A Fact Sheet Sharing Practical Results from USDA Sustainable Agriculture Research and Education Projects in the North Central Region

No. 5, Cooperatively Producing and
Marketing All Natural Beef

Introduction
Pooling with other Producers for Profit
An Unconventional Path to Market
Cattle in the Hen House
Connecting with Consumers
Lessons Learned
Future Visions

Kansas ranchers Diana and Gary Endicott have big ideas for their small farm.

In their application for a SARE producer grant, they envisioned following their organic beef from the farm to a rural slaughtering plant to a small processor to a major supermarket and finally to a satisfied customer: alternative marketing in the mainstream food system.

In today’s perilous agricultural markets, realizing this kind of vision takes initiative, energy, and a lot of courage — the Endicotts have an abundance of all three.

Diana and Gary grow greenhouse vegetables, grain and hay and run a small cow/calf operation in southeast Kansas on their 400-acre certified organic Rainbow Farms.

In the mid-1990s, they wanted to sell tomatoes at an upscale, conventional grocery — Hen House Markets, with more than 10 stores throughout Kansas City. Diana said she simply took her tomatoes to Hen House and passed out samples to produce managers.

With her trademark enthusiasm, Diana added, "We went into that store and not only tried to sell our product, but we tried to sell ourselves."

Hen House began buying tomatoes from the Endicotts. They then offered meat managers hormone- and antibiotic-free, corn-finished beef. Hen House, coincidentally looking for a branded beef product, began buying the beef. When demand exceeded supply, the Endicotts searched for other producers who could provide "natural beef."

Diana added, "I started as someone who knew little about marketing," which is an incredible statement, considering that in five years she has led marketing efforts for a farmer cooperative that has found a profitable niche in a major supermarket chain.

Pooling with other Producers for Profit

Cooperatively producing and marketing allows producers to participate in the "value-added" sector of the marketplace, while sharing risk, knowledge and profits.

"The meat market is very competitive," Diana said. "We’re all competing for shelf space in the supermarket, and we don’t have the volume to compete with the large producers. We’re trying to develop the local markets, and the best way to do this is to have many producers band together."

In 1997, Diana and area farmers formed a closed cooperative to ensure quality and consistency in their beef. Ten producers joined the "All Natural Beef Cooperative" to sell through the grocery chain under the "Nature’s Premium All Natural Beef" label. The co-op added 10 members since then.

To qualify for membership, ranchers must raise cattle without growth hormones or sub-therapeutic antibiotics, on a "small family farm" — where family income is primarily generated from the operation and the family members are actively involved in labor.

Most co-op ranchers raise Angus crossbred cattle. Animals are free-ranged and finished for 90-120 days on a 50 percent corn ration. Grain does not have to be organically grown; however, most producers in the co-op try to be as natural as possible in their production methods.

Primarily third and fourth generation farmers, All Natural Beef Co-op members come from central and southeast Kansas and west central Missouri. They operate diversified farms using certified organic, transitional or sustainable practices.

To organize a formal cooperative, the Endicotts did research, networked with knowledgeable people and attended meetings to learn about technicalities such as articles and bylaws, business plans, feasibility studies, tax registration and trademarks.

With a lot of legwork, Diana brought her co-op to fruition in a short time.

Diana manages most marketing duties of the co-op — with no paid staff — in a market where competitors include numerous branded beef programs. She and Gary have learned from other co-op members about organic beef production. Eugene Edelman, co-op president, does the slotting for the group.

"A cooperative is like a family. You put together a diverse group of people and you have to respect each other’s knowledge and opinions," Diana said. "Each of us tries to do what we think we can do best. Getting people together who have different skills and attributes really helps the business."

The All Natural Beef Co-op is presently slaughtering 10 head of cattle per week for Hen House, with plans to increase production. Diana said they are realizing $40 to $60 per head more than if they sold their cattle on the open market.

An Unconventional Path to Market

As if the challenge of organizing a producer co-op wasn’t enough, the co-op had to find a slaughtering plant and processor to accommodate the ranchers’ desire to follow each cut from field to grocery.

In order to sell beef at all Hen House Markets, located in both Kansas and Missouri, Diana had to slaughter and process in federally inspected facilities. This meant meandering the maze of USDA regulations.

They found a meat slaughtering plant — Adrian Meats, in Adrian, Mo., and a third generation meat processing plant — Sambol Meat Co., in Kansas City, Kan., that dry-ages and distributes the co-op’s beef.

Diana worked with inspectors and bureaucrats at federal and state levels to comply with the strict labeling and food safety laws. In fact, she wrote her own labels, with little assistance.

"Anyone can do this," she said. "I formatted information by looking at other labels. I would send it in to be approved, the USDA (Food Safety Inspection Service) would send it back with corrections, and I would finish it."

Looking at labels and ear tags on the cattle, co-op members can follow animals through feeding, transporting, processing and retail sale. Farmers match final cuts to specific animals with detailed information on a producer data sheet.

