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How Wyoming is using blockchain to get ranchers premium prices for sustainably raised beef

March 6, 2019

Packaging materials solution company Avery Dennison’s retail branding arm, RBIS, and the Wyoming Business Council have tapped blockchain startup BeefChain to help ranchers who use certain management practices like rotational grazing or grass-finishing to reap the pricepoint benefits that consumers are willing to pay for sustainably-raised beef.

Labels like “grass-fed” and “free-range” may sound picturesque, but these more natural approaches to meat production often call for a bigger commitment — more time and careful planning — when compared to commercial farming. For instance, pasture-raised cattle mature at a slower rate than those sent to be “finished” at feedlots. Ranchers need to make sure that there’s enough fresh forage available to feed herds for the long term while preventing cattle from staying in one place for too long which can lead to overgrazing. Providing continued or frequent access to pasture also requires ensuring the animals have enough shade or shelter and access to water.

Ultimately, producing pasture-raised, grass-fed beef is more challenging and time-consuming than conventional beef production. Without the tools to manage their grazing land, striking the right balance can be tedious.

Due to the way that the beef industry is structured, ranchers are often price takers who have to carry the operating costs of caring for a herd of cows that produce calves for market on a yearly basis. Each year, ranchers wean and sell calves to a feedlot operator who then fattens the animals before selling them to a meatpacking beef processor.

If the rancher experiences severe weather, increased feed costs, or a labor shortage, it could negatively impact the number of calves that he or she has to sell, eating away at much-needed profits to care for the herd through the next calving season. Add in fluctuating prices for beef cattle and it becomes nearly impossible for a rancher to know exactly how much income he or she can count on at the end of the season. This predicament is not unique to Wyoming ranchers and is a challenge that beef producers face across the country.

Many ranchers are switching to grass-based, pasture management instead of supplementing cattle with grain in response to growing consumer demand for grass-fed beef. Ensuring that an animal was free to roam open pastures is also becoming a serious concern for consumers, who are willing to pay a premium to purchase meat raised under these conditions.

The price premium doesn’t always end up in ranchers’ pockets, however, as they often receive the same market price for their premium cows as grain-fed cows with limited pasture access when they offer a batch of calves for sale. Feedlot operators and processors purchase the cattle at conventional market prices and apply a markup to the product before selling the meat to a retailer.

Using blockchain to create a rancher-centric supply chain

BeefChain’s mission is to create a new “rancher-centric” supply chain utilizing blockchain technology to recapture the premiums realized by third-party feedlots and processors. It has already used its RFID tags to identify individual animals from birth to processing to create a record of how the animal was raised and managed. As a packaging company, Avery Dennison will enable the RFID tags to be attached to cases of beef from those animals that can be tracked along the supply chain.

By enabling unique animal identification and ensuring origin, BeefChain allows the rancher to receive premium pricing for grass-fed and free-range beef while providing consumers with an easier way to find this type of product and greater confidence in its origin. Applying the tags to the cases of beef helps improve traceability all the way to the dinner table as some companies engage in food fraud, marketing grain-fed meat as grass-fed or pasture-raised.

The initiative has already completed a pilot at a beef processing facility in Wyoming, tagging cases of beef with RFID integrated labels and sending them to a five-star dining establishment in Taipei, Taiwan. Customers were then able to scan a QR code to learn more about the beef including its 7,500-mile journey, adding to the overall dining experience.

BeefChain’s platform presents a serious market opportunity for Wyoming ranchers. One rancher who participated in a BeefChain pilot program estimated that he added between $500 and $700 in value to each of his cows throughout the supply chain by being able to verify their provenance.

BeefChain has already partnered with six multi-generational Wyoming ranches and tagged nearly 1,600 calves. These “first-in-the-world” blockchain calves, totaling over 500,000 lbs of high-quality Wyoming Certified Beef, will be ready for delivery in early fall of 2019.

During 2017, 11,400 Wyoming ranches generated $1.1 billion in cattle sales, according to BeefChain. The state has approximately 2.1 million cows and most family-owned ranches carry permanent herds composed of 90% brood cows, 5% bulls, and 5% dry cows. Using a conservative estimate that two-thirds of all brood cows produce calves, this leads to a potential market of 600,000 calves.

BeefChain is also hoping to create an end-to-end supply chain solution called “Rancher to Retail” that will involve BeefChain investment in feedlot and processing operations. This will position BeefChain to offer long-term, exclusive relationships with buyers around the world.

Meat-focused startups

There are a handful of startups tackling issues in the meat industry, including Irish meat traceability startup IdentiGEN, which originally developed in response to the mad cow epidemic. Beyond meat, IdentiGEN can verify the provenance of fish and even shrimp. In 2017, the company was contracted to verify Norwegian salmon and make sense of the opaque and complicated shrimp supply chain, for British high-end grab and go grocer Marks and Spencer.

Australian startup Provenir is bringing an Uber-like service for meat processing to the Australian beef industry where cattle are processed on-farm and transported to a central hub for further processing. Animals must meet strict criteria such as being grass-fed, pasture-raised, and humanely handled. Farmers are paid on processing day, providing a more consistent and dependable revenue stream that rewards their management.

Stanford University graduates developed a startup called PastureMap that uses precision agriculture technology to help ranchers track herd movements and to plan ahead–something that is critical for grass-fed beef operations. The app has been popular with a number of sustainability-focused operations like TomKat Ranch in California. It’s one of the few US startups focused on grazing management.

AgriWebb is a similar service that aims to leverage the data coming off pastoral livestock farms to improve their efficiency and profitability. Through its mobile app, AgriWebb is also a record-keeping tool for producers, which they can feed into their budgeting, business analytics, and reporting processes. AgriWebb also offers farm management tools such as the ability to create to-do lists next to each field, track inputs on pasture land and any complementary cropping land that a livestock farmer might have.

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