Reaching Greater Sustainability Through Value Added Direct Marketing

Project Overview

FNC03-475
Project Type: Farmer/Rancher
Funds awarded in 2003: $6,000.00
Projected End Date: 12/31/2005
Matching Non-Federal Funds: $43,550.00
Region: North Central
State: Missouri
Project Coordinator:

Commodities

  • Animals: bovine

Practices

  • Animal Production: mineral supplements, grazing - rotational, stockpiled forages
  • Education and Training: demonstration, extension, farmer to farmer, networking, on-farm/ranch research
  • Farm Business Management: budgets/cost and returns, marketing management, value added
  • Natural Resources/Environment: riparian buffers
  • Production Systems: holistic management
  • Soil Management: nutrient mineralization
  • Sustainable Communities: partnerships, sustainability measures

    Summary:

    Tom Craft was born into a farming family and is the 3rd generation to run the family farm. He has raised cattle for 40 years and has been direct marketing beef to consumers in bulk (quarters and halves) for over 15 years. Over the last decade, he has perfected a Management-intensive Grazing (MiG) system that keeps his cattle healthy with a weight gain comparable to that in feedlots with lower overhead costs.

    Papa Cow’s, Inc.
    One of Craft’s sons, (Robert Malcom) wanted to return to the farm, so they began exploring ways to increase the income from selling cattle enough to provide income for two families. The objective of this project was to create a business for marketing and selling value-added beef (retail cuts) by the pound directly to consumers. Craft and his wife, Janice worked with their son Robert and his wife Laura to form a business called Papa Cow’s, Inc.

    Each had a different role in the business. Craft produced beef, contacted producers who wanted to be involved in adding value to their cattle and direct marketing, and inspected farm operations and the live animals of producers who wanted to sell through Papa Cow’s, Inc. to ensure that the animals met Papa Cow’s standards.

    Janice Craft has 30 years experience as a legal secretary and has worked in the court system for over 15 years. She has experience preparing Charter books and handling corporation legal matters. She assisted with contracts and pricing and acted as the liaison with attorneys and accountants. She was the principal financial analyst for the business and handled most of the business accounts.

    Robert Malcom served as president of the business. He is the 4th generation to be involved in the family business. He has over 12 years experience as a chef and is very knowledgeable about food quality and cuts of meat. His primary role was quality control, inspection of final products, liaison with processors/butchers, customer orders, customer requests and customizing and sales.

    Laura Malcom has a B.S. in Management and her primary role in the business was public relations. Her responsibilities included bookkeeping, advertising, sales, and scheduling, as well as assisting with pricing.

    Because Tom Craft was already raising cattle, beef was readily available to begin the business. They started with 3,000 pounds of beef (7 calves) and had them processed at a USDA inspected locker. The processor took care of cutting, inspecting, packaging, labeling, and freezing. Papa Cow’s paid the processor and stored the beef in their freezers.

    While the initial 3,000 pounds of beef were being processed, the group kicked off an advertising campaign. The idea was to time it so they would have beef available for the first customer call. They advertised to let consumers know that they had pasture-finished beef available by the pound and in family packs. Advertising was done in newspapers, on the internet, and by attending local events.

    They identified their customers as anyone who wanted gourmet quality, naturally produced foods at a reasonable price. They targeted the basic consumer with advertising that stressed the health benefits and lower costs of their products. The group also identified a group of producers who wanted to learn more about Management-intensive Grazing and the benefits the system has to offer, including healthy livestock, a cleaner environment, and lower overhead costs and expenses. The Natural Resources Conservation Service (NRCS) in partnership with the local Soil and Water Conservation District (SWCD), hosted tours of the Craft farm for two of their grazing schools in 2003. Approximately 20 people attended each tour.

    The idea behind Papa Cow’s was to provide producers with higher profits and improve their quality and standard of living. The project participants planned that consumers would pay less for higher quality, healthier foods that tasted good. As consumer interest increased, they hoped that sales would grow and Papa Cow’s would be able to create local jobs, selling meat and other products in a store located on the Craft property.

