Connie Hatfield tells the story of how a fitness trainer turned her and husband Doc's lives around. But it isn't a tale about working toward a beach-worthy shape or overcoming the physical effects of time. It's a story about how a sidewalk conversation in Bend, OR, between a rancher and a fitness club owner shaped an idea that grew over the past 23 years into a 100-ranch cooperative generating $50 million in annual revenue on a total capitalization of just $30,000.
It's a story of how a group of ranchers utilize firsthand communication between their member ranches and the consumers buying their product to build a sustainable enterprise that meets those consumers' changing desires and produces a fair return to all parties involved.
The meeting in Bend occurred in 1986, but the story begins a decade before.
Montana to Oregon
In 1976, the Hatfields and their young children, Travis and Becky, moved to the high desert of central Oregon from Montana's Bitterroot Valley. The couple had sold a 200-cow operation and Doc's 10-year-old veterinary practice to relocate their operation to 30,000 deeded and public acres located 55 miles east of Bend.
“We looked all over the West to find a place where people, cattle, land and dollars could all work together in harmony,” Connie says. “We'd have loved to move to eastern Montana but couldn't afford it at that time. But we found this piece in central Oregon that, for what it's like, you could pick up and put right in eastern Montana.”
Things progressed reasonably well, the Hatfields say, until the first half of the 1980s, an era many in agriculture can recall as one of the toughest in the cattle business. Interest rates had skyrocketed, land values had plummeted and consumers were shying away from beef because of health concerns. The Hatfields say they were running cattle much more efficiently, “but we were slowly going broke,” Connie says.
It was about that time that Connie, while running errands in Bend, stopped by a local fitness club to chat with the owner.
“He was a Jack LaLanne type with big muscles,” Connie says, flexing her arms. “I told him I was a rancher and I wanted his opinion on red meat.” Connie braced herself for a negative response, but he surprised her by saying he recommended beef at least three times a week to his clients, then added, “But, we're having the hardest time getting Argentine beef here in Oregon.”
When Connie inquired why Argentine beef, his answer surprised her: “Because it has no hormones, no antibiotics and it's lean.”
Connie recalls being both elated and flabbergasted by what she'd heard. “All the way home, I thought, ‘We have exactly what that man wants, and these people don't even know we're here.’ Of course, later on, we found out that Argentine beef wasn't available anywhere in the U.S. because of foot and mouth restrictions.”
Once home, she and Doc discussed the conversation and decided to act on Connie's information. “We'd always sold our calves and then took whatever the market would give us. We'd never thought about holding our yearlings and going all the way through, but this man had given us an idea for a market,” she says.
So they called other ranchers in a 200-mile radius and arranged a get-together at their ranch in Brothers. The special guest was to be Ace, Connie's gym owner. A total of 34 ranchers, the oldest in their 70s and the youngest in their 20s, and representing a total of 10,000 mother cows, showed up to listen to what he had to say. Country Natural Beef (CNB) — www.oregoncountrybeef.com — was formed over the next few months as a rancher cooperative with 14 Oregon ranch families (see page T6) marketing a total of 200 head of natural beef cattle the first year of operation. The group's organizational goal written in 1986 was “to provide a sustainable means through a group to profitably market quality beef products desired by the consumer while retaining every possible bit of independence.” Within six months of that group meeting with Ace, CNB product was available in two stores.
The group next sent Connie to visit retailers in Portland. Dressed in her trademark jean skirt, her pitch was simple: “I represent a group of ranchers in eastern Oregon with 10,000 mother cows. What form could we put that beef into that would fill a need you're unable to meet?”
She got an appointment with everyone she called, Doc says, including retailers too large for them to consider at the time. “No one in the beef industry, and especially a woman rancher, had ever called and asked them what they needed,” Doc says.
Hitting the market
The co-op's first major customer was a Japanese restaurant company, Kyotaru, which began buying 60 animals per week in 1990. Its first retail customer came in August 1986, the Newport Avenue Market in Bend, which is still a CNB retailer today.
Today, the CNB co-op consists of 100 family ranches located in Oregon, Washington, California, Nevada, Idaho, Wyoming, New Mexico, North Dakota, Colorado, Texas, Montana, Arizona and Hawaii. These families represent more than 100,000 mother cows managed on 6.3 million acres and generating $50 million in annual sales through the CNB program. Member ranches average 450 mother cows but range in size from 60 cows to 12,000.
About 80% of their business is with Whole Foods, natural food co-ops and other innovative independent grocers. Other major buyers include more than 100 restaurants.
“Most businesses start with someone having an idea and then they get a grant and write a business plan,” Doc says. “Then they do a whole lot more studies and use the plan to raise more money to set up the business, offices and hire some people to go out and sell it. The result is they start out with a huge debt.
“What CNB did was start with a vision and a pretty firm goal. And then we put up cattle capital, with each ranch family financing their cattle up to the retail market.”
CNB is strictly a marketing cooperative without bricks, mortar, employees or debt. The functions of production, feeding, marketing and finance are performed by teams headed up by individual co-op ranchers.
