Ranchers Realizing the Beef Needs a Brand
After the steaks and beans were gone and the ice cream bars were being passed around at the annual barbecue at Intermountain Livestock’s stockyards, the talk turned to a new idea moving through the West.
The Oregon Cattlemen’s Assn. has been putting together a plan to market a branded product--as in brand name, not branding iron--called Oregon Trail Beef.
Starting around the first of the new year, OCA president John Hays hopes shoppers used to choosing Calvin Klein jeans over generic will do the same when they lean over the beef case at their local supermarket. The idea of a cooperative is to get bigger paydays for the ranchers by cutting out some of the middlemen.
“The buyer gets a commission, the feeder gets a commission, the trucker gets a commission, the processor gets a commission, and the retailer makes a good profit,” said Hays. “It’s gotten to the point the cow-calf operator was out of the equation. We figured there’s got to be a better way to do this.
While brand names started showing up on precut chicken decades ago, most beef still goes to market as a true commodity--one piece of meat is treated like another. But that’s changing, said Mark Thomas, vice president for consumer marketing of the National Cattlemen’s Beef Assn.
Thomas estimates that 4% to 8% of the beef sold in the U.S. now is under a brand name--Certified Angus Beef, Laura’s Lean and Oregon Country Beef, to name a few--and that figure should double next year.
“The category is still very, very young, but it clearly is the direction the industry is going,” he said.
With its long preparation time and higher fat content, beef lost its place at the dinner table to poultry when American families got smaller, women went to work and people became more health-conscious, said Thomas. But producers now offer lower-fat cuts, and companies like Harris Ranch Beef and IBP Inc. sell precooked entrees that working families can warm up in the microwave.
“There are only two ways to make money in agriculture,” said Mark Coomer, manager of the Farm Credit branch in Baker City, Ore. “That is to be the cheapest operator, or to have a niche market.”
A rancher typically gets $600 to $700 per steer, but Charles Lambert, NCBA’s chief economist, says those selling to brand-name operations can expect to see $15 to $60 more per head. Hays says he expects ranchers selling to Oregon Trail Beef to make another $100 a head on top of that by being part of a co-op.
The trade-off for more money is that participating ranchers will have to give up some of the independence that has long been their hallmark. Somebody else will be telling them what breeds to raise, when to calve, what to feed and how to treat their cattle.
“To bring them together takes an act of God,” said Greg Fischer, who works as a cattle buyer to help his family keep their ranch outside Elgin going. “But in order for us to survive, we’re going to have to start doing that.”
Silas Gilliam, a district sales manager for Cenex and Harvest States Feed Co., said the Oregon Trail Beef concept is a good one, though he questions whether or not it will succeed because of ranchers’ go-it-alone nature.
“I think the biggest problem you’re going to have is getting enough producers to commit the number of head,” he said. “If you go in and say, ‘I want an Angus-Hereford cow bred to a Charolais bull and that’s all I’ll take,’ you know how many ranchers you’re going to make mad?”
Oregon Trail Beef is demanding ranchers raise a Hereford-Angus cross, and that they handle their cattle gently so the meat isn’t damaged. Hays says the co-op, whose logo is a cowboy cooking a steak with a wagon train in the background, will have control of the beef from the time it goes into the packing house until it reaches the retailer. It has a budget for marketing and promotions as it pursues market share.
Brand-named beef is not a new idea. When Doc and Connie Hatfield and their neighbors started Oregon Country Beef back in 1986, theirs was among some 100 brand names launched in a bid to stay afloat at a time of historically low prices. But as generic beef prices rose, all but a few of them went broke, recalled Doc Hatfield.
Oregon Country Beef survived by finding a niche, said Hatfield. It promoted its beef as range-raised, with “graze-well” practices that are environmentally friendly, and fattened up without growth hormones, antibiotics or animal proteins. Hays says Oregon Trail Beef will sell its meat as naturally fed.
The success of small niche marketers has not gone unnoticed by the big dogs.
Last spring, IBP Inc., based in Dakota Dunes, S.D., launched a new brand-name line called Thomas E. Wilson, after a turn-of-the-century meat baron. One of IBP’s 60 plants is devoted to that production, though the company plans to open another next spring.
“We think we can be the dominant name in the beef and pork case,” said Eugene Leman, CEO of IBP’s meat division.
Back at the Island City barbecue, cattle buyer Fischer said the ranching population is aging, young people can’t raise the money to buy land and cattle to get started, and inheritance taxes make it hard to keep ranches in the family. He hopes Oregon Trail Beef will help turn that around.
“We’re stubborn,” he said. “Nobody wants to give up.”
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On the Net:
National Cattleman’s Beef Assn.: https://www.beef.org.
Oregon Cattlemen’s Assn.: https://www.or.beef.org/oca.htm
