Creating the Link: Cooperative Marketing of Organic (All-natural) Beef

Final Report for FNC97-171

Project Type: Farmer/Rancher
Funds awarded in 1997: $9,854.00
Projected End Date: 12/31/1998
Region: North Central
State: Kansas
Project Coordinator:
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Project Information

Summary:

PROJECT BACKGROUND
Rainbow Organic Farms Co. is a producer member of the All Natural Beef Cooperative. Rainbow Organic Farms acts as the marketing arm of the All Natural Beef Cooperative. The All Natural Beef Cooperative consists of approximately twenty producer members. The producer members are small family farms located in north central and southeastern Kansas and South central Missouri. A small family farm may be defined as; a farm where the majority of the labor and management for the farm operations is done by the farmer and family members, the farmer depends on farming to obtain the majority of the family income, and a farm family’s net income from all sources (farm and non farm) is below the median non metropolitan income level of the specific state. In the above working definition of a small family farm, off farm employment does not serve as the operating backbone of the total household budget.

The majority of the All Natural Beef Cooperative members operate as small family farms. Most are third and fourth generation farm families. All of the producer members practice sustainable farming methods. The Appropriate Technology Transfer for Rural Areas (ATTRA) Beef Farm Sustainability Check sheet is used as a guideline.

The Organic Crop Improvement Association (OCIA) certifies several of the producers’ farms organic. These producers also raise OCIA certified grains which are sold through the Kansas Organic Producers Cooperative (KOP). The All Natural Beef Cooperative producer members’ background and activity, in using sustainable farming methods, range from certified organic farming and transitional farming to those who practice environmentally sustainable farming and currently not seeking organic certification. Rainbow Organic Farm Co. has been OCIA certified organic since 1994.

Nature’s Premium All Natural Beef USDA approved special label claims state that the beef are locally family farm raised without growth promoting hormones, subtherapeutic antibiotics, or animal by products. The beef are free ranged until corn fed finished. The carcass is dry aged 10 -14 days. Also the animals are raised and fed out on producer’s family farms. The beef is traceable from the retail counter to the farm and animal of origin.

PROJECT DESCRIPTION AND RESULTS
The two goals of this project are 1) to demonstrate how available data can be collected and utilized to assist small beef cooperatives of assuring beef quality and consistency, and 2) to demonstrate a cost effective way for small cooperatives to conduct cutting edge market research

Goal 1: To demonstrate how available data can be collected and utilized to assist small beef cooperatives of assuring beef quality and consistency.

Many small federal and state inspected meat plants do not have a USDA certified meat grader. Due to the limited carcass volume, it is cost prohibitive for mall producer cooperatives to afford the cost of a USDA meat grader. Also the producers are accustomed to selling their beef priced on “live weight” or “on hoof weight”.

A producer sheet and a processing sheet were maintained for each animal marketed through the all natural beef (ANB) cooperative for 1997 and 1998. Data as collected on over 1000 animals. The grid to determine producer price used carcass hanging weight and the USDA 5 area daily weighted average price. It was determined that too much variability existed in carcass yield to continue using this grid. Collecting the producer data and processor data allowed us to develop a better producer pricing grid system. The new grid utilizes the wholesale primal weights (wholesale yield) and current wholesale primal prices to calculate the price the producer will receive for each animal marketed through the ANB cooperative. This pricing grid correlates directly the wholesale primal value of an animal to the price paid to the producer. The producers were able to determine the breed and production methods that gave them the best dollar return. The producers feel this system is fairer. It also provides them with the necessary incentive for them to examine their production methods more closely. All Natural Beef quality and consistency showed a marked improvement with the implementation of the new grid system.

Goal 2. To determine a cost effective way for small cooperatives to conduct cutting edge market research.