“If we were to close down, together our total capital assets in CNB would be less than $30,000,” Doc says.
All cattle in the program are owned and raised from birth by the member ranches and fed in member feedyards; no outside cattle are purchased, and all cattle are raised without growth hormones, antibiotics or animal byproducts, and short fed (90-95 days in the feedlot).
“But, we're very careful not to bad-mouth conventional beef,” Doc says. “There are a whole lot of conventional producers who produce beef just like we do but the problem is that our commodity system mixes it up and you don't know what it is. There's a customer base that wants more detail and more information, and that's the market we serve.”
Every member of the co-op is also a board member. Participation in a weekly conference call every Wednesday morning is encouraged. Members abide by certain third-party-verified protocols on stewardship of animals, land and water. They must deliver cattle as committed, attend two membership meetings each year, and spend one weekend per year doing store visitations or in-store meat demonstrations in major cities to stay current with consumer concerns.
Meat prices are mutually established between producers and retail outlets based on sustainable ranching cost of production. With few middlemen and administrative costs, 96.5% of all dollars generated from the retailer are distributed to member ranchers, Doc says.
“Our CNB ranchers mostly are rural, conservative, religious Republicans, and most of our customers are urban, secular, liberal Democrats. But those things don't have anything to do with healthy food, healthy families, healthy land and healthy, happy animals,” Doc says.
Aaron Nytroe, meat and seafood manager for The Wedge natural foods co-op in Minneapolis, MN, attests to that. CNB makes up about 30% of Wedge fresh beef sales.
“The amount of transparency among CNB ranchers is really amazing, particularly for the amount of business they do. It works but it shouldn't,” Nytroe says.
It was the co-op to co-op connection that sold the Wedge on carrying CNB product, he says, after the Hatfields visited the Wedge, arranged a meeting with him and sold him on the CNB concept. He followed up by visiting the Hatfield's High Desert Ranch and touring the CNB feedlot.
“CNB is a very high-integrity operation. They came here to Minneapolis themselves and it's been that kind of connection ever since,” Nytroe says.
Helping third-tier farms
CNB is an example of how mid-sized farms and ranches can band together to prosper through the construction of a “third tier” in the U.S. agrifood system, writes Steve Stevenson, University of Wisconsin-Madison, at “Agriculture of the Middle” (www.agofthemiddle.org/). There, Stevenson provides detailed profiles of CNB and three other third-tier programs.
“Known as ‘mid-scale food value chains,’ these new business structures focus on strategic alliances that effectively operate at regional levels with significant volumes of high-quality, differentiated food products, and distribute profits equitably among the strategic partners,” Stevenson writes.
“Agriculture of the middle” refers to a disappearing sector of mid-scale farms and ranches and related agrifood enterprises unable to successfully market bulk commodities or sell food directly to consumers,” he says.
“In our living room that first day, we learned we had talent that none of us thought we had,” Connie recalls. “Tom Norton was a commodity buyer and had a small feedlot we could utilize. Mary Forman, who serves as our chief financial officer, is a certified public accountant. Someone else had a small feedlot. Doc is a veterinarian who served as a meat inspector while in the military.”
Some 23 years later, the Hatfields say their big change is one of succession. Doc and Connie had headed up CNB marketing for 23 years. As of the first of May, they gave up those reins. “I guess you could call us ‘emeritus’ now,” Connie jokes.
The transition began almost two years ago and was completed in May. The decision to moderate their role was fortuitous, however, as six months ago, Doc was diagnosed with pancreatic cancer. While the Hatfields are quick to spread the credit for CNB's success to other members, their role is undisputed.
“Everyone would agree that CNB wouldn't exist without the Hatfields. They presented the concept and they kept the program going during the tough times,” says Dan Probert, CNB executive director and a CNB rancher member from Vale, OR.
Despite current tough economic times, Doc sees CNB's future as very bright.
“We're a values-based value chain where ranchers have an interest all the way to retail and, by working together through a co-op, we're able to pool our products and get to the retail consumer not to leverage or negotiate price but to provide attributes or values that aren't available in the commodity market.
“Our goal in coming here was that it was possible for people, dollars, cattle and the land to work together in harmony and we've been able to prove that,” Doc says.
Original 14 CNB members
- Irlandes Inc.
Dick & Mary Bradbury, Con & Sally Fitzgerald
- McCormack & Sons
Bill & Donna, Jeff, Nin & Billy
- V-Dash Cattle Co.
Ken & Ann Bentz, Jim & Alecia, Mike & Linda
- Alva & Marge Mitchell
- Hatfield's High Desert Ranch
Doc & Connie
- Steiwer Ranch
Bill & Ann, Bill Jr.
- Bob & Joanne Brewer
David & Margaret
The Dalles, OR
- Norton Cattle Co.
Tom & Joanne
- Mark & Liz Turner
The Dalles, OR
- Jerry & Linda Miller
- Lowell & Mary Forman
- Warnock Ranches
Dan & Jo, Randy & Jeanie, Dan Sr. & Alice
- Gordon & Judy Schroeder
- Southworth Brothers
Jack & Teresa