Ranchers find a natural niche

Shan O’Daniel and Jeff Wing had run out of dry ice again.

The owners of Pioneer Beef, a new natural beef firm in Chadron, Neb., had just received a call from a Johnson & Johnson Co. executive in Pennsylvania, who ordered 15 boxes of steaks for other company officials.

By Steve Miller, West River Editor

O’Daniel had to go buy more dry ice to pack with the steaks for shipment. Keeping enough dry ice on hand has become one of the minor obstacles for O’Daniel and Wing as they try to keep up with growing demand from across the nation for their all-natural beef.

All those steaks shipped to the East came from South Dakota cattle raised without hormones or antibiotics on ranches near Belle Fourche, Vale and Java.

Trucks hauled the animals to the Brunner feedlot northeast of Vale where they were "finish fed" for at least 100 days.

The cattle were slaughtered at the former Sturgis Meat Services (now G&G Enterprises) plant in Sturgis, which aged the meat, then packaged it and shipped it to Pioneer Beef at Chadron.

"That was a good order," Wing said as he and O’Daniel got the Johnson & Johnson shipment ready in their cavernous Chadron headquarters, which formerly housed a beer distributorship.

The Johnson & Johnson executive is only one of scores of people both in the Chadron area and across the nation who have discovered the fledgling natural beef company. Pioneer Beef has been operating for only a few months and already has customers in all but nine states, O’Daniel said. Many of their customers find out about them from their Internet Web site at http://www.pioneerbeef.com. For others, it’s word of mouth.

And Pioneer Beef is part of a small but growing niche market catering to people who want to buy beef from cattle that haven’t been given any antibiotics or growth hormones.

Although the natural-beef market is still very small, one consultant indicated that it has grown about 20 percent annually over the past couple of years, according to Cheri L. Rath, a senior ag official in the South Dakota Governor’s Office of Economic Development.

Rath and other ag officials say interest in natural beef is coming mostly from urban areas, partly because of the number of people who are health conscious and partly because of publicity about animal diseases.

O’Daniel said Pioneer Beef has attracted about 160 customers from other parts of the country since it began in September.

They include a woman from New York who grew up on Pine Ridge Indian Reservation. She ordered nine boxes for her family and friends for Christmas.

Another was a Merrill Lynch executive who ordered steaks for his clients.

O’Daniel and Wing also received a batch of orders from California residents for Christmas.

Satisfied customers

But they say they have a growing local customer base, too.

One satisfied local customer is Paul Meisman of Whitney, Neb. Meisman said he tried Pioneer Beef’s hormone-free, antibiotic-free beef primarily because he wanted more healthful meat than he can get elsewhere.

The taste was a bonus, Meisman said. "The flavor is wonderful." He said it reminds him of the meat butchered on the farm where he grew up.

"Their meat is the finest you’re going to find. It’s just delicious. The meat is so tender, you don’t need a steak knife."

Meisman said Pioneer Beef meat is also more filling. "It actually saves me money, because I don’t eat as much."

Jack King of Rushville, Neb., bought a box of beef at Pioneer Beef the same morning the call came in from the Johnson & Johnson executive. He said he, too, likes the flavor. "It’s definitely better than the grocery store," King said.

Jim Fletcher, owner of the One Day’s Walk Cafe in Chadron, says customers love the hamburgers he cooks using ground beef from Pioneer Beef. "The other day, some people came and had a hamburger here and went right straight down there and bought some beef from them."

Pioneer Beef’s steaks are pricey, with four medium ribeyes costing $49.99. But O’Daniel and Wing point out that the price is similar to that of Omaha Steaks.

And their hamburger is $2.49 a pound for 90 percent lean, and $2.19 a pound for 85 percent lean, comparable to area grocery store prices.

Pioneer Beef also sells family packs, containing a roast, stew meat, burger and steaks, for $49.99.

They say they can sell cheaper than the grocery stores on burger, roasts, ribs, round steaks and sirloin tip steaks.

Born in the USA

Tom Connelley of Belle Fourche is a longtime cattle buyer and feeder who started feeding and selling synthetic hormone-free beef about a year and a half ago. Since then, his business has tripled.

He has sold about 30 cattle in the past year.

Most of Connelley’s customers are in this region and about half of them are ranchers. He doesn’t have a Web site, yet.

Connelley keeps all of his cattle hormone free. "We can’t guarantee absolutely antibiotic free for a lifetime, but if an individual animal is treated with an antibiotic, it does not fit my program, and it goes into the general market," he said.

"When I’ve got cattle ready for slaughter, I go down and pick out the ones I’ve got in my program," he said. "I select only the best finished ones and the ones that have never had a health problem while on feed."

He says his big selling point is that he can guarantee all his beef is born and raised in the United States and did not come from Canada, which discovered a case of mad cow disease last May. However, a case of mad cow disease was found in Washington state last week.

Connelley says he buys hormone-free cattle from ranchers in western South Dakota and Montana, feeds most of them at Potter, Neb., and slaughters them at Sterling, Colo.

