In challenging economic times, it can pay to diversify your business model. For Ross Macdonald of 98 Ranch, this was a strong case for marketing cattle into grass-finishing supply chains.
Building resiliency into your business, especially when traditional markets have been challenged, is what Macdonald sees as “probably the least discussed and least understood opportunity” in considering a grass-fed program.
“There’s a definite business case in terms of a set of cattle on an operation that fit that marketing stream better than other marketing streams,” says Macdonald, who ranches with his wife, Christine, at Lake Alma, Sask.
This doesn’t have to be a “one or the other” decision, he notes, with plenty of ranches having separate programs to take advantages of different markets. “There’s huge opportunity to create, I think, some really good business models with grass-finished in this country.”
98 Ranch encompasses around 3,500 acres, about 80 per cent of which is native grass, and their summer range is at Goodwater, Sask., east of their home base. Over time, their focus has shifted from running custom yearlings to building their own cow-calf herd. This summer, they plan to breed around 150 females. They keep all their calves over on grass to be sold as yearlings, and they’ve started grass-finishing some of their open heifers.
As Macdonald explored opportunities for adding value to his family’s business by backgrounding yearlings on grass, a trip to a million-acre ranch in Nevada showed him this was possible regardless of the size of the operation. This particular ranch had several revenue streams, one of which was grass-finishing.
“The dynamics that exist on a huge place are the same as on our small place,” he says. “They looked pretty heavily at grass-fed as a way of adding value to some of the cattle that they had and to add to resiliency into their business model.”
It’s with this focus that 98 Ranch signed on to supply a new program underway at the Canadian fast-food restaurant A&W. In early March, A&W announced it would start sourcing 100 per cent grass-fed beef raised in Canada. Previously, the restaurant sourced beef from Australia, New Zealand and the U.S. as well as Canadian producers for its “beef raised without artificial hormones or steroids” program.
This new initiative was prompted by customer demand and internal values, says Susan Senecal, A&W’s president and CEO.
“As we started thinking about what other initiatives we can support and really make a difference in, the idea of regenerative agriculture started to gain momentum, and some of the producers that we were already dealing with were leaders in the area of regenerative agriculture,” says Senecal. “We started learning more about it and the role of grass-fed beef in that cycle and got very excited about the opportunity to be part of that movement.”
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While large suppliers such as Beretta Farms, Meyer’s Canada and Spring Creek Ranch will be part of the grass-fed program, A&W is also working with smaller grass-finishing operations. Producers will receive a premium on cattle sold into this system. This program will also require cattle to be raised without artificial growth hormones and treated with antibiotics only when necessary.
Senecal explains that the company’s collaborations with beef producers have been an important part of establishing its specialty beef programs.
“Since launching ‘beef raised without hormones and steroids’ in 2013, we’ve had a much closer relationship with ranchers and producers and understanding what obstacles they’re facing,” she says. “We buy millions of pounds of Canadian beef today, and we saw this as a way to really increase that supply and do something that was a bit special in the marketplace.”
For the Macdonalds, who calve in May and June and wean later in winter, backgrounding yearlings on grass makes financial sense for their operation.
“We understood pretty well what yearlings could gain on our grass,” says Macdonald. “Given that we were keeping them on the cows anyway as part of the management program, it made it really simple to be able to add that value with the grass in the summer.”
Before the first A&W specialty program started, the Macdonalds wanted to add value to their business while increasing their herd at a rate with which they were comfortable. They came across advertisements for natural beef markets seeking feeder cattle that fit specific criteria, and they chose to work with Spring Creek Ranch of Vegreville, Alta., because its representatives understood the direction the Macdonalds wanted to take.
When A&W started its “beef raised without artificial hormones or steroids” program, Spring Creek Ranch was one of its suppliers of trim.
“We’d been selling to Spring Creek for a couple of years by then, and so we understood what the scope was and what the parameters were, and it was just a really easy fit for us,” says Macdonald.
A visit with a knowledgeable representative from A&W further solidified their decision to work within this program, and in the last few years, they’ve sold their yearlings to Beretta Farms.
The earlier program was restricted to cattle under 30 months; the 100 per cent grass-fed program is now open to animals under five years of age. Producers sign an affidavit stating they’ve adhered to A&W’s animal health and welfare protocol, and those in the grass-fed beef program must meet the criteria for the amount of concentrate that can be fed. Certified auditors conduct third-party verification at the finishing stage.
The value Macdonald found in this program goes beyond the financial.
“It was a wonderful education because we got some production data back from the feedlot at the time and we had a lot of good discussions about the protocols that were engaged and where we were headed with our management and genetic selection,” he explains.
This relationship also increased their understanding of the entire beef supply chain. “You could spend your whole life trying to glean that information through other sources.”
Concerns with marketing claims
A&W’s announcement raises concerns among some industry stakeholders, especially in the feedlot sector. The Alberta Cattle Feeders’ Association (ACFA) expressed its concerns with “both the reasoning for the choice and how A&W will promote it to consumers” in a March 10 press release, noting that “both grass-fed and grain-fed production methods are used in Canada to raise beef in a sustainable, environmentally responsible manner.”
