attended promotions and trade shows in which our passionate,
western-clothed ranchers were popular attractions and
generated great consumer enthusiasm. People loved to meet
and visit with the actual producers of their food. The
only problem was this was very time-consuming and expensive
for the ranchers."
with permission from the Kansas Rural Center, a non-profit
research, education and advocacy organization working
for a sustainable agriculture and sustainable food system.
Annie Wilson is a member of KRC's Tallgrass Prairie Producers
Heartland Network cluster and ranches with her family
in the Flint Hills of Kansas. See KRC's website at www.kansasruralcenter.org
or contact firstname.lastname@example.org.
members faced the prospect of entirely mortgaging their
family ranches to back what we knew was a worthy but extremely
risky enterprise, competing in an absolutely cut-throat
and volatile commercial arena. Finally, after five years
of intense struggle, we made the painful decision to terminate
our sales and stem our loss of equity."
The purpose of this article
is not to discourage other producers from niche marketing,
but simply to share some of our experiences in our five years
of marketing grass-fed beef. The variables in any business
effort are so endless that we cannot conclusively pronounce
what wont or will work for others. Furthermore, times
change, and undoubtedly some of the production and marketing
realities we faced are markedly different now. A new and different
formula may work today.
We only know what happened to us in our time, and will try
to communicate our perspective here. First we will give a
general overview of our business history. Next, we will outline
what we feel are some critical elements of success, some of
which we unfortunately lacked. Finally, we will provide some
additional underlying observations, commenting on some of
the contradictions and ironies we discovered in our strange
adventures in the food marketing wonderland, where all is
not as it seems.
Tallgrass Beef is a product produced by ten ranch families
in a marketing cooperative called Tallgrass Prairie Producers
Co-op, which actively operated from 1995 to 2000. Our original
mission was "to produce and market meat products from
livestock raised in a way to maximize conservation of natural
resources and minimize use of fossil fuels and farm chemicals."
We decided to raise cattle that spent their entire lives on
the pasture, never in the feedlot, avoiding the grain and
feedlot production model and producing a unique lean, grass-fed
beef product raised without hormones or sub-therapeutic antibiotics.
To achieve these goals, we organized ourselves into a formal
marketing cooperative in 1995 to develop our product, markets
and distribution strategies. We received some grant assistance;
however, all our actual operating capital was generated from
investment in coop stock by the ten ranch families. Most experts
who have looked at our business plan were amazed at how much
we accomplished with so little capital.
The organizational structure under which we actually operated
this business was member-based, with someone from each ranch
serving either individually or as husband-wife teams on our
Board of Directors which met monthly. All ranches also had
to serve on either our Marketing or Production Committees
which also met monthly, and our officers had an additional
monthly meeting as our Executive Committee.
We had one non-member employee who provided part-time marketing
and operations management services, and one member who served
as business manager, taking orders, doing billing, handling
internal and external communications, and another member who
worked part-time at our storage unit assembling large orders
for out-of-state shipment. All other jobs were performed by
co-op members on a volunteer basis, including developing marketing
strategies, attending marketing promotions, delivering orders,
Early on we did nutritional testing on our grass-fed beef,
discovering that it had an extraordinary nutritional profile,
even better than we had thought, with a very low fat content
and high nutrient content. We went through the onerous process
of obtaining USDA approval for Nutrition Facts labels for
all our products, as well as unique special label claims including
natural, free range, grass-fed (to our knowledge, the first
beef product in the nation to obtain this designation), raised
without hormones, etc. We maintained intricate documentation
on every animal processed, and recorded carcass data for all
beef processed. The advantages of CLA and Omega-3 fatty acids
were an area we only began to explore toward the end of our
production and we did not do formal testing or labeling for
One of our great market successes was the effectiveness with
which our members could personally market our beef when given
the opportunity. We attended promotions and trade shows in
which our passionate, western-clothed ranchers were popular
attractions and generated great consumer enthusiasm. People
loved to meet and visit with the actual producers of their
food. The only problem was this was very time-consuming and
expensive for the ranchers.
We performed taste testing and found the grass-fed beef flavor
to be very appealing to consumers. At food trade shows, our
samples were so delicious that customers flocked around our
booth and kept asking what special flavor additives we used,
but we explained that it was just the natural flavor of free
range, grass-fed beef.
