Written collaboratively by Pete Bauman and Dr. Allen Williams (Grass Fed Insights, LLC.).
Generally speaking, grass fed beef producers are challenged with production expenses that are greater than those of conventionally raised beef. However, profit margins can be greater than those of conventionally raised beef if marketed wisely and creatively. Profits can be potentially maximized at a large or very large scale. To illustrate these points, the Bonterra Partners report provides a hypothetical comparison of several beef production models based on available data. It is beyond the scope of this article to provide a full analysis of their spreadsheet, but suffice it to say that the potential for improved profitability in the grass fed industry lies in the ability to create scale and accessibility in the supply chain.
Currently, there are easily achievable standards for grass fed labeling of imported beef and no mandatory on-farm inspection or labeling criteria for domestic grass fed beef, leaving a great deal of ‘noise’ in the consumer’s understanding of exactly what they are getting when purchasing retail grass fed beef. One way consumers avoid these concerns is through direct purchase from the grower, which is often built on personal relationships between the grower and the consumer. However, this level of relationship is challenging at larger scales which are necessary if the grass fed/grass finished industry is to continue to grow.
A popular way for growers and/or conglomerates, who represent several growers, to ensure consumer understanding of their product is through voluntary certification. Several entities offer a variety of certifications standards that not only help their growers and consumers differentiate between conventionally raised beef and their grass fed products, but also highlight product differences within the grass fed/grass finished industry. Therefore, while these voluntary certifications and labels are helpful to the educated and discerning grass fed consumer, they can also create some angst and confusion when comparing one grass fed label to another.
The Bonterra Partners report ranks several voluntary labels against USDA grassfed standards and against each other. Criteria compared within the report includes the following: 1) label verification; 2) 100% grass-based feed; 3) animal waste in feed; 4) pesticides in feed; 5) use of antibiotics; 6) use of growth hormones or other drugs; 7) use of fertilizers and pesticides in feed and pastures; 8) genetically modified organisms [GMOs] in feed or pastures; 8) manure management; and 9) pasture management methods. Beyond these organizations offering certifications for grass fed beef, producers may call for certain habitat, water quality, or other environmental requirements to earn their certification. Ultimately, these certifications are designed to provide a marketing niche for the producer and his/her labeled grass fed beef.
Beyond labeling to take advantage of market niches, grass fed beef production is still challenged with overall product distribution, especially for smaller domestic producers that rely on direct sales to customers. One of the greatest challenges in this market sector is access to local federally inspected processing plants that would allow for direct sale of packaged and labeled (certified or non-certified) grass fed beef products to consumers. While some growers have shouldered the risk of creating local co-ops to address this issue, most are still subject to this supply chain bottleneck. While several grass fed conglomerates exist, most grass fed growers are still independent, fairly dispersed, and market a limited number of animals annually. This poses challenges for creating the type of market pressure necessary to adequately address supply chain inefficiencies.
Disclaimer: Information provided in this grassfed beef article series is primarily derived from an April 2017 independent report titled "Back To Grass: The Market Potential for U.S. Grassfed Beef" authored by Renee Cheung of Bonterra Partners and Paul McMahon of SLM Partners. View the full report for more information.