

Whatever the formula, Fudge says his customers tell him his grass-finished beef is the best beef they've ever had. He adds, “the best thing about raising it is we get to eat it ourselves.”

Dollars And Cents

How much does it cost to grass-finish a steer or heifer in the South? That's what a group of investors asked economists, animal scientists and agronomists from Auburn, Mississippi State, Louisiana State and Arkansas State universities. The investors have more than a passing interest — they're considering putting in a cull-cow processing facility in Northwest Mississippi and hope to use grass-finished beef to fill in seasonal production gaps.

These costs include not only the pasture and supplement, when needed, but labor ($7/hour) and land costs. The researchers used typical southern annuals and perennials in their calculations.

For cattle finishing in the first quarter of the year (January-March), the cost is $80/cwt. For cattle finishing in the second quarter, when cattle can make the most use of high-quality winter annuals, the cost drops to $72. In the third quarter, it climbs back to $76, and tops out at $86 in the fourth, when more supplements are needed for a longer period of time.

“These costs allow producers to be paid for all factors of production,” says Auburn economist Walt Prevatt. “If they choose not to include some costs, such as the opportunity costs associated with the use of their land or labor, they can do it for less.”

He comments, “Many Southeast beef producers have the capability of producing grass-finished beef if they can get adequate market prices.”