How Grassfed Beef Can Go Mainstream

by Peter Hanlon

Published: 4/25/17, Last updated: 5/24/19

Grassfed beef has been making its way into more grocery stores, more farmers’ markets and onto more restaurant menus than ever before. In fact, sales of labelled grassfed beef — that is, beef labelled as grassfed and kept segregated from conventional beef in the supply chain — doubled every year between 2012 and 2016. Yet, in the US, this more sustainably and ethically produced meat is still very much a niche product. According to a new report, however, the potential for growth in the grassfed beef industry is tremendous, as long as several limiting factors can be addressed.

There’s no denying the recent trends for the grassfed beef industry. As described in Back to Grass: The Market Potential for US Grassfed Beef, a report produced through the collaboration of Stone Barns Center for Food and Agriculture, Armonia, Bonterra Partners and SLM Partners, retail sales of labelled grassfed beef grew from $17 million in 2012 to $272 million in 2016, and there are now an estimated 3,900 producers finishing grassfed cattle in the US, up from just 100 in 1998.

Consumers have many reasons to choose grassfed beef, including improved animal welfare, less impact on air and water resources, sequestered carbon through better grassland management and, to many connoisseurs, better taste. But while the upward trend is clear, the amount of labelled grassfed beef sold today, at about one percent of the total US beef market, still pales in comparison to conventional beef.

What’s Standing in the Way of Grassfed Beef?

Why isn’t grassfed beef even more popular? One major factor is consumer confusion over just what grassfed means. The distinction between grassfed and conventional beef boils down to how the cattle spend their last several months. Grassfed cattle remain on pasture their entire lives eating grass and other forages. Conventionally raised cattle, on the other hand, spend the first stages of their life on pasture just like grassfed cattle, but for their final stage are brought to feedlots where they gain weight quickly by eating grains.

While that distinction between grassfed and conventional beef is fairly clear, how it is communicated to food shoppers is far murkier. As Jill Isenbarger, CEO of Stone Barns Center for Food and Agriculture, says, “…consumers don’t realize that much of this beef is coming from cattle that haven’t actually spent the whole of their lives on open pasture, eating real grass.”

For example, the USDA allows meat labels to claim that animals were partially grassfed, which in practice includes nearly all cattle, making such labels essentially meaningless. Those looking to support higher animal welfare standards by purchasing grassfed beef are likely unaware of “grass feedlots,” where cattle are fed grass in confinement. Others looking to support regional or at least US food production probably don’t know that imported grassfed beef — accounting for 75 to 80 percent of US grassfed beef sales — can be labelled “Product of the US” after it passes through a USDA-inspected plant.

Another factor hindering the growth of the grassfed market is cost. According to the report, consumers pay a 70 percent price premium for grassfed beef over conventional beef, but grassfed producers only see a 25 to 30 percent premium when selling to a branded program. The problem is the supply chain. The conventional beef industry benefits from massive economies of scale, with just four companies buying 80 percent of cattle in the US. Treating cattle as commodities instead of animals has its financial benefits, as these four companies can process cattle for as little as $100 to 120 per head, and distributors charge just a 7 to 10 percent markup for selling the meat. Compare that to the grassfed beef industry, where a large number of small-scale producers, most of which don’t have access to large processing plants, pay up to $800 per head for processing. On top of that, distributors charge a 25 percent, and sometimes higher, markup for getting the product to market.

Four Steps to Grow the Grassfed Beef Market

The Back to Grass report suggests four key changes to grow the US grassfed beef industry even further.

First, high-quality grassfed beef that matches consumers taste preferences should be available to consumers year-round. While many producers already meet this standard, training for other producers, technical advancements and coordinated production can make at-scale grassfed beef production possible throughout the year.

Second, grassfed label standards should be made stronger and less confusing. The report points out that several respected grassfed certification programs are already working to establish an agreed-upon set of principles, which will benefit not just consumers but also producers and the animals themselves.

Third, to get to scale the grassfed industry should rethink its inefficient supply chain. Instead of creating its own parallel supply chain, the report suggests that the industry take advantage of the one in place for conventional beef. This can be done by multiple producers aggregating their grassfed animals for processing at larger, and cheaper, facilities as well as for distribution through larger transportation, storage and sales companies. It’s important to note, however, that switching to large and highly efficient processing facilities can introduce contamination and worker safety concerns due to the high speed of production lines.

Fourth, to get costs down producers should both scale-up and pursue better cattle and grazing management. The report authors estimated that by following such a model the current 70 percent price premium for grassfed beef that consumers face could ideally be brought down to 20 to 30 percent. Producers could still make a profit, while soils and grasslands could be restored.

The grassfed beef industry has momentum, and consumer demand for grassfed beef continues to grow. But as the Back to Grass report makes clear, the industry faces some difficult challenges to make the jump to the mainstream. If players throughout the entire grassfed beef supply chain, from producers to chefs and consumers, successfully coordinate their efforts in an equitable manner, it would mark a significant shift towards a food system that achieves higher standards for animal welfare and environmental stewardship.

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