If you're puzzling over your future role in a changing beef industry, your answer may be a niche market, one that allows you to differentiate your product and garner more attention, and hopefully more dollars.
One such avenue might be the “natural” route, which was the subject of a recent South Dakota State University (SDSU) workshop entitled “Matching Cattle to Markets: A Natural Approach.”
Such a program, if it fits for your cattle and management style, can bring some hefty premiums over conventionally raised beef. But it entails weighing the added production and management costs resulting from the inability to use certain growth-enhancing products.
First off, “natural” shouldn't be confused with “organic.” Animals qualifying as organic must be fed 100% certified-organic feed, and the process to become certified-organic can be lengthy; it takes three years just to certify organic crops. In addition, the animals cannot be administered growth-promoting hormones or antibiotics, even for therapeutic purposes. The organic label also requires that the animals have access to pasture, with minimal confinement.
Meanwhile, USDA currently defines “natural” as “minimally-processed,” meaning that virtually all fresh meat products qualify under the label.
“However, all products claiming to be ‘natural’ should be accompanied by a brief statement explaining what is meant by the term,” says Brett Stewart, an analyst with Cattle-Fax.
In order to clear up widespread confusion on the natural label, USDA is currently developing a more specific definition for use on meat products. Otherwise, says Dana Stahl, manager of USDA's Quality Systems Verification Programs, the natural designation will lose its significance to the consumer.
Still, within that broad definition, each commercial firm chasing the natural market sets its own definition. Most companies define natural as a “never-ever” product, where cattle have never-ever been administered ionophores, antibiotics in any form, or hormones. Most natural programs also have additional management and performance requirements.
Natural programs tend to utilize two different cattle types — high cutability (Continental influence) and high quality grade (British influence).
Cutability-based programs reward carcasses with low yield grades and high dressing percentages, promote a healthy product, and require 75% Continental blood. One of the largest cutability-based natural programs is Laura's Lean Beef, which seeks high-percentage Continental cattle, and offers up to a $70-100/head premium for cattle meeting their specifications.
Meanwhile, quality grade-based programs offer incentives for higher quality grades and more marbling, promoting taste and genetic verification. Such companies target cattle with at least 75% British genetics. Two such programs are Coleman Natural Beef and Meyer Natural Angus.
Colorado State University research indicates the most important factor to consumer purchasers of natural beef are: hormone-free, traceability to a particular ranch, antibiotic-free, no feeding of animal by-products, animal care and environmental stewardship.
With consumer demand for natural beef, the market is seeing a dramatic increase. According to Cattle-Fax, beef marketed as “natural” represented about 1% of beef sales in 2005, a growth rate of nearly 20% annually.
Perception prices the product, says Cattle-Fax's Stewart. Consumers are willing to pay the price for a feeling of reassurance when setting the meat on the table.
“Consumers are looking for a product that has a story with it,” explains Tyler Melroe, Marshall County (SD) Extension livestock educator. “By raising natural cattle, you differentiate your product, create a story and a niche-marketing opportunity.”
Opportunities and challenges
While the premiums possible through such niche markets are appealing, experts say a thorough consideration of your operation and the requirements and costs of such a shift must be done before chasing any niche market.
Among the obvious advantages of a natural market is consumer appeal and a market that is growing vigorously. Some firms report demand growth of their natural lines as high as 60% annually. Melroe says that's driving producer premiums as high as $20/cwt. Astute marketers optimize their chances of hefty paybacks by timing their production to the times of seasonal low supply.
Among the challenges of natural production are: ensuring that the premiums compensate for the production inefficiencies, ability to provide a dependable supply for natural companies, and marketing of the entire carcass.
Some of the heftiest risks in raising natural cattle are in the health arena due to the inability to use antibiotics. Russ Daly, SDSU Extension veterinarian, says that makes the importance of a good health program doubly important before transitioning from conventional to natural production.
“The transition is easy for those producers who historically have a low level of disease in their herds; it's a good indicator they're doing things right,” Daly says. He also suggests working with your veterinarian to tweak your health program before making a transition. Any animal treated with antibiotics becomes ineligible for the program.
“But if the animal needs antibiotics from an animal welfare standpoint, they need to be treated,” he says.
While the health risks involved in converting to a natural program can seem overwhelming, Daly says an up-to-date health program that includes proper vaccinations can go a long way toward minimizing disease challenges.
Steps to take
If you're considering a leap into the natural world, Melroe recommends first gaining a thorough understanding of what you sacrifice to go into a natural system, and what you can potentially gain.
Your herd genetics and management must match the program specifications. A thorough understanding of program requirements, your herd's positioning and a critical evaluation of the production and management changes necessary will help make implementation easier and potentially more profitable for your operation, Melroe says.
After finding a program that matches your herd's genetics and production scheme, contact a representative of the branded beef company. Many companies perform herd audits to ensure that program specifications are met. This may include an internal audit, a third-party audit and carcass residue testing to maintain the integrity of the brand.
Record keeping that documents adherence to program protocols, and for traceability purposes, is another staple of such programs.
“With natural programs,” Melroe says, “we often focus on what we don't do, but the key component is what we do do. Record keeping, vaccination and preconditioning are musts!”
Jeff Russo, a cattle buyer with Laura's Lean Beef, provides two pieces of advice for those interested in the natural beef business — have good records and utilize a good vaccination program.
If you do your homework right, implementing a natural program can be a great asset and increase profitability for your operation.
Rachel Wulf is a senior agricultural journalism student at South Dakota State University from Morris, MN, graduating in May 2007.