The people at the front line determine sales. The retail meat managers and meat employees behind the counter can make or break sales of meat products. This is especially true of new meat products. A survey of meat managers attitudes towards Natures Premium All Natural Beef was conducted. This survey was initiated to help the meat managers be aware of all natural beef and its’ quality. Is also provided beef quality feedback for the producers.

Meat Manager Attitudes Towards Natural Beef:
The survey of meat managers focused on the Nature’s Premium All Natural Beef for 15 consecutive weeks regarding their preferences about beef products in their stores. The manager were to fill out one survey per week for 15 consecutive weeks after preparing and eating Nature’s Premium All Natural Beef. The questions included ranking product attributes such as price, flavor, shrinkage, appearance before and after cooking, juiciness, tenderness, attractiveness, willingness to recommend, moisture, freshness, and overall eating experience. The ranking ranged from one to seven, one being more favorable than other meat products in the case and seven being less favorable than other meat products in the case. The origin of the cut was the factor chosen to average the responses to the 16 questions. The categories were ROUND (Eye of round, Inside round, Rump roast, Top Round), RIB (Rib eye, Rib), LOIN (KC strip, Sirloin, Strip, T bone, Tenderloin, Top Sirloin), GROUND BEEF (Ground Beef), and CHUCK (Chuck roast, Arm clod, Brisket, Flank Steak, London Broil, Tri-tip).

Consistently throughout all 16 questions, the most favorable rankings came from cuts out of the LOIN, with an average answer of 1.9. Flavor, freedom from moisture, and willingness to recommend are strong characteristics the managers associated with LOIN cuts. However, the managers were not especially favorable to the price of the LOIN cuts. The average of the answers for RIB cuts was a 2.45, CHUCK cuts 2.5, ROUND cuts 3.07 and GROUND BEEF 3.375. The most favorable attributes of RIB cuts were ease of judging meat quality, and appearance of meat after cooking, the least, amount of fat in the meat. The most favorable characteristic for both CHUCK cuts and ROUND cuts was freedom from moisture in the package. The least favorable for these two categories of cuts was price. The most favorable attribute of GROUND BEEF was the price; the least, shrinkage during cooking. Emphasis that is directed towards keeping the favorable qualities consistent will prove effective in delivering a consistent, reliable product to the meat case.

People:
– Balls Food Store – furnished the retail space and subsidized the sales of the all natural beef products. They provided the opportunity to conduct the consumer surveys.
– Tom Moore – meat director
– Dennis Greene – meat merchandiser
– Charlie Owen – preferred card program
– Meat managers
– Mike Conran – systems support

– Kansas State University Agriculture Economics Department – assisted with in store surveys, data collection, analysis, and on farm tour. KSU meat science department assisted with value added product development.
– Dr. Michael Boland – assistant professor Ag. Econ
– Se’bastien Givry – graduate student Ag. Econ
– Dana Peterson – graduate student Ag. Econ
– Dr. Don Erickson – KSU Community Development Specialist – profit return analysis
– Dr. Dave Barton – KSU Cooperative Specialist – presentation on Co-op development to producer members

– Stan Freyenberger – KSU Research Assistant Ag. Econ – on farm tour

– Dr. Elizabeth Boyle – KSU Assistant Professor Meat Science
– Kathleen Hachmeister – Research Assistant Meat Science
– Apple – graduate student Meat Science

– Doug Niemeir – Bourbon County Conservation Service – County Executive Director assisted with on farm tour

– KS Department of Commerce – Agriculture Products Development Division – Lee Masenthin – grant to KSU meat science for product research and development

– Ragan Meat Company – Kansas City, KS – development of value added products

– Adrian Meat Company – Adrian, MO – Pat and Mary Oates – slaughter and data recording

– Sambol Meat Company – Kansas City, KS – Bill Kolich & Steve Kolich – Processing and data collection

– Galen Rapp – Rural Development – Cooperative Specialist – Presentation to Co-op

– Kansas State Representative Andrew Howell – contacts for funding and support

Discussion
This grant enabled the producers to determine the breed and raising procedure that will yield the greatest profit potential. The producers learned the importance of data collection, how to interpret the results, and use this knowledge to increase the profitability of their operations.

