Premium beef markets

In May, 2003, when the American border closed to live Canadian cattle, it quickly became apparent Canada needed more beef slaughter and processing capacity. While there were scores of proposals for new facilities, most have been stymied by the capital and marketing acumen required.

But there have been success stories like Natural Valley Farms in Saskatchewan and Atlantic Beef Products Inc. in Prince Edward Island.

Natural Valley Farms
by Kevin Hursh

June 14, 2005 was a day of celebration for Natural Valley Farms. The company’s new beef processing facility at Wolseley, Sask. was finally ready. Investors and guests gathered for an official opening and tours of the federally inspected facility. 

The first beef arrived for processing a couple of days later. For the summer, carcasses came from federally inspected facilities in other provinces. Before year’s end, Natural Valley hopes to have its own federally inspected slaughter plant operational in the nearby town of Neudorf. Total investment in the two facilities tops $15 million.

Natural Valley was initiated by two local cattle producers – Ken Piller and Cam Taylor. The idea was conceived before the first case of BSE changed the face of the Canadian beef industry. It’s been a long road from concept to reality.

There are 70 investors, mostly producers, with an average investment of $100,000. Including those who have purchased “hook space” (the right to process their animals through the facility), about 1,200 producers have a stake in the operations.

Producers are not beef marketing experts. For that, David White was hired as general manager. With 20 years experience in the value-added meat processing industry, he's thrown his heart and soul into Natural Valley.

Initially the plan was to exclusively market a “natural beef” product in a branded beef program. However, the BSE crisis quickly led to huge backlogs of older cattle. The strategy expanded to include beef from animals over 30 months of age.

Under the Branded Natural Beef Program, producers follow stringent management guidelines. Animals receive no hormone implants and must be antibiotics-free after weaning. Producers follow the on-farm protocols of the Canadian Cattlemen’s Quality Starts Here program.

“We’re offering traceability that the large beef processors can’t,” says White, gesturing towards a computer-labeling machine. “The bar code on packages identifies each group of animals and what farm they came from.”  The tracing will even extend to hamburger.

White is reluctant to discuss much about retail supply agreements. “The retailers I’ve talked to are the largest in Canada,” he says. Otherwise, he would only say a branded product from Natural Valley would first be seen at Ontario retailers.

Natural Valley wants to maximize value by selling cuts into the highest value markets. For instance, flank steak has a higher value on the export market than in Canada.

Canadian beef processors have enjoyed strong returns since the closure of the border to live cattle. In a normalized market, returns are typically narrow and the large processors have an efficiency advantage.

By targeting premium markets and by offering a natural branded beef product, Natural Valley Farms hopes to capture additional returns for the producers it serves.

Atlantic Beef Products
by Allison Finnamore

Beef producers in the Maritimes were tired of relying on others to determine their fate. The dependence had been building for years, as smaller processing plants closed, squeezed out by larger companies. When Hub Meat Packers in Moncton, N.B. closed in the spring of 2002, the issue became crystal clear.

Without Hub, cattle were shipped to Ontario – an added expense. And there was something else too – Maritime food was being processed with beef from throughout the country. In general that's OK, they felt, but why shouldn't Maritime consumers be able to eat federally inspected beef produced by their neighbours?

Enough was enough. The producers decided to take control.

They formed a co-operative and started selling hooks. Maritime beef producers had already made up their mind to take action when the bottom fell out of international trade in May, 2003. In December, 2004, Atlantic Beef Products Inc. opened in P.E.I.

Dean Baglole is chairman of the producer co-operative. He says producers bought into the plant because they believed controlling production within the region would help insulate the Maritime industry against trade disruptions.

"We have given producers an opportunity to have a say in marketing," Baglole says. "If all we do is continue to produce, we are at the bottom of the food chain and there is not a whole lot of hope at the end of the day."

Producers now have a direct say in how their product is produced, processed and distributed. "Producers are involved from gate to plate," explains Baglole.

Kirk McGrath the facility's general manager. He agrees with Baglole and says producers took steps for self-preservation. "I think Maritime producers knew they couldn't depend on U.S. markets and wanted to have more control of their future and their markets," McGrath says.

Atlantic Beef Products produces three brands of premium beef – Atlantic Tender Beef Classic for Co-op Atlantic, its own Atlantic Beef Products and a premium line, Atlantic Choice, for the food service industry and future retail markets.

Atlantic Choice is high end AAA beef, sold only to select restaurants, including Delta Hotels. Breaking into that market is challenging, but the key, McGrath says, is creating a product different from everyone else.

Atlantic Beef Products offers consistency. They buy from a closed loop of 190 producers who agree to protocols for raising their cattle. McGrath declined to give details, but says offering quality, every time, is vital. "Because we have a closed loop, what we're doing for our customers is consistent."

Work has started to install a fully traceable processing line, McGrath says. It will allow Atlantic Beef Products better access to more specialized markets, since the line will offer traceability from farm to fork, along with complete processing documentation. If customers want hormone-free beef, the facility will be able to physically verify how the brand has been processed.

Controlling destiny didn't happen overnight – producers worked on the project for several years before it came to life. Now that Atlantic Beef Products Inc. is operational, processing Maritime beef for local consumers, they're enjoying the view from the driver's seat.

FACTS

Name: Atlantic Beef Products Inc.
Shareholders: Majority ownership by Atlantic Beef Producers Co-Operative Ltd. Minority ownership by Co-op Atlantic
Location: Albany, P.E.I., just moments from Confederation Bridge
Capacity: 500 head a week
Staff: 70

Name: Natural Valley Farms
Shareholders: 70 investors, mostly producers
Location: Processing plant at Wolseley, Sask., about an hour east of Regina
Capacity: Wolseley processing facility can handle 1200 head a week
Staff: more than 80 when slaughter plant at Neudorf is operational

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