"From the data sheet, we can find out which beef performed well and which didn’t," Diana said. A spreadsheet for each carcass indicates hot weight, weight of individual cuts, and price per cut.

At first, producers were frustrated with the detailed paperwork and confusion of spreadsheets; however, because this information allows farmers to learn more about their beef quality, Diana said, "They learned to read the spreadsheets pretty quickly."

Diana researched pricing by taking into account five-area daily weight averages, USDA five-year average primal prices, and other branded beef program pricing grids to develop their own pricing spreadsheet.

Diana added that the middle meats are easiest to sell, while "end meats are the hump we needed to get over."

With assistance from Kansas State University students, they now process chucks and roasts into homemade ethnic sausages at Ragan Meat and Sausage Co. in Kansas City, Kan. to sell sausages as a value-added product.

Diana said that independently taking animals from slaughter to store has inefficiencies — costing nearly double what it would cost to slaughter conventionally. But she sees this as incentive to reap even higher profits as they increase efficiency.

Cattle in the Hen House

After slaughter and processing, Nature’s Premium All Natural Beef finds a prime spot of shelf space at Hen House Markets. At a butcher block, customers choose from a variety of mouth-watering All Natural Beef cuts, such as strip steaks, rib eyes, filet mignon, ground chuck, and back ribs.

While Hen House is unique in its commitment to local and regional food producers, and meat managers happened to be looking for a branded beef product, Diana still made many visits to Hen House and offered free samples.

"The retail meat mangers and meat employees behind the counter can make or break sales of meat products," Diana said. "This is especially true of new meat products."

She partnered with Michael Boland, an agricultural economist at Kansas State University, to survey meat manager attitudes towards Nature’s Premium All Natural Beef.

The co-op gave five participating meat managers a total of nearly $1,500-worth of meat products to prepare and judge for 15 consecutive weeks. Thirty-eight responses collected information on product attributes, from price to flavor to attractiveness.

Information from the survey not only provided producers with valuable production and marketing information, but it also helped cement positive, reciprocal relationships with meat managers.

With support of the meat managers, the co-op now has lead-off counter space in eight Hen House stores throughout Kansas City.

Connecting with Consumers

As with any alternative marketing strategy, selling at supermarkets requires constant consumer contact and education.

Diana markets the co-op’s beef products by collecting market research, doing in-store food demonstrations and offering buying incentives.

"Market research allows you to identify your consumers and the products that work and don’t work," Diana said. "It helps you find out who wants your product and how much they’re willing to pay."

A Kansas State student wrote a market survey for consumers for a master’s project. After Gary Endicott developed a computer program for an interactive "kiosk" to deliver the survey, the Endicotts brought the computer to Hen House so consumers could take the survey and receive a beef coupon for their efforts. Both the co-op and Hen House benefit from survey results.

Consumers indicated they wanted to know how their meat was raised, and said they read labels to ascertain the presence of artificial additives and preservatives. Perhaps most important, those surveyed said "taste and tenderness" outweighed price as the most important purchasing factor.

"Demo, demo, demo, market, market, market," said Diana when talking about in-store beef samples for customers. She hires restaurant chefs to prepare samples so Hen House shoppers can taste All Natural Beef and then buy it with coupons. Diana invites producers from the co-op to meet with taste-testing customers, fostering a valuable urban/rural bond, from which consumers learn about family farms and producers learn what urban consumers want in their food products.

Food demonstrations also allow Diana to introduce and gather survey information for new products, such as their Nature’s Premium All Natural Beef Franks.

With customer contests, Diana gathers names and addresses on entry cards to build a database. The co-op gives free All Natural Beef "grill packs," and Diana partnered with the Bourbon County, Kan., tourism division to give away free weekends at southeast Kansas bed-and-breakfasts with a purchase of her beef. Diana sells beef and gets customer addresses, and Bourbon County b-and-b’s get low-cost advertising.

Diana plans to add a shopper card scanner to her kiosk, allowing her to use the store’s mailing list to add to the database of customers whom she can further entice with newsletters and mailings.

Lessons Learned

Spending endless hours reading, networking and attending meetings and conferences, not to mention working the farm and ranch, has been exhausting for the Endicotts.

"But I just go, go, go, then take a breath and go again," said Diana, on her way home from a speaking engagement at the University of Nebraska.

Unlike producers protective of their markets, Diana believes there is room for more direct marketing, and that saving family farms means educating other farmers about profitable alternatives.

Diana emphasizes the value of mutually beneficial relationships, such as those she’s cultivated with graduate students and Bourbon County tourism.

She suggests producers build relationships with private and governmental agencies, organizations, institutions and businesses. Diana said that her first producer grant from NCR-SARE gave the project credibility and created more interest from other funding organizations.

"It is working with people like Tom Moore (meat director of Hen House) and Pat and Mary Oates (of Adrian Meats) that have made this project so very rewarding to me," Diana added, speaking positively about relationships with processors and retailers.

