Profile of a Kansas Beef Cooperative

by Lisa Bauer, North Central Region SARE Program

Kansas farmers Diana and Gary Endicott have big ideas for their small farm. In their application for a SARE Producer Grant, they envisioned following their organic beef from the farm to a rural slaughtering plant to a small processor to a major supermarket and finally to a satisfied customer: alternative marketing in the mainstream food system.

In today’s perilous conventional ag markets, realizing this kind of vision takes initiative, energy, and a lot of courage. The Endicotts have an abundance of all three. Farming in southeast Kansas on their 400-acre certified organic Rainbow Farms, Diana and Gary grow greenhouse vegetables and grain and hay and run a small cow/calf operation.

Fulfillment of their goals began in the mid-1990s. They wanted to sell tomatoes at a large, upscale, conventional grocery store - Hen House Markets - with more than 10 stores throughout Kansas City. Diana said she simply took her tomatoes to Hen House and passed out samples to produce managers.

With her trademark enthusiasm, Diana added, "We went into that store and not only tried to sell our product, but we tried to sell ourselves."

Hen House started buying tomatoes from the Endicotts. Not long after that, she approached Hen House meat managers about selling hormone- and antibiotic-free, corn-finished beef. Hen House, coincidentally looking for a branded beef product, began buying Endicott’s beef. When demand exceeded supply, the Endicotts searched for other producers in their area who could provide natural beef to Hen House.

Pooling with other Producers for Profit
In 1997, Diana and other area farmers decided to form a closed cooperative to ensure quality and consistency in their Hen House beef. Ten producers formed the "All Natural Beef Cooperative" to sell through the grocery chain under the "Nature’s Premium All Natural Beef" label. The co-op has added 10 more members since then.

To qualify for membership in the co-op, cattle must be raised without growth hormones or the use of sub-therapeutic antibiotics, on a small family farm where family income is primarily generated from the operation and the family members are actively involved in labor.

Most cattle raised in Diana’s co-op are Angus crossbred. Cooperative producers must raise the calves or know the source of them. Animals are free-ranged and finished for 90-120 days on a 50 percent corn ration. Grain used to feed out calves does not have to be organically grown; however, most producers in the co-op try to be as natural as possible in their production methods.

It took a lot of legwork, but Diana brought her co-op to successful fruition in a fairly short time period. The All Natural Beef Co-op is presently slaughtering 10 head of cattle per week for Hen House, and they plan to increase that number. Diana said they are realizing $35 to $55 more per head than if they sold their cattle on the open market.

An Unconventional Path to Market
In order to sell their beef at all Hen House Markets, Diana had to slaughter and process in federally inspected facilities. This meant meandering the maze of USDA regulations.

They found a meat slaughtering plant - Adrian Meats, in Adrian, Missouri, and a third generation meat processing plant - Sambol Meat Co., in Kansas City, Kansas, that dry-ages and distributes the co-op’s beef.

Diana worked with inspectors and bureaucrats at both the federal and state levels to understand and comply with the strict labeling and food safety laws. In fact, she wrote her own labels, with very little assistance.

Another topic that required research was pricing of their meats. Diana said they took into account five-area daily weight averages, USDA five-year average primal prices, and other branded beef program pricing grids to develop their own pricing spreadsheet.

Diana added that the middle meats are easiest to sell, while "end meats are the hump we needed to get over." With assistance from Kansas State University students, they now process chucks and roasts into homemade sausages at Ragan Meat and Sausage Co. in Kansas City to increase their profits. Sausages are sold as a value-added product.

Diana admits that independently taking animals from slaughter to store has inefficiencies - costing nearly double what it would cost to slaughter conventionally. But she sees this as incentive to reap higher profits as they increase efficiency.

Cattle in the Hen House
After slaughter and processing, Nature’s Premium All Natural Beef finds a prime spot of shelf space at Hen House Markets. At a Hen House butcher block, customers can choose from a variety of mouth-watering All Natural Beef cuts - strip steaks, rib eyes, filet mignons, ground chuck, back ribs, and many more.

"The retail meat mangers and meat employees behind the counter can make or break sales of meat products," Diana said. "This is especially true of new meat products."

She and her co-op partnered with Michael Boland, an agricultural economist at Kansas State University, to survey meat manager attitudes towards Nature’s Premium All Natural Beef.

Five participating meat managers were given a total of nearly $1,500-worth of meat products to prepare and judge for 15 consecutive weeks. Thirty-eight responses collected information on product attributes from price to flavor to attractiveness.

Information from the survey not only provided farmers with valuable production and marketing information, but helped cement positive, reciprocal relationships with meat managers. With support of the meat managers, the co-op now has lead-off counter space in eight Hen House stores throughout Kansas City.

Connecting with Consumers
As with any alternative marketing strategy, selling at supermarkets requires large doses of consumer contact and education. Diana has helped market the co-op’s beef products by collecting market research, doing in-store food demonstrations, and offering various buying incentives.

A Kansas State student developed a market survey for consumers through a master’s program. After Gary Endicott built and developed a computer program for an interactive kiosk, the Endicotts brought the computer to Hen House so consumers could take the survey and then receive a beef coupon for their efforts.

Diana hired restaurant chefs to prepare samples so Hen House shoppers could taste All Natural Beef, and then buy some with coupons. Taste testing also gave Diana an opportunity to bring in producers from the co-op to meet with customers.

She’s had customer contests, allowing her to gather names and addresses on entry cards for a database. The co-op has given away free All Natural Beef "grill packs," and Diana has also partnered with the Bourbon County, Kansas tourism division to give away free weekends at southeast Kansas bed-and-breakfasts with a purchase of her beef. Diana sells more beef and gets more addresses for her database, and Bourbon County b-and-b’s get some low-cost advertising.

Lessons from the Pros
Unlike producers who are protective of markets, Diana believes that there is room for a lot more direct marketing, and that saving family farms means educating other farmers about profitable alternatives. The Endicotts are willing to share lessons they’ve learned.

One of the primary lessons has been positive results from mutually beneficial relationships, such as allowing graduate students to do market research for a master’s project or working with Bourbon County tourism to support local businesses and simultaneously promote natural beef through contests and give-aways.

Diana suggests that producers build relationships with private and governmental agencies, organizations, and businesses. Diana said that her first producer grant from the USDA’s North Central SARE program gave the project a lot of credibility and created more interest from other funding organizations.

Diana warns producers that the road will most likely be rough, but producers should persist and be prepared to sacrifice for a while until they get a project going.

"Do the leg work yourself and hire as little done as possible," she said. "This will allow you to understand the necessary procedures from the farm through the market."

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