    Craft said he was glad they tried the project. He learned a lot, but what they discovered was that it is very hard for a small producer to sell individual cuts of meat. Craft says he learned from the Papa Cow’s experience that, “You have to keep the overhead low or you don’t make it.” There was too much overhead in this type of a business. Also, grass fed beef was not popular in their rural area and consumers did not respond to general advertising since they preferred to buy beef from people they knew. The retail cuts offered through Papa Cow’s ended up being $1.00 to $1.50 higher than meat at the store and people didn’t buy it. The result was that the business did not generate enough income for two families and Robert Malcom had to seek better employment.

    T-Bone Beef
    Craft reviewed customer preferences, analyzed what did and did not work with the business and formed a new business with his son Rusty Craft. The new business is called T-Bone Beef. It specializes in selling corn-fed Angus beef in quarters or halves. The animals are on grain for an average of 90 days.

    T-Bone Beef LLC is a brokerage LLC. The Crafts raise and finish some of the beef they sell and also buy finished beef from neighboring producers. They buy on a live weight basis and sell on a hanging weight basis. T-Bone Beef pays the producers market price and delivers the animals to the meat locker. They have created a market for themselves and other producers. T-Bone Beef finds the customers and sells quarters and halves at a wholesale price. The Crafts stay out of the processing business. The cattle are fed out to the weight specified by their customers.

    For example: A customer wants a half a beef, hanging weight 350 lbs. T-Bone Beef comes up with a corn-fed Angus steer with a weight between 1,050 and 1,125 lbs., which dresses out roughly to 700 lbs. hanging weight. The customer gets a quarter (the 350 lbs. hanging weight that they want). T-Bone Beef sells the other half to another customer.

    The customer calls the meat locker and tells them how they want the meat cut up and how long to hang it to age it. The customer pays the locker for slaughter, cutting the meat, and wrapping it. The customer picks up the meat wrapped and ready to take home to their freezer. The Crafts don’t have any contact with the meat after it reaches the locker. They use only USDA or state-inspected meat lockers.

    Through this method, the Crafts are able to keep their overhead very low and still sell a quality product that is 25 to 30 percent cheaper than in a grocery store. The Crafts work with three or four other producers to supply beef to their customers. The other producers receive $20 to $30 per head more for animals sold to the Crafts than they would by selling to a packer. Tom Craft explains, “That’s a good deal for them and me both. I’m just trying to help everyone in the locality and me too.”

    T-Bone Beef sold nine head of cattle in 2005 and has already reserved locker space for 12 animals in 2006 (as of December 2005). The Crafts work with 25 to 30 customers per year. The orders vary from year to year. One year, a customer might take a quarter, and another year they might want a half or no meat at all.

    Tom Craft says that word of mouth accounts for 99 percent of their sales. In 2005, 30 percent of the customers were new people, so it seems the word is getting out that they are supplying what their customers are looking for. Craft says they are already in the black, but they would have to sell much more beef to support him or his son. He estimates they would have to sell 100 animals to support one of them and it could take years to build up a business to that size.

    Through field days at the Craft farm and a supportive Soil and Conservation Service, which uses the Craft farm to teach grazing schools, Craft says he has noticed an increase in interest in grazing.

    Grazing System
    Tom Craft has put a lot of time and effort into developing a grazing system for the cattle he raises on his farm. Diane Bradley, District Conservationist, NRCS described how the system was developed and how it works on November 1, 2005:

    The 135 acres of grassland have gradually been developed into a rotational grazing system starting in 1988. They began to make improvements by controlling brush with chemical/mechanical means, constructing all new property and interior fences (9 miles of high tensile electric interior fencing), improving the water supply by developing and making improvements to five farm ponds (1,000 feet of pipeline and ten freeze proof tanks were added to the 135 acres of grassland), livestock were excluded from all ponds and all stream corridors to improve water quality and increase the water supply’s life expectancy. Today, these grassland acres have been divided into 42 paddocks that are approximately three acres in size, and the livestock are rotated through the prescribed grazing systems. All acres are soil tested annually to every three years and fertilizer is applied at recommended rates annually for continued maintenance of forage quality/quantity.

    Legumes are re-seeded if pastures are hayed and not allowed to re-seed themselves. This system is capable of supporting approximately 25 cow/calf pairs and 80 head of stockers (numbers may vary from time to time) for a minimum of 330 days of grazing. When acres are hayed, consideration is given to leaving adequate nesting cover acres for the turkey and quail. Haying is minimal as stockpiled grass is grazed and hay is only provided in situations of drought, ice, or snow. In addition, 10 oz. geotextile fabric and rock have been place in all heavy use areas such as roads, alleys, and around tanks to reduce erosion.