Connelley requires affidavits from his cattle suppliers. Although he knows and trusts all his rancher suppliers, he also checks the animals’ ears for telltale signs of hormone implants. He has found none, so far.

Pioneer Beef is getting all its cattle from the Brunner feedlot at Vale.

Pioneer Beef requires affidavits from area ranchers and from feedlot partners Brad and Joel Brunner confirming that the cattle are hormone free and drug free. The affidavits also certify that their animals have never been fed animal byproducts, which scientists say is the source of mad cow disease.

Pioneer Beef’s O’Daniel and Wing say they hope to institute a quick-check system using tissue swabs to make sure they get no beef raised with hormones or antibiotics.

O’Daniel’s father, longtime rancher Perle O’Daniel, selects the animals from the Brunner feedlot that will be slaughtered at G&G Enterprises at Sturgis.

U.S. Agriculture Department officials check the affidavits and the condition of the Chadron plant.

Connelley and Pioneer Beef both keep records so they can trace their meat back to the individual animal.

For example, each steak and each package of hamburger from Pioneer Beef contains a code identifying the animal it came from, the ranch it came from, the date it was slaughtered and the date it was packaged.

Rare beef

Brad Brunner says his feedlot is rare. Most other feedlots still implant cattle with hormones. The Brunners, in operation for about 25 years, stopped using growth implants a few years ago.

Brunner said feeders forfeit some weight gain and feed efficiency going hormone-free.

But he said "finish feeding" (feeding to slaughter weight) natural beef is only a small part of his operation. The Brunners also feed calves and replacement heifers over the winter. The Brunners feed about 3,000 head. Of those, they finish 300 to 1,000 a year that are hormone- and drug-free.

Brunner said they plan to eventually go to a high-tech form of individual animal identification, with a bar code attached to ear tags.

Brunner said they will treat with antibiotics any animal that gets sick. But they stick a purple ear tag on that animal and pull it from the all-natural program. It will be sold into the general commodity market.

"Animal welfare comes first," Brunner said.

Brunner says he doesn’t believe hormones hurt anything and, by themselves, don’t affect the quality of the meat. But he said growth hormones cause cattle to add a higher proportion of protein and less fat in their weight gain, making the meat less flavorful and juicy.

Hormone-free beef simply tastes better, Brunner said.

Connelley agrees but for different reasons. "Heavily implanted cattle, when you bite into that beef, it’s like chewing bubble gum," he said. "It’s like a football player on steroids. It muscles them up, but the muscles don’t break apart when you bite into the steak."

Connelley says he thought he was charging a premium price, but he is now pretty close to supermarket beef prices, which climbed this year. He sells his New York strips and ribeyes for $8.25 to $8.50 a pound.

Connelley and Brunner say more and more ranchers in the Upper Great Plains are avoiding hormones altogether and avoiding treating animals with antibiotics when they can.

Added costs

They agree that such a program takes more work and is more costly. Not using growth hormones means lower weight cattle, although Connelley says producers who raise hormone-free calves have started to see heavier calves again after a few years.

Aging carcasses longer – as long as 20 days – means more shrinkage.

And tracking individual animals takes time.

Raising strictly organic beef is extremely complicated and difficult, according to Dr. Sam Holland, head of the South Dakota Animal Industry Board. For example, the producer would have to certify that the cattle feed, the ground it was raised on, the ground the animals graze on, and the water they drink, all are free of pesticides and other chemicals.

Wing agreed organic is too difficult.

"We picked a middle ground because we wanted the best quality product that we could get but something that the consumer still wanted to eat," Wing said. "We’re finishing our cattle on some corn, but we’re just not pushing them as much as the feedlots do."

Dr. Trey Patterson, beef specialist at South Dakota State University’s West River Ag Center in Rapid City, says he cautions producers considering raising natural beef that they need to figure how much of an additional price they need to get to offset the additional costs.

Patterson and others also say there isn’t as much push to develop value-added beef now when the beef market is yielding historically high prices. That could change if the general market declines.

Jerry Roseth, owner of Philip Livestock Auction, says the market doesn’t always reward ranchers who produce hormone- and antibiotic-free cattle. "You can get a good price one sale. Then the next week, you’ll call those outfits that buy them, and they’ll say they’re all filled up," Roseth said. "They don’t have enough niche in the market to handle all the all-natural cattle that’s there."

There are also skeptics including Patterson who say eliminating hormones and antibiotics doesn’t affect the quality of the meat (see accompanying story).

But, Patterson said, "If consumers perceive that meat quality is increased, and they’re willing to pay a premium, then it makes sense for producers to capture that."

South Dakota Agriculture Secretary Larry Gabriel agrees. "It’s not so much the issue that the meat is better. It’s the perception," Gabriel said. "I often say the consumer is always right. Let’s sell the consumer what the consumer wants."

Gabriel said the U.S. could be exporting beef to the European Economic Community if it could guarantee it has no growth hormones. "We’ve got to have a way of certifying that."

