Globalization – Friend or Foe?

By Bill Roberts

Like most of you, I’ve read and thought a little about globalization. And like most of you, I have had some vague feelings about what “could be” or “should be”. But recently globalization raised its ugly head right here at 12 Stones Farm and the reality of “what is” slammed me right between the eyes.

The experience began several months ago when I contacted a casual friend who is the Procurement Director for a very successful branded beef program. The company had not yet entered the grass fed market. This person is one of the most knowledgeable cattleman in the conventional production system that I know. He understands the economics of cattle from the hoof to the table. He can rattle off break-even costs based on grade and yield faster than a stock exchange ticker tape.

I had a purpose and a plan for my call. I was sure he was exactly the right contact to facilitate and implement the most amazing cooperative grass fed effort to date. In my naiveté I felt surely the salvation of rural economies all over the USA was just around the corner.

Try to imagine then the joy and anticipation which filled my soul when he declared that he was even then planning a trip to California to talk to grass fed producers. His mission was to assess the feasibility of entering the market using their processing and distribution network. I related some pertinent information to peak his interest and planned a callback after his scheduled trip.

The weeks quickly passed and the time arrived to reconnect with my friend and sure-to-be companion in revolutionizing the beef industry. During the call, he recounted his trip to California and summarized his observations with this statement: “With the price those grass fed producers expect for their beef, I do not see a profit margin that is adequate for us.”

He was obviously comparing the grass fed margin available to the margin on their current programs. And his enthusiasm for the project had obviously diminished even lower than the projected profits. Nevertheless, undaunted by the set-back, I bravely managed to say I would e-mail some information and arrange a time to revisit the issue.

When he never responded to my e-mails, I chalked up the effort as another learning experience in the road to success. Obviously this was not going to be the contact that would fulfill my dreams for both grass fed beef and rural America.

I had about overcome my disappointment when, just last weekend, my wife and I visited our favorite health food store. My friend’s company is a primary supplier of their “natural beef”. As we approached the meat display, we were greeted with a new sign:

“Grass fed Beef from Australia –
$ 4.55 / lb.”

Now, I’ve never investigated trans-Pacific shipping charges, but I sure know how much it costs to truck a side of beef from Memphis to Nashville. How in the heck can my friend’s company get beef from Australia to a U.S. port and then on to Nashville and meet the margins he told me that American producers could not? Are Australian costs really that low or do the Aussies pay you to buy their beef?

We purchased a roast and some ground beef for comparison. After a trip to the crock pot our conclusion was that cooking time was longer to achieve acceptable tenderness. The taste was alright but not up to our standards. Still I have to confess that an average family, particularly one on a limited budget, would have concluded this was an absolutely awesome bargain.

Until I learn more about the Australians’ procedures and product (and there is certainly talk that their protocols are less stringent than ours’, I will continue to focus on what I consider to be the keys to a successful grass fed marketing effort:

1) Do not compromise on producing a gourmet product from the best genetics and finest soils for maximum nutritional benefit and distinction of product.

2) Build a story detailing the care and attention you give to provide valued customers the healthiest and most nutrient dense product money can buy.

3) Build a network for “relationship selling” that a commodity-oriented purveyor can not exploit by traveling the globe to find a product with a similar name to what you call your product but is cheap enough to give them their “required margin”.

And now I will add a fourth key to the list:

4) Begin by buying or leasing only pastures that are comparably priced to grassland in Australia. (But if you find it in the continental USA, call me first!)