Lowell Forman says that the
traceability of CNB beef is another
factor that has gained
customers for the co-op.

The Natural

“Brickless” marketing co-op helps ranchers
tap growing market for lean, natural beef


By Dan Campbell, editor

eering out from under the brim of his straw cowboy hat, Lowell Forman looks as if he would be right at home belly up to the bar of the Long Branch Saloon, shooting the breeze with Matt Dillon and Miss Kitty. But the Antelope, Ore., rancher is serving, not drinking, as he hits the switch to start the pump that fills a 1,500-gallon water trough in the hilly rangeland of north-central Oregon. The sound of the pump and running water soon attracts a file of thirsty red angus-mix heifers, part of a herd of 450 cattle that graze a 20,000-acre ranch he and his wife, Mary, operate about three hours east of Portland.

The range grass is still green in mid- June, but it won’t be for long. “Within a couple of weeks, it will all fade to dry brown,” says Forman as he scans the horizon of the ranch that four generations of his family (sons Spencer and Floyde, currently away at college, will be the fifth generation if they choose to ranch) have worked through hot, arid summers and frigid winters. When the range dries out, the cattle will have to roam over ever-greater areas of the ranch to get the forage they need — typically 50 acres per head.

“This was all sheep and horse country until after World War II,” Forman says, as he aims his pickup truck for home. A large coyote eyes him warily before darting into the brush as the truck crests a hill.

Early the next morning, Mary and Lowell saddle up their quarter horses and form a quick game plan for driving 120 pairs into the corrals around their barn. The Formans obviously know the cowboy trade, making short work of it as they deftly zigzag their horses in and around the cattle, working them ever forward. Mary veers off onto one of the flanks to bring in some strays as Lowell continues to drive the main herd down into a small creek gully, then up a slope and into the corrals.

And so ranch life goes as the Formans move cattle from one part of the ranch to another to keep them fed and watered. In winter, when the range alone can no longer support the herd, supplemental hay will be provided. In July and August, 18-month-old steers will be rounded up one final time and trucked to the feedlot for finishing.

The process is repeated on tens of thousands of ranches all over the western United States every year. But from this point forward, the process will take a decidedly different twist, due to the Formans’ membership in the Country Natural Beef cooperative.

Co-op without bricks or mortar
Most ranchers sell their cattle upon arrival at the feedlot or just after finishing, but co-op members retain ownership through the feedlot and processing (technically, they sell their cattle to the processor, then buy the boxed beef back). They maintain ownership until their beef is sold to retailers.

The Formans are among the 76 ranch families (93 counting transitional members awaiting full membership status) in eight western states and Hawaii who have banded together under the umbrella of the Country Natural Beef (CNB) cooperative. The co-op formerly did business as Oregon Country Beef prior to its expansion into other states. CNB has grown slowly, but steadily, in the 20 years since it was founded by 14 family ranches and as the reputation of its natural beef has attracted a cadre of loyal customers.

CNB is a cooperative without bricks or mortar. “We own zero net assets and have zero net liabilities,” Lowell says. It is strictly a marketing a cooperative, without employees. The functions of production, feeding, marketing and finance are performed by teams headed up by individual CNB ranchers. These “internal partners” have their own employees and are responsible for their area of expertise. In the beginning, everyone volunteered their time and talent, but these ranchers are now compensated for their efforts. Mary, a CPA, heads the finance office from a house on the ranch near Antelope. The co-op’s sales now top $40 million annually, and are growing about 16 percent each year. Last year, the co-op shipped more than 40,000 head to market.

The co-op is currently expanding east into Colorado, Texas and New Mexico, due in part to the urging of its largest customer, Whole Foods, a growing, up-scale grocery chain that attracts a demanding, health-conscious clientele.

Lowell tips his Stetson to Doc and Connie Hatfield of Brothers, Ore., for having the foresight and energy to initialize the formation of the co-op in the mid-1980s (see sidebar, below). At that time, yearling calves were fetching only a bankruptcy-inducing 65 cents a pound. One major goal of the co-op was to help level out the beef-market rollercoaster — which sees prices soar one year, only to plunge the next — by pricing their beef at an amount that covers a member’s cost of operation, a return on investment and a reasonable profit.

In 1986, the co-op picked three ranches to use as a baseline to determine average cost of production. That baseline is updated every year to reflect current market conditions. This practice also provides stable pricing for CNB customers. Unlike most beef marketers, CNB does not sell based on weekly price sheets.

