Natural Beef Rounding Up a Sizable Following

Back in 1986, with red meat becoming a dirty word in a more health-conscious United States, a group of cattle ranchers gathered in Doc and Connie Hatfield’s barn to talk about finding a new market for their beef.

After hearing from a trainer at a health club, they chose what has come to be known as natural beef -- produced without growth hormones or antibiotics, and fed exclusively vegetable feeds -- and to market it directly to natural food stores, where they could get a premium price.

“We were going broke,” said Connie Hatfield, one of the founders of the co-op Country Natural Beef, widely sold as Oregon Country Beef. Then “we found out about the market for antibiotic- and hormone-free beef.”

Thanks to concerns about mad cow disease, the success of natural food stores and Americans’ growing desire to know where their food comes from, natural meat is one of the beef industry’s fastest-growing sectors. Over the last 10 years, Oregon Country Beef has gone from processing 3,400 head of cattle a year to 40,000. Since the mad cow scare in 2003, production has more than doubled, with a 73% increase over the last year.

Estimated at $500 million to $550 million a year, the market for natural and organic beef accounts for less than 1% of overall U.S. beef production, but is growing at about 20% annually, while overall beef production of 24.6 billion pounds this year is down from 25.1 billion in 1995, according to the National Cattlemen’s Beef Assn.

Under the U.S. Department of Agriculture definition, almost anyone can slap a “natural” label on minimally processed beef. But through the efforts of ranchers and natural beef marketers, natural beef has come to be defined as raised without antibiotics or growth hormones, and never fed the meat byproducts that can carry mad cow disease. Organic beef must meet strict regulations, including the requirement that cattle eat only organic feed.

One of the pioneers and industry leaders is Coleman Purely Natural in Golden, Colo. Chairman Mel Coleman Jr. said the company would be pressing the USDA to make the “natural” label for beef more definitive.

The growing demand has moved natural beef into mainstream stores. For example, Laura’s Lean Beef is sold in Albertsons and Fred Meyer stores in Oregon, and shoppers on Fresh Direct, a New York-based Internet grocer, can choose from USDA choice top sirloin steak for $4.99 a pound and Creekstone Farms antibiotic-free choice top sirloin for $5.99.

Still, Coleman said he could count on the fingers of both hands the outfits doing more than $1 million a year in sales.

Michael Boland, professor of agricultural economics at Kansas State University, figures the higher prices paid for natural beef -- around 20% -- are eaten up by the higher costs of raising them. A sick animal that has to be treated with antibiotics drops out of the program and no growth hormone means cattle gain weight more slowly.

Oregon Country Beef’s growth has also been tied to getting into dozens of Whole Foods Markets, a chain with 176 stores in the United States, Britain and Canada, and 65 more planned.

The main thing keeping natural beef from going mainstream is distribution, said Fedele Bauccio, chief executive of Bon Appetit Management Co. in Palo Alto, which serves only natural beef at cafes on college and corporate campuses in 26 states.

“These guys are up against the Monsantos of the world -- genetically modified products, big agriculture,” Bauccio said. “I think Whole Foods is growing faster than Wal-Mart. I don’t know if they will ever catch them. But there is a huge population that cares about what they put in their bodies.”