It was a late-night phone call a few days after Dec. 23 that made John Wood realize just how seriously the first U.S. case of bovine spongiform encephalopathy (BSE) would impact his grass-fed beef business.

“John, can you supply the entire restaurant?” asked the chef at the St. Louis Steakhouse, a four-diamond restaurant in St. Louis, MO. Panicked by the BSE media craze, the owner wanted to offer grass-fed beef exclusively.

“I said we could do all but the tenderloins,” Wood explains. And with that, Grassland Beef LLC, Monticello, MO, went from supplying 10% of the restaurant's beef needs to nearly 100%.

“That was a big boost,” says Wood, Grassland Beef's president, noting that his company experienced record sales throughout most of January and had another record week in April.

A large part of that success is probably because some consumers perceive a grass-fed animal's forage diet makes it less susceptible to BSE. However, Wood says a combination of factors — including the popularity of the Atkins diet and other low-carb diets — contributed to Grassland Beef's record-breaking sales. Mentions of Grassland Beef in the New York Times and the St. Louis Post-Dispatch also boosted sales, which have nearly doubled since September 2003.

Grassland Beef's biggest problem today is keeping up with demand.

“Right now, we have more opportunities on our plate than we have time to service,” Wood says. “We generate probably five or six new customers daily, and repeat business really has been strong.”

A California Story

At Morris Ranch near Avenal, CA, consumer interest in its USDA-certified organic grass-fed beef also increased after the BSE discovery in Washington state.

“When people found out we were a closed herd, the interest was much greater,” says Douglas Morris, a fifth-generation beef producer. “We saw a little increase in sales, but not as much as we thought we would because it didn't last very long.”

Likewise, sales at American Grassfed Beef, Doniphan, MO, quadrupled in January and then tapered off somewhat. Even so, sales as of April, were 33-50% higher than last year, says owner Patricia Whisnant, DVM.

“When the BSE news hit, I think a lot of people said, ‘Well, okay, now is the time to try grass-fed beef,’” she says.

According to the American Grassfed Association (AGA), demand for grass-fed products is growing exponentially. But grass-fed beef is unquestionably a small niche market.

“Even now, with growing interest, it is still a very small part of the market,” says Chris Calkins, a University of Nebraska animal science professor.

Prior to the first U.S. case of BSE, the market for grass-fed and other natural beef products had been growing slowly. According to a report by Organic Monitor, the highly fragmented organic meat market had been moving particularly slow compared to other sectors of the organic food industry. The report entitled, “The North American Market for Organic Meat Products,” points to small-scale production, direct marketing, a lack of distribution infrastructure and high retail prices as the reasons why organic beef controlled less than a 1% market share last year.

Even with sales projected to expand by more than 50% this year, organic beef is not expected to reach a 1% market share for at least five years, according to Organic Monitor. Much the same can probably be said for the grass-fed market.

While the BSE case may have helped elevate consumer interest in grass-fed and other types of natural beef, Calkins says such reasoning seems to clash with a report from the National Cattlemen's Beef Association (NCBA) that consumer confidence in the safety of U.S. beef remains high at 89%.

“If you don't see a decline in consumer confidence, it is kind of odd to suddenly believe that we have great marketplace growth for the natural products,” Calkins says.

Organic Monitor explains that the BSE case acted as a catalyst. “Even if BSE had not occurred, the organic market would have grown at very high levels anyway due to more volume coming into the market and supply chains developing,” it says.

Is Grass-Fed Beef Safer?

Not to be overlooked is the whole food safety debate concerning grass-fed beef. Some grass-fed producers are positioning their products as “immune from BSE.” Calkins disagrees with that practice.

“In order for those products to be safer, you have to presume that the grain-fed products are not safe, or there is some measure or degree of risk associated with those,” he says. “The risk from BSE is so remarkably low that there really is no measurable difference in risk… We are talking about perceptions.”

Wood agrees.

“The [Chicago] Cubs will win the [professional baseball's] World Series four years in a row and you'll be struck by lightning — both of those have to happen before you are going to die of BSE,” he says.

