There will be a market for Canadian organic cattle once the U.S. border opens to live animal exports, says the owner of North America’s largest integrated organic beef company.
“Our market will be feeder calves. I don’t see us buying any finished fat cattle from Canada in the near future,” said Scott Lively, chief executive officer of Dakota Beef Co., a U.S. firm that began only 18 months ago.
The start-up company wants the last 120 days of feeding to be completed under its supervision to ensure the end product meets certain quality tests.
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“I don’t think we would chance product consistency just to get low-cost fat cattle,” said Lively, who spoke to a group of Canadian producers attending last week’s inaugural Organic Connections conference.
In his short time in the organic beef business, Lively has concluded that product reliability is the key to any successful marketing program.
“It all has to be the same. You have to have consistency in your cuts, in your marbling, in your flavour.”
And that comes from having a fully integrated supply chain. In the case of Dakota Beef, it begins with exclusive agreements with 30 organic ranchers.
Other elements of the quality management program include a simple but effective $20,000 electronic tracking system that monitors an animal’s progress from the ranch through the company’s 1,800 sq. metre packing plant in Howard, S.D., and two large company-owned feeding facilities located nearby.
Having control over all aspects of production allows Dakota Beef to meet the demanding specifications of retailers like Raley’s and Williams-Sonoma. Some clients go as far as insisting upon incorporating consistency clauses in their contracts.
Being able to meet those demands sets Dakota Beef apart from the organic beef co-operatives cropping up in the U.S., which tend to be more focused on producing beef than selling it, said Lively.
“They stop at creating the brand but don’t do anything to market or sell it.”
Strong growth in the organic beef sector is attracting plenty of competition. According to one industry estimate, organic beef sales totalled $16 million in the U.S. in 2003. That represents less than one percent of the country’s $60 billion beef market, but organic sales volumes are expected to double by 2007.
Lively said $16 million is a stretch because Dakota Beef and its biggest competitor couldn’t muster $3 million in revenue between them. But he agrees with growth projections.
There is a growing demand for the product by consumers in California and New York who make purchases that fit with a lifestyle based on health and sustainability.
“Typically your Des Moines, Iowa, soccer mom is not buying organic product. It’s your west coast and east coast buyer,” he said.
Dakota Beef’s plant is processing 50 head of cattle a week. Lively expects to be doing more than three times that volume by next fall. If it was running at full capacity, the plant could cut and pack more than 500 head a week.
One unexpected source of demand in 2004 caught Lively by surprise.
“Whenever there is a mad cow report there is a flurry of phone calls and our website gets just pummelled with inquiries. Our phones ring off the hook for about three days and then it just dies out.”
But it’s not something on which to build a business plan.
“The last thing I want to do is market my beef as the safe beef and have people buy it out of fear. I think that’s a mistake.”