Janice Tranberg, ACFA’s president and CEO, says the association sees the all-Canadian sourcing as a positive move; however, they would have preferred to see A&W take a different approach.
“We were concerned that they focused in on a type of production, and I think that we would have rather seen them support, for example, the great work that’s being done by the Canadian Roundtable for Sustainable Beef,” she says.
With the Canadian beef industry working together as a whole to be more sustainable, she continues, this marketing decision could have been an opportunity to collaborate on a wider scale and share the industry’s stories. It’s worth noting that A&W is a member of the Canadian Roundtable for Sustainable Beef.
Part of ACFA’s concern relates to marketing claims about grass-finished beef fueling misconceptions about the feeder sector.
“I don’t know that the general public truly does understand the Canadian production system,” says Tranberg, who pointed out that ACFA is not stating that traditional finishing practices are better than finishing cattle on grass. “We’re just saying that when you’re talking to the general public, who doesn’t understand the different practices and why we do what we do, then it just makes it sound like one is better than the other.”
This is not the first time that A&W has come under scrutiny for its marketing claims. Its previous marketing tactics raised the ire of some in the Canadian beef industry, with a few particularly vocal critics leading the conversation. As a producer engaged in this program, Macdonald is eager to see this discussion evolve beyond pointed criticism of the restaurant by a small group of individuals.
“There are many other producers that supply the millions of pounds of domestic Canadian beef that goes into that system,” he says. “So the claim that the industry is not in favour of (A&W) I think is completely unfounded and blown out of proportion.”
When the original program began to receive attention, Macdonald looked into some of the criticism. He came across research conducted a decade ago at Kansas State University on whether branded beef programs negatively affected commodity beef demand. In fact, the study found these programs created a small increase in sales, as branded products sold better to those who were interested but also didn’t deter those uninterested in the claims from buying beef in general.
These findings were reflected in a consumer panel at a producer meeting in Saskatchewan a few years ago, he recalls, where the panelists revealed they’re not interested in these claims and don’t consider them when purchasing beef.
“There’s very little to no research out there to substantiate any of the claims that it’s having a negative impact,” he says.
One of the oft-heard criticisms with A&W’s program is that its marketing claims are driven by fear. Macdonald disagrees, as he doesn’t see any consumer data to suggest this approach is harming the beef industry in general.
“Did anybody’s feeder calf price drop? Did a bunch of people say they’re not going to be buying burgers? No.
“In fact, there was some really positive things that happened and a pile of beef sold, and when you look at the language, a lot of it is the same language that gets used in the CETA agreement.”
Given the interest in this topic, it’s no surprise the family received a range of responses when they appeared in an A&W commercial in 2017. While some people confronted Macdonald about his involvement with A&W, he also heard from producers who sell into branded programs and were happy he spoke about his experience because they felt they couldn’t share their marketing decisions with others. As well, he received calls from several buyers for specialty markets who wanted to purchase beef with a similar story.
“I think the narrative is starting to change on that as a couple years have gone by. There were a couple of guys at Agribition after the commercial launched that first year, they wouldn’t make eye contact. These are guys that I’ve known for 15 years and sat on boards with.”
The next year, however, the same people were friendlier and more willing to discuss this program with him.
Optimism about meeting the demand
With A&W’s announcement came questions about whether sourcing enough Canadian-raised, grass-finished beef would be a challenge. Senecal says that this initiative will be implemented in stages, and she is confident this will be accomplished over time.
“We just also need to recognize that this is not the kind of change that we can make overnight, but it’s a change that we think is worth the investment,” she says.
Macdonald also doesn’t anticipate any issues with meeting this requirement. After visiting a grass-finishing operation in California, he realized that winter doesn’t have to be a hindrance because of the overall quality of Canadian cattle and their ability to finish on nutrient-dense grass. Although the California producers don’t have to deal with our winter conditions, they fed just as much hay in the middle of summer due to the hot, dry climate.
“Production-wise, we definitely have the capacity to do it, and there are people already doing it on a pretty large scale here,” he says. “It might take a couple of years by the time it gets fully rolled in to 100 per cent, but there’s no production reason that we can’t hit that.”
Senecal reports the program has already generated a positive response, particularly from producers with cattle that fit the initiative’s criteria.
“We were very encouraged early on when a lot of existing supply relationships showed interest and joined the program,” she says. “Those commitments had us buying millions more pounds of Canadian beef, so that in and of itself I think is a big positive.”
For Macdonald, the opportunity to promote this production system and offer new marketing channels for Canadian producers is encouraging.
“The connection to the importance of grassland systems and how they function, that’s really at the core of all of our activities on our place and within my personal passion,” he says. “The fact that there is a large demand now domestically for product directly off that grassland and the story that goes with it, that, I think, is hugely powerful.”
Bringing this story of grassland conservation and management together to take advantage of the growing demand for grass-fed beef, he continues, can be just the opportunity to add value to your business to help weather difficult times.
“I think that’s where our strength is going to be in the future, and that’s where it always has been in a lot of ways, but I think that’s going to get more and more important. So any direction that heads us down those paths I think is going to serve cattle producers and then the larger beef production industry in this country really well in the future.” c
Piper Whelan is a field editor for Canadian Cattlemen based out of Calgary, Alta.