In fact, natural beef could become a part of Gov. Mike Rounds’ Dakota Prime beef project, according to the GOED’s Rath.

Connelley sees the niche market expanding. "People are sick and tired of going to their local market and getting one good steak one day and getting five more that are sorry," he said. "The inconsistency that they get at the meat markets is going to make people want to get a consistent product every time, and this thing about being born and raised and processed in the USA is going to get more important all the time."

But others say hormone and antibiotic-free beef probably will remain a narrow niche market.

"It’s not practical to produce all our food supply under those conditions," Holland said.

Brunner says even though he believes in the higher quality of hormone-free beef, it probably won’t have much effect on the mass market, which is driven by the big packing plants and major retailers.

The big retailers, such as Wal-Mart, "will desert you for 10 cents," he said. "That’s why that relationship building is so important in a small niche market."

One of the difficulties is trying to predict demand and maintain an adequate – but not more than adequate – supply of hormone and drug-free cattle.

And one danger is growing too fast. Wing and O’Daniel say a man from California wanted to order steaks from 20 animals a week. But they said they didn’t have a market for all the hamburger and roasts they would have left. "You have to sell the grind," O’Daniel said. "If you don’t, your profit disappears."

That is one of the problems that the ill-fated Sturgis Meat Service value-added beef project faced. That project also committed to buying a lot of cattle before a market was established.

Pioneer Beef is selling on average 100 to 120 pounds of beef a day.

Both Pioneer Beef and Connelley say they are starting small and just trying to grow enough to keep up with their demand.

Officials on the nearby Pine Ridge Indian Reservation also have indicated interest in Pioneer Beef. "If we can tap some of that market, I think we will grow faster," O’Daniel said.

Pioneer Beef has also been contacted by a Colorado health food store.

"It seems to be growing," O’Daniel said. "I see us doing 20-40 head a month in the next two to three years."

O’Daniel and Wing so far are operating Pioneer Beef only on their own money and labor. They don’t have any employees. They answer the phones, staff the front counter and pack the meat for shipment themselves. O’Daniel is still leasing the old beer building.

But they will likely seek loans from a local bank and economic development group to expand their freezer space. O’Daniel also plans to buy the building.

And, if sales keep growing the way they have, they’re going to have to get a lot more dry ice.

Contact Steve Miller at 394-8417 or [email protected]

Beef cattle care spurs a debate

By Steve Miller, West River Editor

A growing number of consumers are worried about the ill effects of hormones and antibiotics in cattle. Those consumers, primarily in urban areas, are fueling growth in the so-called natural beef market (see accompanying story).

They fear that widespread antibiotic use in cattle is resulting in antibiotic-resistant bacteria that are transmitted to people who eat the beef.

But Dr. Trey Patterson and other cattle industry officials say that there is little or no evidence that the use of growth hormones, other growth drugs or antibiotics in cattle poses a health hazard for humans or hurts the quality of the beef.

"There is no scientific data indicating that those result in any residues in the meat that are anywhere close to levels that are harmful to human beings," Patterson said.

Patterson, beef specialist at South Dakota State University’s West River Ag Center in Rapid City, says there isn’t any research indicating that treating animals that get sick with antibiotics poses any problem for humans.

Patterson said the only possible valid concern involves administering low levels of antibiotics on a regular basis, even to healthy animals. Some feedlots feed low levels of antibiotics to all of their cattle to stave off health problems that arise when the animals are switched from a grass diet to a heavy grain diet.

"There are some data linking subtherapeutic antibiotic use in animals with antibiotic resistance, although that’s not been clearly targeted to the animal industry," he said. "I’m not convinced that human beings consuming meat from animals that have been fed antibiotics on a subtherapeutic level are necessarily going to have resistance to antibiotics. If that were the case, I guarantee you, it would be outlawed."

Jeff Wing, co-owner of Pioneer Beef in Chadron, Neb., is just as convinced that hormones and antibiotics are harmful.

He said cattle develop acidosis from the "hot" grain diet in feedlots and consequently are fed low-level antibiotics to combat the inevitable diseases that result, such as ulcers and liver abscesses.

He said University of Nebraska research indicated that cattle with a moderate acidosis condition and several small liver abscesses gain weight faster than healthy animals.

"Everybody knows it’s a problem, and it’s not healthy," Wing said. "It’s just that nobody can prove it’s dangerous."

His partner in Pioneer Beef, Shan O’Daniel, a former rancher, agrees.

"If you leave it to nature to grow things at a normal rate, I think you’re better off," O’Daniel said.

Wing and O’Daniel say they have removed any question of danger from their meat. They certify that it is raised without any growth hormones or antibiotics.

One of their customers, Paul Meisman of Whitney, Neb., also is convinced that growth hormones and antibiotics are hazardous to humans.

Meisman says he has read studies indicating the use of growth hormones in livestock likely causes earlier puberty in boys and girls who eat meat from those animals.

He says he and his family feel better since avoiding mass-market meat raised with hormones and antibiotics.

"I’m dealing with my life and my health," he said. "Until they prove it’s safe, I don’t want it."