Soaring sales of grass-fed beef forces industry to shift

RICE LAKE, WIS.

Lee Graese started raising bison in the mid-1990s, after the former professional powerlifter and his nutritionist wife, Mary, decided it was the best source of nutrient-rich, lean proteins to feed their young family.

From that start, they committed to feeding their animals grass rather than the grains that most farmers use to fatten their livestock before slaughter. Instead of housing them in closely confined pens and feedlots, the family allows their bison to graze in fields until the moment they are harvested for their meat.

"The slaughter and processing world is all about efficiency," said Lee Graese's son, Sean. "We have a little different philosophy. We work at a snail's pace when we are out there during the field harvest. It's better for the rancher and the consumer and the animal."

Americans consume billions of pounds of meat each year, but the industrial approach to producing it faces rising scrutiny from environmentalists, animal rights activists and consumers. Sales of beef produced the traditional way have been in decline, and consumers looking for healthier, more environmentally friendly options are increasingly turning to grass-fed meat.

Sales of fresh grass-fed beef soared from $17 million in 2012 to $272 million just four years later, according to Nielsen data published in an April report from Bonterra Partners, an investment consulting firm that specializes in sustainable agriculture.

This shift has helped the Graese's family-owned business, Northstar Bison, become one of the world's largest producers of 100 percent grass-fed bison. Its products are popular both with consumers turned off by the massive, industrial-scale feedlots and slaughterhouses that produce most of the beef found in grocery stores, and with companies that are under increasing pressure to appeal to those consumers.

General Mills helped the Graeses secure $4 million in financing to expand production of its meat. Today, Northstar sells about a quarter of its production to Epic Provisions, a fast-growing Texas company that uses only grass-fed beef in its protein bars and other meat snacks.

General Mills bought Epic in 2016, hoping to capitalize on surging consumer demand for healthy, minimally processed snack foods. Chief executive Jeff Harmening said that the Golden Valley company best known for its cereal, flour and yogurt can help smaller companies like Epic with money and marketing, while also learning valuable lessons from them about appealing to changing consumer preferences.

"The reason we bought them is because they are doing something really well," Harmening said.

Sources: SLM Partners, Bonterra PartnersMARK BOSWELL • Star Tribune Sources: SLM Partners, Bonterra PartnersMARK BOSWELL • Star Tribune

Northstar's operation is a far cry from the system that now provides most of the 25 billion pounds of beef Americans eat in a year. In conventional operations, cattle are largely confined to giant feedlots, fattened with a diet of mostly grain, and slaughtered assembly-line fashion, some in factories that can process more than 200 cattle an hour.

Northstar takes between two and three years to raise each of its bison, with killing methods that aim to minimize stress. On a typical harvest day, 20 are killed.

Lee Graese perched himself on his yellow Ford tractor in the middle of an open pasture one recent morning. The sun was still low in the sky as one of his beloved bison grazed undisturbed on the tall grasses nearby.

Slowly, Graese raised his rifle, aimed it at the beast's head and fired a single shot.

The animal was dead before its 1,000-pound body hit the ground. Graese wheeled the carcass to a nearby building, where a team of workers would spend more than 10 man hours butchering and cleaning it by hand.

There is an obvious limitation to Northstar's approach: It is more costly, and it will never produce as much as a conventional cattle farming operation.

While proponents of the grass-fed method believe it can become more efficient over time, skeptics argue that there is nowhere near enough land to raise as many animals as it would take to fill the world's demand for red meat.

"Everything in these big companies is designed for volume and efficiency of scale," said Daniela Ibarra-Howell, chief executive and co-founder of the Savory Institute, a Colorado nonprofit that promotes livestock grazing as a solution to climate change. "Everything in the regenerative movement is designed for complexity and resilience, so we have totally different metrics of success."

Few companies have as big a window as General Mills into consumers' increasing demand for food perceived as healthier and better for the environment.

Sales of the company's traditional products — packaged goods that line the center aisles of every grocery store in the United States — are shrinking as consumers choose healthier, less processed options. In recent years, that led the company to pledge to use only cage-free eggs in its products, and to acquire both Epic and Annie's natural foods.

Epic already had annual sales of $20 million by the time General Mills bought it, and sales doubled in the past year.

When founder Taylor Collins and his wife, Katie Forrest, decided to include meat protein in their Epic bars, bites and jerky, they deliberately opted for grass-fed. They believed the meat was healthier, and the animals treated more humanely.

Sales of grass-fed beef have soared in recent years as consumers became more concerned about how food is produced and how nutritious it is.

