Report: US Grass-Fed Beef Market Doubling Every Year, But Scaling Challenges Remain

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Grassfed beef is a growing segment of the US meat industry.

Retail sales of labeled fresh grassfed beef reached $272 million in 2016, up from $17 million in 2012 and doubling every year, according to a new report entitled Back to Grass: the Market Potential for U.S. Grassfed Beef.

This still represents just 1% of the US beef market, with unlabeled grass-fed beef accounting for about 4% of US beef sold.

There are many benefits for US grassfed beef, according to the report which was co-authored by Renee Cheung, founder of consultancy Bonterra Partners, and Paul McMahon, CEO of SLM Partners, the regenerative agriculture fund manager. 

They include human health, animal welfare, environmental protection, climate change mitigation, and taste and flavor.

All cattle start out life on pasture, eating mostly grass, but conventionally-raised cattle are later fed grain in feedlots for several months of their life before slaughter.

Feedlots, also known as animal feeding operations, are defined as facilities where cattle are confined and fed for a total of 45 days or more in any 12-month period. While they are mostly fed grain such as soybean or cottonseed meal, they are also fed other food manufacturing byproducts such as cookie crumbs, orange pulp, candy, and potato waste to reduce feed costs.

In feedlots, large quantities of manure are concentrated in small areas, becoming an environmental hazard, whereas in grassfed beef production, this manure can be beneficial for grassland ecosystem health and plant production. Rotational grazing, which is adopted by many grass-fed beef producers, can improve soil health even further.

The report, which was written in partnership with Stone Barns Center for Food & Agriculture and Armonia, outlines other differences between the two production methods.

There are a lot of opportunities for cattle ranchers to convert to grass-fed beef and pick up premium pricing for their products. But scaling grassfed beef in the US, where conventionally raised cattle are so entrenched in the industry, will be challenging, according to a new report. There is also some debate about how you define grass-fed. 

We caught up with Cheung to find out more about the report, which can be downloaded here. 

Why did you undertake this report?

Because we believe that grassfed beef production that uses regenerative grazing methods is good for human health and the environment, unlike grain-finished beef that comes from feedlot operations. But for ranchers and farmers in the US to adopt regenerative grazing, they need to be incentivized and see how they can profit from it. So we cannot talk about regenerative agriculture without fully understanding the US grassfed beef market and its opportunities and the impediments that are preventing the market from growing.

Did you uncover anything that surprised you during your research?

Defining “grassfed beef” is actually not easy; even grassfed beef producers may not agree with each other what grassfed should mean. Another surprise (and challenge) is that with the repeal of the COOL (Country of Origin Labeling) requirement in December 2015, imported beef can now be labeled “Product of the USA,” so it is difficult for consumers to know when they are eating American beef (or not).

What are some of the most important learnings you want to get across with this?

The US grassfed beef industry needs to scale up, or else it will be overshadowed by grassfed imports (which are cheaper) and beef from “grass feedlots” (see p. 9-10 in report)

For the US grassfed industry to scale, everyone along the supply chain, from producers, marketers, and retailers, needs to collaborate and work together.

Despite cheap grassfed beef imports, American consumers must support US ranchers who are raising grassfed beef using regenerative agriculture methods. The benefits that properly-managed grassfed productions can bring to the land, environment, and people are too important to be ignored.

Overall, are you positive about the potential for the US grass-fed beef market and do you think more ranchers will come into the fray/convert in the near future?

We are definitely positive about the potential but a lot needs to be done to help the US grassfed beef industry realize its potential; that’s why we made four recommendations in the conclusion of our report. I believe more ranchers will convert to grassfed beef production; many have been losing money doing conventional beef, and they know it’s time to do something different. They can see that the grassfed beef market and demand is continuing to grow.

What are the main risks for a US grass-fed operation?

Grassfed beef imports, COOL, and grass feedlots. It’s easy for some US grassfed beef producers to say “I want to remain small and don’t want to scale.” But the danger is if the industry doesn’t try to grow and get bigger then we will be overtaken by beef producers that are either from outside the US or who are producing “imitated grassfed beef” using “grass feedlot” systems.

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