But Whisnant, who is director-at-large for the recently formed AGA, says she believes grass-fed beef is safer than grain-fed beef.

“When you feed them nothing but grass — 100% pasture — then you are not taking a chance on feeding them any kind of animal by-products,” she explains, adding that the small operations that raise grass-fed beef can easily trace an animal's origin.

Safety and traceability issues aside, grass-fed beef does have health benefits over grain-fed beef, according to a research review by the University of California-Chico. As compared to conventional beef, grass-fed beef is higher in beta carotene, vitamin E and omega-3 fatty acids. It also has a higher level of conjugated linoleic acid (CLA), which is believed to reduce the risk of cancer, heart disease and diabetes.

Those health benefits are apparently a key selling point for folks who buy grass-fed beef. Whisnant says her customers are usually very health-conscious and many have health problems such as allergies, heart disease or cancer. Some are even former vegetarians.

“They are people who come for a specific, healthier product,” she says.

Another reason some consumers choose grass-fed beef is for animal welfare and environmental considerations.

“We deal with some people who are pretty phobic over some of these issues they read about in the news,” Wood says. “We are actually selling beef to people who wouldn't otherwise buy regular commodity beef.”

Taste-wise, those who like grass-fed beef are as passionate about their preference as those who prefer grain-fed beef. However, the vast majority of U.S. consumers — about 80% of them — prefer grain-fed beef, Calkins says. He has conducted consumer preference studies on grass-fed vs. grain-fed beef and has been unable to identify what segment of the population likes the taste of the grass-fed product.

What Calkins has found, though, is that most grass-fed beef is lower in flavor and acceptability than grain-fed beef. Other scientists have found grass-fed beef to be less tender.

That finding doesn't surprise Morris.

“The old rule is that grass-fed cattle are tough,” he says. “If you don't have the right kind of grass, you will have a rangy, tougher-type animal.”

Though he won't give away specifics, Morris says he has a little different way of raising cattle that makes his 100% grass-fed beef tender and juicy.

“We have run taste tests and tenderness tests, and we are beating everybody that we come up against,” he says.

Likewise, Whisnant says her beef has faired extremely well in taste tests done by chefs' groups.

“They explain it as having a cleaner and more pure flavor,” she says.

Recent Auburn University studies also indicate that taste isn't a problem. The key is learning how to cook it properly, says Lisa Kriese-Anderson, an Auburn associate professor of animal science.

“There could be some basic eating quality issues if someone doesn't know how to prepare it,” she says.

Grass-fed beef takes a third less time to cook than grain-fed beef, Morris explains. And, Whisnant says you have to cook it with “a flashlight.”

“You don't want to overcook it and you don't want to handle it in a real hot situation where it has a tendency to dry out,” she says.

Both Whisnant and Morris include cooking instructions with the meat they sell.

Another issue with grass-fed beef is the cost. It's expensive to buy and expensive to produce, so the average person is not going to be able to afford grass-fed beef, Kriese-Anderson says.

For perspective, a Morris Ranch organic grass-fed ribeye steak retails for $19.75/lb., while a conventional ribeye elsewhere goes for about $7.99-$9.99/lb.

“The people who have more disposable income are very willing to pay more money,” she says. But the person who would like to eat it but has a minimum-wage job is going to get commodity beef at Wal-Mart.

Long-Term Potential

Looking ahead, Morris says it will take time for people to get accustomed to what the qualities of different meats are. When they do, he hopes more people will understand the health benefits of grass-fed beef and pay the premium for it.

In the near-term, though, the predominant share of the beef market is likely to stay focused on grain-fed beef, Calkins says.

“Right now, grass-fed has the potential to meet a small niche market,” he says. “And, I think it will be a niche market for quite some time to come.”

Diana Barto is a freelance writer based in Waconia, MN, and a former BEEF senior associate editor.

Defining Grass-Fed

Exactly what qualifies as “grass-fed” beef depends on whom you ask. USDA's Agricultural Marketing Service (AMS) currently has no official definition, but it is in the process of establishing claims standards for grass-fed and several other meat marketing terms.

