WINNIPEG — Jerry Wulf’s business philosophy is simple: if someone wants a particular product, he finds a way to supply it.
That explains why Wulf has increased the number of naturally raised cattle on his ranch over the last several years. Naturally raised cattle aren’t treated with growth hormones or antibiotics.
“It’s not niche (market) for us anymore. I would prefer to call it value added,” said Wulf, who owns and operates Wulf Limousin Farms and Wulf Cattle Company with his three brothers in Morris, Minnesota.
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“Right now, that’s what the market is telling us. It’s (more profitable) to raise more of those cattle.”
Wulf told the Manitoba Grazing School in Winnipeg in early December that Wulf Cattle Company markets more than 22,000 head of fed cattle annually.
The Wulfs used to sell most of their beef to Tyson Foods, which wound up in the “commodity” protein market. However, in recent years they have fed more cattle without growth hormones to capture the higher prices in that market.
Nonetheless, Wulf said feeding more animals in the natural way wasn’t a strategic decision to corner an emerging market. Instead, they were simply responding to market demand.
“We don’t make a decision to push more towards that market. It gets back to listening to our customers,” he said.
“If (packers are) telling us to produce more natural beef and they’re willing to pay for it, we’ll be there producing it.”
A substantial portion of Wulf’s non-hormone treated beef is sold to Europe. The European Union, the United States and Canada have been locked in a bitter trade war over beef for more than two decades after Europe banned imports of beef raised with growth hormones in 1989.
Lengthy trade negotiations eventually saw the Europeans expand their import quota for non-hormone treated cattle, which has allowed producers such as Wulf to sell beef into that market.
After feeding thousands of cattle in their feed yard, Wulf and his brothers determined it takes about one extra pound of feed to get the same pound of weight gain without hormones.
“I said a pound, but what I probably should have said is that you’re looking at 12 to 15 cents a lb. extra cost of gain in the feed yard by feeding them natural,” Wulf said.
Price premiums more than cover the additional feeding costs, he added.
Wulf disagreed with an assessment of the non-hormone treated cattle market made earlier by Canadian Cattlemen’s Association past-president Brad Wildeman.
“He didn’t seem too big on being able to capture that NHTC premium here in the centre of the continent,” Wulf said.
“That’s not true for us. We’re one of the larger feeders of (non-hormone) European Union-destined cattle in the country.”
John Masswohl, the CCA’s director of government and international relations, said there is an opportunity for Canadian producers to sell non-hormone beef to Europe, but two things have to happen to convert it into a substantial opportunity for Canadian beef producers: Canada has to modernize its protocols around non-hormone treated beef to make it more efficient for producers, and Canada and the EU need to sign a free trade deal.
He said Canadians compete with producers from the U.S., Australia, New Zealand and Uruguay to fill a 21,500 tonne European import quota at zero percent duty for non-hormone treated beef.
“That 21,500 tonnes is going to increase to 48,000 tonnes and change. That will probably happen sometimes next spring, if all goes well,” he said.
“So you can see there’s a growing amount of availability…. So that may encourage some additional producers to get into this.”
However, he said Canadian beef producers need unfettered access to the EU market to make it a sizable and legitimate business opportunity.
“We have set it as a very high priority in the negotiations going on between Canada and Europe, to get unlimited duty free access. So, no quota,” he said.
“Once (Canadian) producers start to be confident that the market is there, they will start to raise those cattle without using the growth hormones.”
Masswohl has faith in the potential of the European market, but he is skeptical about consumer demand for natural beef in North America. There may be a tiny portion of the population that wants beef produced without growth hormones or antibiotics, but he said it will never be a sizable chunk of the protein marketplace.
“I would say something like one percent of the population is going to pay extra for that. It kind of has a bit of a snob appeal,” he said.
“The vast, overwhelming majority of consumers are just trying to feed their families. They’re looking for the lowest cost protein at the grocery stores.”