To communicate our product features, at first we assembled
our own promotional material, but later hired professional
graphic designers who produced award-winning labels and promotional
materials for us. We were fortunate to receive attention from
local and national media, and won Best of Show awards in our
state food exhibition. It is our strong opinion that we had
one of the most healthy, delicious and environmentally sustainable
food products ever offered to the American consumer.
At our peak, we were marketing our beef in 23 states through
three large natural foods distributors. Also, from the very
beginning we sold some beef in our local area, to individuals
as "direct marketing" and also to a small hospital
and to some restaurants. However, our local markets were so
low in volume and high cost in service that they were never
profitable. The markets that worked the best economically
for us were the large distributor markets.
Barriers we encountered were numerous. Many we were able to
overcome through hard work and determination, such as development
of our products, official labels and promotional events. Others
had become insurmountable at the point at which we finally
perceived them clearly, and we found ourselves caught in a
Our volume was too low to obtain processing of our product
at an economically viable, competitive rate (our costs were
triple those of other high volume suppliers). Yet even managing
and distributing the volume of orders we had was exhausting
our members and employees. We lacked adequate supply to access
the markets we needed to reach the volume we needed to obtain
affordable processing and transportation, and we did not have
the capital to acquire professional management to guide our
company in these directions.
Despite painstaking monthly analysis of our gross margin and
exploring every cost-cutting measure we could think of, including
heroic subsidization of our business with free labor from
our members, we were consistently losing equity. We could
not see any improvement in sight within the economic structure
in which we were trapped. At that point, we utilized our now
considerable experience to produce a thorough business plan.
Using this plan, we looked everywhere we could for outside
help including private investors, financial institutions,
government agencies, foundations and other rancher alliances;
however, we could not find the help we needed. Ultimately,
we lacked the capitalization to escape our quandary.
Our members, who had already made significant financial investments
in the co-op, faced the prospect of entirely mortgaging their
family ranches to back what we knew was a worthy but extremely
risky enterprise, competing in an absolutely cut-throat and
volatile commercial arena. Finally, after five years of intense
struggle, we made the painful decision to terminate our sales
and stem our loss of equity, so that at least we would be
able to pay all of our co-ops bills and would not cause
financial injury to others.
In hindsight, we realize that we probably should have initially
leveraged our investments and borrowed heavily from a financial
institution, based on a sound business plan developed by professionals
that would have established a much larger, viable scale, professionally
managed operation. Instead we tried to avoid co-op debt and
do it all ourselves, learning as we went, which didnt
Nevertheless, in retrospect, we have also learned that even
larger specialty meat companies we had thought were very successful
are also struggling. The phenomena of concentration both within
the processing industry and retail arena is so intense that
the profit margins are very slim for everyone. There are fewer
and fewer processors available for mid-size companies. The
expense and burden of service and promotion are almost entirely
passed on to the supplier by retailers.
We wonder now if it would even be possible to survive today
as a mid-size company, with volume of around 30,000 head a
year, which was what we were considering as our expansion
level goal, an astronomical increase from our peak of 400
head a year.
Our co-op is made up of extremely committed and activist members.
We still feel the co-op model is an excellent one, except
that the Board of Directors shouldnt actually run the
business. A professional manager should do that. We certainly
discovered the synergy of group effort where the sum is greater
than the parts. Our members made many individual sacrifices
for the good of the co-op, and developed strong loyalties
toward each other. In fact, we attribute our remarkable level
of progress on such little capital and without professional
guidance to the sheer commitment of these ten families.
Many have described our odyssey as a remarkably successful
effort that took us much farther than most groups of this
type ever get. One expert characterized our activities as
a "successful test market" of a product that could
be someday be taken to the commercial level with adequate
capital and proper professional guidance.
In recent months, our co-op has also been exploring the possibility
of joining together to develop a cooperative tourism enterprise
in which we would host guests on our ranches and offer authentic
experiences in ranch daily life and prairie ecology. We are
also considering remaining as a ranching cluster that shares
production ideas and economic information in an effort to
assist and advise each other on economically and ecologically
successful ranching strategies.
We dont know where all this will lead us. What we do
know is that we have been fortunate to know each other and
have developed tremendous loyalty, respect and affection for
one another. No matter what happens, we have been through
an adventure together that we will never forget, and we will
always be friends.