The kiosk portion of the project was a greater endeavor than initially anticipated. However, we did successfully construct a computer assisted self interview kiosk and use it to conduct consumer surveys in supermarkets. The computer and marketing experience I gained will enable me to expand the market potential for the producers. It will also allow me to improve consumer outreach methods.

I think the most important knowledge gained is the increased ability to work together for a common goal (to utilize sustainable beef production methods as a means to insure environmental sustainability and small farm profitability). The producers, processors, and retailer experienced the tribulations of each operation. The producers and processor developed the ability to communicate more effectively. They gained the importance of maintaining quality throughout the chain of operations.

All of the producer members are more positive and have a greater interest in the continued success of this project. The producer members with certified organic farm operations encourage conventional and/or transitional producers to increase sustainable farming practices in their operations.

The barrier farmers are facing in adding value to their products and market entry will continue. Nonetheless, this project made a positive step in addressing that barrier. Hopefully, these groups will continue to work together and set precedence for other producers seeking livestock marketing alternatives.

The advantage of this project was the team effort required for it to bed successful. It brought together the producers, private industry, a state university, and government agencies working together, many for the first time. However, this can also be a disadvantage. The greater the diversity and numbers of individuals the greater the time, effort, and responsibility of the project leader. This is especially true when my division in the sequence of events, from the farm to the market, would result in a successful project.

My recommendation, to other producers considering a similar project, is to build relationships with private and government agencies. Seed out others for information and ask questions. Most people are willing to share information of direct you to resources. Do the leg work process yourself and hire as little done as possible. This will allow you to understand the necessary procedures from the farm through the market.

Economic Impact – the producer receive $40.00-$60.00 per head above the conventional price.

Environmental Impact – due to animal waste, the concentration of animal production continues to be an environmental concern. The return of on farm feeding out of livestock could be a solution. The average cow produces 25 pounds of waste per day. With 5000 head of cattle in a feedlot, moving the waste into the soil would cost $50,000 to $100,000 a year in labor. To save that cost mounds of waste inside and outside the feedlot are created. As a result, pesticides are sprayed to fight the flies that are attached to the manure. This project has demonstrated how on farm feeding can result in a consistent and high quality retail beef product. It also determined this could be accomplished and still maintain an acceptable retail price and a better return to the producer.

Social Impact – it is estimated that the outreach and in store demonstrations touched at least 2000 people.

OUTREACH
– March 6, 1998 presented poster at the SARE 10th National Conference of Sustainable Agriculture
– October 8, 1997 Southeast Kansas Workshop “Innovation in Agriculture” Niche Marketing by Farmers – All Natural Beef (on farm tour) 60 people attended
– October 1998 Mid America Nazarene University, Olathe, KS – International Agriculture Development Department (on farm tour) 50 people attended
– November 6, 1998 – Midwest SWAG – Paul Johnson – Savior of the World Pastoral Center – Kansas City, MO – (panel on marketing sustainable products) approximately 75 attended

Future Communications:
– February 4, 1999 Emporia, KS – Young and Beginning Farmers – contact person Liz Perkins
– February 23, 1999 – University of Nebraska Lincoln – Institute of Agriculture and Natural Resources – Seminar Series Reintegrating Agriculture and Community in the Midwest – Presentation on Cooperatives as a mechanism for increasing farmer income and strengthening links with local consumers.
– March 4, 1999 – Minnesota Department of Agriculture – Presentation
– March 6, 1999 – Sierra Club – Kansas City, KS – Panel discussion and promotional booth.
– March 24, 1999 – Columbia, MO – Farmer to Farmer Conference – Presentation on marketing beef

Research

Participation Summary
Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the view of the U.S. Department of Agriculture or SARE.