Even at the depths of the cattle cycle, ranchers know that stronger prices will eventually return. The problem is that each downturn in the cycle weakens many ranches financially. A particularly bad one can put thousands out of business.
Some ranchers are escaping the cycle of boom and bust by shifting their production from the traditional commodity markets to markets more immune to cycle swings.
David James of Durango, CO, is among them. Producing for the Omega 3 grass-fed cattle program, he says niche production has two advantages.
First, you don't have to compete in a bulk market that often produces too much beef.
“We're not forced to raise or lower prices because the commodity market is going up or down,” he says, “because our Omega 3 operation has nothing to do with the cattle cycle.”
Second, his grass-fed cattle program keeps all production on the home ranch where he fattens his cattle on grass.
“When you cut out all the middlemen, you pick up their profits,” says James.
Omega 3 is a fatty acid that scientists now recognize as essential for good health. It is found, among other sources, in flaxseed, soybean oil, Alaskan salmon and grass-raised beef.
Another essential fatty acid is Omega 6. It's found in corn oil, sunflower oil and corn-fed beef. Researchers say good health requires a balance between Omega 3 and Omega 6 — no more than eight units of Omega 6 for every one unit of Omega 3, with the best ratio being three or four to one.
The problem is that most Americans get 20, 30, even 40 times as much Omega 6 as Omega 3. A growing body of research suggests alarming consequences for human health.
Omega 3 tunes the human cardiovascular system, helps control arthritis and other inflammatory disease, and helps prevent Type II diabetes as well as depression, says Jerry Cott. He's former chief of psychopharmacology research at the National Institute of Mental Health.
There are also indications that a lack of Omega 3 contributes to attention-deficit disorder and dyslexia, says Cott, now a food industry consultant in College Park, MD.
Thus, when Omega 3s are lacking, he says, you get increases in heart attacks, type II diabetes, arthritis, depression and perhaps more dyslexic and hyperactive children. (More on Omega 3 and Omega 6 can be found on his Web site www.jerrycott.com).
The solution, he says, is to get our diets into balance by decreasing Omega 6 consumption, increasing Omega 3 consumption, or both.
The problem is that it's hard to decrease Omega 6 because it's so commonly found in our diets. On the other hand, increasing Omega 3 is also hard because Omega 3 foods are difficult to find in this country.
But that's about to change, Cott says, as health books promote Omega 3 and nutritionists tout its value on television talk shows. American food producers have begun to respond.
Most supermarkets now stock Omega 3 eggs, which sell for more than twice the price of regular eggs.
Experts also suggest fish varieties with high Omega 3 content, such as Alaskan salmon. But there may not be enough fish to meet demand.
That opens the market for grass-feed beef. U.S. ranchers motivated by the chance to broaden the market for beef and market a product with high-profit margins have begun to respond.
Last year, for instance, the Twin Creek Ranch in Wyoming booked profits of about $300/head, after expenses, for the five animals raised on grass and sold as Omega 3 beef. The ranch made no money on the 295 calves it sold on the commodity market.
“With commodities, you're totally at the whim of the market,” says Andrea Malmberg, who oversees Omega 3 production on the ranch she operates with her husband Tony. This year, 20 calves will go into the ranch's Omega 3 grass-fed program. Their long-term goal is to convert the entire operation to Omega 3 beef.
Malmberg says they started their Omega 3 program on a small scale to iron out any wrinkles. She says it also takes roughly three years conception-to-consumption on a finished, grass-fed steer.
That means waiting an extra year for the first paycheck. But when the paycheck does come, it's for an average of $4/lb., she adds. Malmberg admits it also takes time to find customers and sell the product. These are tasks grass-fed producers often do themselves to capture the profits that normally go to the supermarket.
Serving The Market
James of Colorado does this by offering free samples of cooked grass-fed beef at local farmers markets. Many people who get their first taste there will place a bulk order for a half or a quarter, cut into steaks or as ground beef, he says. He also sells frozen patties through local health food stores.
“We go with the market,” says James. “They like hamburgers and steaks. We give them hamburger and steaks.”
One sales pitch is the health value of Omega 3 beef. The distinctive taste of grass-fed beef is another.
“Every ranch will have a little different flavor meat because of local differences in the grass their cattle are eating,” James says.
The Malmbergs and Jameses emphasize face-to-face marketing in nearby cities. The Internet works as well. Some producers also maintain their own Web sites, but a number of ranchers have joined together on a common site to promote Omega 3 beef (www.eatwild.com).
The market for Omega 3 beef is growing, as is the number of producers selling it. But James doesn't foresee Omega 3 ever becoming a bulk commodity subject to the whims of a price cycle.
“Most ranchers don't want to go through the effort to create Omega 3 beef. Meanwhile, corporate America isn't likely to mess with it either,” he says. “It's a wonderful product, but it's hard to do.
“Some other ranchers think that I'm crazier than a road lizard,” says James. “But I'm putting money in the bank.”
Running a niche market operation adds a new layer of complexity to a ranch. Here are some tips from the Twin Creek Ranch on running an Omega 3 operation:
Keep track of product quality. “We eat something from each animal,” says Andrea Malmberg, who oversees Omega 3 production on the family ranch.
The butcher can help by recording carcass performance information. Use it for selection and mating decisions.
Deliver or ship beef soon after animals are processed to minimize the need for expensive freezer storage.
Feed the correct regimen to produce an Omega 3 product — all grass or hay, all the way. The animals are finished on live grass to maximize Omega 3 content before they're harvested in late summer. Omega 3 beef are never fed grain.
Use the local newspaper to publicize the product. The Twin Creek Ranch sold out its first-year production after Malmberg convinced the local newspaper to write an article about raising Omega 3 beef.