Insight into a Local Business— Grass Run Farm

Insight into a Local Business— Grass Run Farm

by Kristine Jepsen of Grass Run Farm

A couple weeks ago, Kristin Evenrud — your Co-op meat buyer — asked me to put into words a few conversations we’ve had about rising costs in the meat industry affecting businesses of all sizes including us, your local meat company. The result, a story I hope speaks to the challenges faced by anyone currently running a local foods business. Food is so many things — fuel, a connection to the earth, and an environmental legacy. However, local foods are also a business subject to the same laws of economic success and failure that govern the rest of our lives. This fact can get fuzzy in the scope of the ideals we want a local food system to embrace.

On Tuesday, March 30, 2011, the top commodity slaughter cattle brought $1.29 per pound live weight at the Lanesboro Sales Barn, an all-time high. Ever. The market has been trending upward for almost a year, but this new spike surged through the cattle community like wildfire. Everyone from sales barn owners to the coffee counter regulars were talking. No one had ever seen this happen. I repeat: ever. It’s as though gas went to $6/gallon.

This comes in a year in which the U.S. cattle and calf herd totals 92.6 million head, the lowest count since 1958 (when my dad and grandpa were milking 20 some Holstein dairy cows by hand).

Why should we care? Well, these are small-print indicators of the harsh climate in the American meat industry. There are fewer animals in the national supply line, global demand is very strong and the cost from field to fork is rising whether you’re Cargill or Grass Run Farms.

What’s scary, though, is that in times like these, sustainable-ag- oriented farmers must often decide whether they can afford to stick to their belief in landscape change. Do they sell to alternative companies like us to preserve diversity and long-term competition in their marketplace, or do they just sell into the commodity livestock system for top dollar.

Shouldn’t better prices mean more for the farmer? Sometimes, but not necessarily. Most costs associated with raising beef in America are also rising, sometimes faster than the pay price.  Markets do naturally inflate and contract, run and correct, but often the big get bigger and the diverse don’t survive. Mono-markets are the “natural” result.

At Grass Run Farms, we’re familiar with the pinch of being a small company in a very large, very well-capitalized industry. More than 100,000 beef are harvested every day in the United States. Just a handful of vertically integrated corporations control the world’s beef market from corn seed to slaughter to distribution. It’s a system that brings us ground beef around $2/lb. retail most days of the year even in small-town northeast Iowa.

It’s a system large enough to influence and benefit daily from widespread federal subsides, international market pressures and buying trends well beyond the packing plant. In fact, everything about the mainstream beef you see in stores today was contracted and brokered in increments of quarter pennies often before the animals were even born.

It’s all about control and power in your marketplace, and that’s what forces like Cargill have achieved. (We’re drawing here on a very good read: Invisible Giant: Cargill and Its Transnational Strategies.) Funny thing is, that’s what local foods seek to achieve, too, in the interest of protecting food quality and keeping food dollars in our communities. We’re talking about capitalism’s birthright here. So what exactly is the difference?

Like it or not, the commodity meat industry delivers what we ask of it: price, consistency and quality in line with what the majority of us really want to pay. It’s a proven model of business viability: eliminate what costs you can by compromising whatever level of quality your customer will tolerate while continuing to purchase your product.

And as long as this system exists, we are — all of us — its customer, in some way.

So, what’s a co-op loving buyer to do?

Well, for starters, know how and why local foods are different. At this point, local foods are vulnerable from start to finish to real-time expenses of food production and often some degree of inefficiency imposed by geography, level of mechanization, and the coordination of real people who tend variably productive land and animals. We call it “firefighting” — mitigating challenge after logistical challenge that chews into Grass Run Farms’ viability.

Remember, “local” is only “sustainable” to the degree that it can truly feed communities, complete with farming, processing, storage and distribution that offer sincere alternatives to “the system” we seek to reinvent. Also note that economy of scale can shrink a food’s carbon footprint.

Put another way, local foods demand familiarity with consequence on the part of the buyer. When production costs fluctuate — in our case, when we seek to offer a premium to producers above an unprecedented high cattle market — we must raise prices to our customers. There are, by design, shorter strands in the web to absorb hard consequences. It’s up to the consumer to decide what “local” is worth in food value, as well as in social change.

At Grass Run Farms, each dollar collected from sales breaks down like this:

$0.73 to the producer/farmer

$0.15 to the processor(s)

$0.12 for sales, distribution, and running of the business by four local folks

This includes:

  1. Creating relationships with livestock producers who value pasture-based sustainable agriculture. Knowing their families. Working together to be nimble and profitable as an alternative meat industry when the mainstream system is soaking up market share.
  2. Mapping out the harvest of beef year-round; including which animals will be “finished,” when and where. Then arranging trucking to the processor, transport of packaged meat to cold storage, and timely inventory of the hundreds of cases that come back. Also, arranging the sale of blood, hides, offal, fat and bones from the plant to make use of the whole animal.
  3. All while we build a customer base for the product we move each week. We take orders, pack pallets of product, confirm cross-docks in other cities, and track product still being cured, sliced, ground or packaged in smaller portions. We connect with long-time customers to run quality control. We follow up on new leads. We hand out samples in stores. We clean our inboxes, office, and warehouse. We write articles like this.
  4. Then we run the numbers, pay bills, count the inventory, and start again. We’re not perfect, but we’re trying to invest wisely in economy of scale and accountability. This is what we do for a living. It’s our job.

The question remains, though: what will local foods look like when they dominate the average citizen’s food budget? Will lingering or even new inefficiencies be accepted as a natural limit, even at higher sticker prices?

Or will you call us “Cargill” if companies like Grass Run Farms drive the formation of and emerge as leaders in as streamlined a food industry as can be supported within the 100-mile purchasing radius of this Co-op? It’s worth asking, afterall, because economic success is in the local food movement’s best interest.