    Other forages that are utilized in the operation at different times of the year include: Red River Crab Grass (summer)/stocker brome (fall & winter), turnips, winter rye, triticale, and wheat to provide additional winter pasture.

    The results of Tom’s over 15 years of work have had both immediate and long-term benefits. By implementing a rotational grazing system, he has been able to control the harvest of vegetation, increase forage quantity and quality, improve grazing efficiency and distribution, and improve manure distribution, which can decrease fertilizer inputs. These benefits gained by implementing a rotational grazing system have increased pounds of beef raised per acre, and improved animal health and productivity while improving water quality and reducing soil erosion.

    Red River Crabgrass, Caucasian Bluestem, Switchgrass, Wrangler and Vaquero Bermuda Grass, Smooth Brome, Fescue, Red Clover, Ladino Clover, and Lespedeza are all maintained and are in good to excellent condition.

    Pastures are grazed in rotation starting in a different pasture each spring. If the grass in a grazing cell gets ahead of Tom, he will cut that cell for hay and then re-fertilize the following spring according to soil test. Red clover and lespedeza are re-seeded as necessary. Usually, one third of the pastures with the least amount of legumes are re-seeded every year by interseeding 80 percent red clover and 20 percent lespedeza. However, Tom does not manage the grazing system for hay production. Following the hay cutting, he will allow those paddocks to rest and stockpile the re-growth for fall/winter grazing. Grazing will resume around mid-October on these acres. The rainfall from August through October predicts how long the stockpiled grass will last before an alternative feed is needed. Three quarters of the stockpiled grass will be strip grazed with a new strip provided daily. Usually, the stockpiled pastures can be grazed up to the new spring growth. This allows those pastures grazed through the summer months a 60 day period of rest. Normally, 60 to 80 acres of fescue will be stockpiled for winter forage. Stockpiling starts the first week of August, when an application of 50-40-0 is applied and 3 lbs. of red clover is added.

    Cool-season grasses are only fertilized in August with the necessary nitrogen, phosphorus, and potassium to meet their fertility requirements. Lime is applied as needed in July and August. No spring fertilizer is applied on cool-season grass acres. Warm-season grasses are given 60 lbs. of nitrogen every 30 to 45 days with applications occurring two to three times per year during the months of May through August, based on livestock numbers.

    Hay is fed 20 to 60 days on average and only when there is a snow cover, ice, or drought conditions present. Hay feeding is limited. Stocker Brome and Red River Crab grass are allowed to re-seed annually. Every two to three years, Roundup is applied in early spring before the switchgrass comes out of dormancy to control encroaching fescue. The remainder of the pastures are spot sprayed for thistles, ironweed, and any other invasive species. Pastures have not needed to be clipped for the past two years.

    Livestock are rotated every two to four days in the spring and fall to every four to five days in the late spring and summer months. There are several pastures that offer winter protection with freeze proof tanks. Livestock are continuously rotated through the system 365 days a year.

    Records for grazing are kept in a pocket notebook and include: date livestock entered a paddock with the number, date livestock left the paddock with number, days of grazing, days of rest between each grazing, amount of supplemental feed if any is provided, recommended fertilizer by paddock, fertilizer application with date/amount, legumes added and pounds to each paddock, weights of livestock when placed on the scale, notes pertaining to pregnancy checks, and any other special notes in relation to herd health care, etc. Daily rate of gains are calculated. These records are reviewed annually to see where improvements and changes can be made to increase livestock production in the future.

    The controlled harvest of vegetation with grazing or browsing animals, managed with the intent to achieve a specified objective allows for accomplishing economic and natural resource concern goals. This system will provide for a maintained plant community, reduce soil erosion, safeguard the water resource, provide food and shelter, provide more even yield distribution and more even manure distribution, increase legume persistence, decrease fertilizer cost, increase forage quality, and increase carrying capacity. Achieving these objectives will improve herd health and rate of gain.

    In addition, the information collected can be used to educate producers, landowners, community leaders, and the general public about how Management-intensive Rotational Grazing Systems can impact many objectives in a positive manner. Factual information is a key to support of a management system.

    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.