AMS proposed an initial standard for grass-fed production in the Dec. 30, 2002, Federal Register. That standard permits products to be considered grass-fed if 80% of the animal's primary energy source comes from grass, green or range pasture or other forage.

Public comments in response to that standard revealed a need for additional technical input, says AMS spokesperson Kathryn Mattingly. AMS will conduct another public comment period before finalizing the grass-fed claim, she says.

One interested party is the American Grassfed Association (AGA), a group of producers, food service industry personnel and consumer interest representatives that was formed in September 2003 to promote grass-fed products. AGA defines grass-fed products as being from animals that have eaten nothing but their mothers' milk and fresh grass or grass-type hay from birth to harvest.

Many products marketed as grass-fed do not meet AGA's definition, so the organization is pushing for strict USDA guidelines on grass-fed marketing claims.

Grass-fed producer Patricia Whisnant, DVM, of Doniphan, MO, says she and other AGA members feel AMS's initial 80% standard for grass-fed qualification is a disservice to consumers.

“The health benefits (for humans) dramatically decrease when you start adding grain to the animal's diet,” she says.

To read AMS's proposed requirements for grass-fed products and related comments, go to www.ams.usda.gov/lsg/stand/claim.htm. For more information about AGA, visit www.americangrassfed.org.

Some Pointers On Moving To Grass-Fed

If you are considering producing and direct marketing grass-fed or organic beef, here are some pointers:

  • Establish a market first. Producing grass-fed or organic beef does not instantly bring customers to your doorstep.

    “A lot of producers just want to take their grass-fed beef to the magic place and receive a premium for it,” says Lisa Kriese-Anderson, Auburn University associate professor of animal science. “That probably is not going to happen unless you do your own marketing.”

    Moreover, University of Nebraska animal science professor Chris Calkins says its tough to find the small portion of the population that likes grass-fed beef; customers may have to find you.

    “Be sure you have a place to go with the product,” he says. “Otherwise, it is a bigger gamble than I would encourage anyone to take.”

  • Direct marketing is a whole other business.

    “There's a whole other industry in agriculture and that's how you relate to the consumer,” says John Wood, president of Grassland Beef, Monticello, MO. “Direct marketing is no easy ticket. Anyone who ever succeeded at it has paid incredibly high dues.”

    Patricia Whisnant of American Grassfed Beef agrees the effort it takes to market direct is a real obstacle. Direct marketing involves setting up a Web site, getting the animals slaughtered, and having the meat cut, packaged, frozen, stored and shipped.

    Selling to a restaurant requires meeting its demand for the most popular cuts on time, and then getting rid of the hamburger and roasts that tend to pile up. Working with retailers is also challenging because most operations do not produce enough to supply a retail chain. However, co-ops and alliances are forming for grass-fed and organic products.

  • Grass-fed production can be economically challenging. Grass-fed animals require 18-24 months to finish and more pasture. Plus, the producer must retain ownership or buy back the meat after slaughter, Calkins says. And, there are costs for cold storage, shipping and selling via the Internet.

    “The cost on the bottom line looks good,” Whisnant says. “But, it's not as lucrative as it appears.”

  • Organic production is very restricted and costly. A producer usually pays fees to be certified, and there are restrictions on how animals are handled and hauled. Plants that kill the animals and process the meat must be certified, and that can cost extra. Plus, each animal must have an ear tag showing how it was managed and transported and where it was killed, packaged and sold.

    “It would be a lot easier to just sell the cattle… All the environmentalist ideas that we have to participate in makes it more expensive,” says Doug Morris, who produces USDA-certified organic grass-fed beef at Morris Ranch near Avenal, CA.

  • An operation near a metropolitan area is probably more likely to succeed. The market for grass-fed beef tends to be clustered around urban areas, Kriese-Anderson says.

    Local farmers' markets near metro areas are a great venue, Whisnant adds. No such markets are near her operation in Doniphan, MO, but her customers travel four or five hours to buy her product.

For more on grass-fed production, check out these Web sites:

www.morrisorganicbeef.com, www.americangrassfedbeef.com, www.csuchico.edu/agr/grasfdbef, www.grasslandbeef.com, and www.americangrassfed.org.
— Diana Barto