$272M$17M2012*2016**Fiscal years ending in June.Sources: stonebarnscenter.org; Bonterra Partners"The first time we saw a feedlot, Katie and I were completely disgusted by what we saw," Collins said.

Allowing livestock to graze on grasslands their entire lives is more costly and time consuming. But some ranchers and land advocates say this process moves beyond sustainability — which they say simply prevents further degradation — and can actually regenerate the land.

The livestock, when moved from one part of the grasslands to another at proper intervals, naturally fertilize the soil with their excrement. Their movement also breaks up the topsoil, allowing those nutrients to penetrate the soil.

A 2016 study led by ecologist Richard Teague of Texas A&M University suggests that if soil carbon is factored into the equation, grass-fed beef produced through intensive rotational grazing results in lower greenhouse gas emissions than grain-fed beef.

Sean Graese said his family's challenge is that there are about 400,000 bison in the entire world, and most of them finish their life eating grains rather than an all-grass diet.

Purists like Graese prefer to keep their bisons' diet 100 percent grass-based to mirror the animal's natural grazing patterns. It also helps maximize the nutritional benefits of the meat, offering a healthier omega-3 to omega-6 ratio, and higher rates of vitamins like A and E.

But the soaring demand for grass-fed bison has pushed many of the operations to finish their animals on feedlot diets, which hastens their slaughter.

Epic quickly discovered this labeling problem during its rapid expansion. There wasn't enough supply to keep up with demand for its most popular item, the Epic Bison Bacon bar. The company responded by creating two separate lines for its meats: those labeled 100 percent grass-fed and those labeled 100 percent natural, for animals raised on open pasture but later supplemented with grains.

The company hopes to convert more ranchers to 100 percent grass-fed and wean off the grain-finished bison in the next three or four years.

"We basically used 100 percent of the existing grass-fed bison in our first six months," Collins said. "So we had to actively start converting ranchers."

For now, consumers have a hard time knowing for certain how the meat they're eating was raised.

Unlike "organic," the label "grass-fed" doesn't come with uniform standards. Companies are allowed to use the grass-fed label on meat from animals that may have been fed grass for only a week or two of their life.

" 'Grass-fed' could mean that the animal reached over from inside a feedlot and ate a mouthful of grass at some point in its life," Graese said.

He worries that the term could become diluted.

"People assume that all bison are raised in Yellowstone [National Park] and field harvested and prayed over by American Indians," Graese said. "That is completely not the case for the majority of the bison meat you see in the grocery store."

Meanwhile, retailers and fast-food chains are looking for ways to respond to the consumer desire for meat raised in a more natural setting.

Cargill, the nation's third-largest beef producer, supplies grocery stores and fast-food operators like McDonald's. The Minnetonka-based firm recently launched a line of "pasture-crafted" beef, which is "designed for the socially conscious beef consumer who can't afford to go all the way to organic."

The beef comes from cows that are grass-fed and grain-finished, and can be traced back to a single ranching operation, according to Cargill.

Cargill says the product offers consumers the ability to track the meat back to a specific rancher.

The agribusiness giant is also testing a "birth to burger" initiative in Canada this year that uses technology to track beef cattle through its supply chain and create a database that its customers, like McDonald's, can then use to verify the meat's source.

Demand is also driving up the price of fresh beef labeled grass-fed, which already costs more to produce. Grass-fed beef cost 71 percent more than conventional beef in retail stores — even higher than organic beef's 63 percent price premium fetched in 2016, according to Nielsen data.

"This level of premium is not affordable for many people," Bonterra wrote in a recent market study. "Unless the price gap between grass-fed and conventional beef narrows, expanding grass-fed consumption on any significant scale will be a challenge."

While cost and land requirements are likely to limit how quickly grass-fed meat production can expand, some in the industry think it can grow significantly.

Bonterra's consultants say that under the right circumstances, grass-fed operations could replace a significant portion of the industrial, feedlot-based system. For this to happen, there would need to be a stronger national definition for "grass-fed," and the ranchers would need to adopt, and perhaps adapt, the efficient processing system used by the conventional beef industry.

Frank Mitloehner, an animal science professor at the University of California, Davis, said that a growing global population will make it impossible to get rid of an industrialized meat-production system.

But he thinks the expansion of grass-fed production can help to meet global demand while providing environmental benefits. Two-thirds of the world's agricultural land is marginal, he said, which means the only food production it can support is grazing for cows, sheep and other livestock.

He said he believes that intensive rotational grazing, like the system championed by the Savory Institute, is the best use of such land.

"When you put livestock on land, you turn dirt into soil," he said. "They give life to the land."

Kristen.Painter@startribune.com 612-673-4767Glen.Stubbe@startribune.com 612-210-8603