Why Lots Of Grass-Fed Beef Sold In U.S. Comes From Down Under

Why Lots Of Grass-Fed Beef Sold In U.S. Comes From Down Under

by DAN CHARLES

October 03, 2013 2:49 PM

Beef from cattle that have grazed only on pasture is in high demand — much to the surprise of many meat retailers, who didn’t traditionally think of grass-fed beef as top-quality. George Siemon, a founder of Organic Valley, the big organic food supplier, says the push for grass-fed beef started with activists who wanted to challenge a beef industry dominated by factory-scale feedlots. In those feedlots, cattle are fed a corn-heavy diet designed to make the animals gain weight as quickly as possible.Today, Siemon says, grass-fed has grown beyond that. “It has a naturalness that seems to attract the mainstream market,” he says.

But if you look carefully at the labels on grass-fed beef, especially in mainstream supermarkets like Safeway and Stop & Shop, you’ll notice something peculiar. Quite a lot of this beef is coming to the U.S. from half a world away, in Australia.

Patricia Whisnant knows about this through personal experience. She and her husband own Rain Crow Ranch in southern Missouri, which has become one of the country’s largest grass-fed-beef producers. Several thousand cattle graze on more than 10,000 acres of grassland on the ranch itself and other farms nearby. “They roam around; they actually live a life that’s behaviorally and biologically appropriate for that ruminant animal,” says Whisnant.

The Whisnants have some big customers, including Whole Foods. A couple of years ago, an even bigger potential customer came to visit. It was a meat broker, a company that wanted to supply this increasingly popular product to mainstream supermarkets. The visit went well, but as Patricia Whisnant tells the story, the brokers also located another supplier that was bringing in grass-fed ground beef from Australia.

That Australian beef was 75 cents or a dollar cheaper per pound. And Whisnant lost the deal. “They said, ‘We’re sorry, you can’t match that price, so we’re going with them,’ ” Whisnant recalls.

Nobody collects information on exactly how much of the grass-fed beef that Americans eat comes from abroad. Theo Weening, the global meat coordinator for Whole Foods, says his company buys very little. “We probably import maybe 3 percent. The rest is regional, local; that’s what we really push for,” he says.

But you’ll see plenty of Australian-origin beef in other supermarkets. Organic Valley, meanwhile, gets all of its grass-fed beef from Australia. There’s also a lot of grass-fed beef coming in fromUruguay and Brazil.

So why does the U.S., the world’s biggest beef producer, have to go abroad to find enough of the grass-fed variety?

Curt Lacy, an agricultural economist at the University of Georgia, says some of the reasons are pretty simple. Weather, for instance. In most of the U.S., it freezes. In Australia, it doesn’t. So in Australia, as long as there’s water, there’s grass year-round.

And then there’s the issue of land. “If you’re going to finish animals on grass, it takes more land,” Lacy says. Grassland in Australia is relatively cheap and plentiful, and there’s not much else you can do with a lot of it, apart from grazing animals.

As a result, Australian grass-fed cattle operations are really big. In fact, they’re the mainstream. Seventy percent of Australia’s beef production comes from cattle that spent their lives grazing. And when beef operations are large-scale, everything becomes cheaper, from slaughtering to shipping.

On Monday, the U.S. company Cargill announced a new deal with Australia’s second-biggest beef producer — a company called Tey’s. Cargill will now sell more Australian beef in the U.S., both grass-fed and grain-fed.

Grass-fed-beef producer Whisnant says she still has one big advantage. “We have a story behind what we sell,” she says. It’s a story about her family, their ranch and her sons, who have just joined the business. Some consumers will pay more for that story.

And to reach the other consumers, American grass-fed operations are trying to get more efficient, too. Many are growing in size. The Whisnants have built their own slaughtering operation. They’re also selling meat via the Internet. Maybe someday, American grass-fed beef won’t seem quite so expensive, compared with the Australian competition.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: