Ranchers, farmers embrace consumer demands

Ranchers, farmers embrace consumer demands

For some, transparency or other value-related practices boost profits and market access

Have you been to one of the open kitchen restaurants, like Five Guys Burgers and Fries? After you order you can watch servers make your food a few feet away from the counter. You may see a sign introducing the farmer who grew the potatoes that became your french fries that day.

Consumer desires drove the open kitchen concept, which proclaims, "We have nothing to hide." That's the same message farmers are getting from retailers as consumer demand for transparency grows unabated.

Now those retailers are looking for the right balance between consumer satisfaction, and on-farm practices that can be audited and verified.

"For us, the focus is always go to the consumers, see what they want, then produce it," says Oregon rancher Dan Probert.

Take Dean Foods, for instance. The company produces products for countless big brand retailers, such as McDonald's, Walmart, Pizza Hut – even Dollar Stores. Each of those retailers has embraced a particular suite of practices to appease customer desires.

"Transparency means accountability to our customers and to farmers," says Jennifer Walker, DVM and director of dairy stewardship for Dean Foods. "We have to be good stewards of their brand. I don't know if consumers want to know exactly every detail, but they want to know we are taking care of animals."

They also want to know how far milk travels, because 'local' is now very important to consumers.  In a survey, 'local' is the one trait people care about most, says Walker. Dean's definition of local is 100-200 miles, but it changes based on suppliers.

Dean set sustainability goals, but soon realized the goals needed to be flexible based on corporate customer needs.

"Some just need to check a box, while others really want to get involved to see that the company is making meaningful improvements in the supply chain," she says. "We have to be careful of our carbon footprint, and they want examples of our actions. On animal welfare they want to know we are improving and driving change, where farmers are succeeding or being challenged.

"It's risk mitigation, to some degree."

An edge

"For us, the focus is always go to the consumers, see what they want, then produce it," says Dan Probert, a rancher who produces specialty beef with 60 other northwestern ranchers. Their products are sold as Country Natural Beef, predominantly to Whole Foods and smaller independent retailers. Started 26 years ago, Country Natural grows vegetarian cattle with no antibiotics and no hormones. Many consumers also want an animal welfare ethic included in the beef they eat.  Every member rancher must adopt a retail store where Country Natural Beef is sold.

"Transparency is more than just labeling," he says. "Part of the responsibility of our co-op is, we have ranchers in the stores, and our retailers will be on our ranches. So there's a lot of interaction going on."

How are all those practices verified? "As we lose that connection to farms and ranches, we're going to move to a third party audit system where a group that doesn't have a dog in the fight can come in and say, yes, they are doing these practices they claim they are doing," says Probert.

John Butler, CEO at producer co-operative Beef Marketing Group, says transparency has become very important to the co-ops success. The co-op partners with beef producers, packers and end users to deliver value-added beef, all driven by consumer demand for information, and verification that the practices are happening as expected.

BMG has a system of best management practices ranging from what happens when an animal arrives at a ranch, to pre-harvest food safety, to sustainability.

"In the last five years we have been fortunate to see a demand increase in our product, and part of the credit goes to niches like natural or organic," says Butler.

There's increasing demand for transparency and special values integrated into how food is made. In more and more cases, these values-related demands are giving good managers an edge over other producers.  Customers – to a point - will pay extra for food produced with specific methods.

It's what Probert calls 'the choke point.'

"Consumer demand will drive it, and it will be different for different niches," he says. "Our beef industry is going through that right now." Adds Butler: "Food is an emotional experience. If they want that special attribute in the product, they will have to step up."

More value-add

Butler believes these niche markets will continue to grow. "We are taking a higher percentage of our cattle and putting them into a value-added system," he explains. "We've gone from almost zero percent value-add to 65% of our cattle now in one or another value-add system.

"We have a target for those animals based on demand," he continues. "We've put a supply chain together where the end buyer will give me a list of specific traits. We're not creating a brand; we're enhancing an existing brand."

Meanwhile, end users like Walmart have become much more demanding, says Butler.

"They want to know more about practices of where the food is coming from," he says. "The belief is, if the consumer knows more about their food they will be more confident in the purchases they make. That is the value proposition."

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