The connection between the survival of farm communities and rural businesses is obvious to Diana. Working with small, local processors and meat lockers boosts rural economies.

And working with grocery stores helps foster a necessary urban/rural connection that benefits local businesses, consumers and producers.

Diana tells producers exploring similar projects that the road will be rough, but persistence and some sacrifice have paid off for her.

"Do the leg work process yourself and hire as little done as possible," she said. "This will allow you to understand the necessary procedures from the farm through the market."

Future Visions

The All Natural Beef Cooperative, with Diana’s marketing leadership, has high hopes for the future. They want to vertically integrate the operation by partnering with others to buy a processing facility.

To increase producers’ accountability to label claims, co-op members will also be working with ATTRA — the Appropriate Technology Transfer for Rural Areas — on a "beef farm sustainability checklist."

Educational efforts will continue to be a hallmark of the All Natural Beef Co-op. Producers will invite meat managers and other non-farmers on tours of cattle operations and processing facilities, and Diana will continue to use the kiosk to gather consumer information.

Diana also wants to publish a newsletter, which will eventually be on the Internet when the All Natural Beef Co-op develops a website.

Their most important vision remains keeping the small farm viable. As the co-op sets forth in beef promotional materials: "They believe and practice sustainable agriculture not only to achieve the health and environmental benefits, but also to economically produce beef a new way to hold on to an old way of life — the family farm."

Editor’s Note: Diana Endicott will be a keynote speaker at NCR-SARE’s marketing conference – Alternative Agricultural Marketing: Developing Skills for the New Millennium – Nov. 19-20, 1999, in Lincoln, Neb.

Program Notes

News and Announcements from the USDA SARE Program in the North Central Region, Spring/Summer 1999

Make your Mark at the Marketing Conference
Website Face-lift Presents User-Friendly Features
Call for Proposals: Research and Education/Professional Development
SARE Project Results Now Available Online
Put Your Farm to the Test with New On-Farm Research Bulletin

Many of you manage innovative marketing projects and enterprises. You’re selling
products directly to consumers. You’re doing market research. You’re supporting farmers and ranchers marketing directly. Or you’re creating products or resources for alternative marketers. Why not apply to share your marketing savvy – and make valuable contacts – through a poster or display at the NCR-SARE marketing conference?

The NCR-SARE program invites farmers and ranchers, researchers, educators and others
interested in sustainable agriculture to www.sare.org/ncrsare for information on research results, competitive grants and other resources to support profitable, environmentally sound farming and ranching systems.

Innovative researchers, educators and collaborative teams can apply for competitive Research and
Education grants until Sept. 10, 1999. Approximately $1.3 million is available in 2000 to fund creative projects addressing sustainable agricultural issues. Priority areas are listed in the Call for Prepropsoals at www.sare.org/ncrsare. Or contact the SARE office at 402-472-7081 or ncrsare@unl.edu for print copies.

The NCR Professional Development Program (PDP) will call for competitive grant proposals in mid-September, with proposals due Dec. 15, 1999. Approximately $500,000 is available to fund one- or two-year projects that focus on professional development programs in sustainable agriculture systems and concepts for Cooperative Extension Service, Natural Resources Conservation Service and other agricultural educators. The average funding level for 1999 SARE PDP competitive grants was $52,224.

Successful proposals will include anticipated outcomes and outcome-based evaluation plans. Anticipated outcomes must include participants knowledgeable in sustainable agriculture and capable of conducting adult education programs at the local, state and/or regional level. Projects that involve farmers, ranchers and other end users as meaningful participants are strongly encouraged, as are projects that foster partnerships between public and private organizations, sustainable agriculture associations and 1862, 1890 and 1994 land grant institutions. Proposal authors are expected to contact their state sustainable agriculture coordinators to obtain information about current professional development efforts.

Find the Call for Proposals at www.sare.org/ncrsare or contact Paula Ford at 785-532-5328 or pford@oznet.ksu.edu for more information.

Searching for SARE project information is now as easy as a click of the mouse.

Researchers, educators, farmers and ranchers and anyone interested in reviewing past and present SARE grants – from the NCR and nationwide – can access a database of 1,400 SARE projects. Go to the SARE homepage at www.sare.org then click "Funded Projects" to visit a gateway page explaining grant programs, how to search and basic information about annual reporting processes, which feed the database. Or go directly to the search engine by clicking on "national projects database" from the homepage.

In these trying agricultural times, many farmers and ranchers are opting to conduct on-farm
research to help them boost profits while protecting natural resources. The national SARE program has published a 12-page bulletin to assist producers with their farm-based inquiries.

Designing and carrying out simple research tests in a more organized fashion can provide reliable, valuable answers to production and marketing questions. The bulletin covers the basics of how to conduct research at the farm level, presenting practical tips for both crop and livestock producers, as well as a comprehensive list of more in-depth resources.

Contact Lisa Bauer at 402-472-0265 or lbauer2@unl.edu to get your copy.

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