Members are paid in five installments, which begin to flow back to them from time cattle arrive at the feedlot. At the finishing feedyard, each program animal gets a pre-numbered, CNB ear tag which identifies it through the packing house. This provides a record that enables the co-op to trace beef back to its source.

Ranchers meet consumers
during in-store promos
All members of the Country Natural Beef cooperative do at least one in-store promotion each year, where they meet and greet their buying public. Members usually cook beef, hand out samples and recipes while answering questions. The in-store promo days allow co-op members to hear firsthand what consumers are looking for in beef.

The “in-stores” also help ranchers see the market through the retailers’ eyes.

Connie Hatfield says in-store promo days provide members with a tremendous boost in morale. “The in-stores have helped to give us back the pride we had lost back in the 1980s when the cattle and beef industry was under constant attack. When we meet the customers, we always make a point of thanking them for buying our beef and telling them they are helping to keep family-owned ranches in business.

“Many times the customers will give you a hug and thank you right back, saying how much they appreciate the beef products we are producing. Sometimes they can get emotional, relating their memories of their grandparents’ farm or ranch and how they miss it. You are never the same when you go home after those kinds of exchanges.”

“Natural” not for all ranchers
The “natural” label has been misused and abused by many, Lowell notes. USDA stipulates that a product that contains no artificial ingredient or added color and is only minimally processed — in a way that does not fundamentally alter the raw product — may be labeled “natural.”

For CNB, “natural” also means strictly following a low-input method of production and adopting a philosophy of careful land stewardship. All members sign affidavits promising to raise cattle without the use of antibiotics, growth hormone implants or feed additives that promote forage conversion.

They also must adhere to the co-op’s land ethic, which means never overgrazing and managing limited water resources to maintain grass and plant diversity and healthy streams. “We basically strive to leave the land in better shape than we found it,” says Lowell.

To ensure enforcement of these standards, CNB contracts with the Food Alliance to do third-party verification.

“This approach to ranching does not appeal to everyone,” Lowell notes.

“That’s fine; we don’t want to commodify our product. There are plenty of ranchers who are interested in raising cattle the way we require and belonging to a co-op that requires members be active participants in it.”

When asked if the co-op has considered going organic, Mary Forman responds that it just wouldn’t be practical for operations that often cover 20,000 acres or more, such as hers. “Organic means that every bite of feed an animal ever consumes should be classified as organic. Can you imagine qualifying a million acres of range? If we can’t guarantee it, we don’t even suggest it,” she says.

The only way for CNB members to guarantee that all feed source is organic would be to confine animals and feed them only forage or grain from certified organic sources. “We are striving for sustainable range land, families and communities and we cannot reach our goal by being organic,” Mary says.

Sponsorship required for membership
New members have to be sponsored by an existing member, and then go through a two-year trial membership before they become full members of the co-op.

Member ranches range in size from a Wyoming ranch with 12,000 cows to one long-time member with only 60 cows. Marketing “slots” are allocated to members, determining the dates when they must ship their cattle to the feedlot. Once a member has slots assigned, they cannot be bumped out of them.

Jim and Maria McNamee, who manage 550 mother cows near Maupin, Ore., became full members in December 2005. They can’t be accused of making a snap decision to join. Jim, Mary Forman’s brother, has been watching the co-op grow and prosper for 20 years and Maria has worked in the CNB finance office for 12 of those years. They were invited to join in the spring of 2003 when the need for cattle was growing.

“We joined in a year of what turned out to be record-high prices for generic beef,” Jim says with a laugh. Still, he has no doubt that he’ll do better most years by being a member of the co-op. “I like the idea that we will have more control over our own destiny by marketing through the co-op,” Jim says.

“The biggest change means that now if we treat an animal with antibiotics, it cannot be marketed with our co-op cattle,” Jim says. But it can still be raised and sold outside of the co-op for generic beef.

Every member a director
Every member of the co-op is also a board member. Participation in a weekly conference call every Wednesday morning is encouraged. Attendance at their two annual membership meetings each year is required, as is participation in an event involving customers or consumers.

During the conference calls, members hear reports on which ranches shipped cattle for processing the prior week. They also get updates on sales and promotions, freight and feedlot costs, etc. Team leaders for the marketing, finance, environmental and production committees also hold weekly conference calls.

Will this policy of having every coop member also serve as a director still be feasible as the co-op passes the 100- member mark? “We frequently have that discussion: are we getting too big to operate this way?” says Hatfield. “We’ve decided to keep doing business this way until it becomes impractical; so far, it is working just fine.” Indeed, it is a strength of the co-op, she says, adding that “we’ll know when it’s time to change.”

Shorter time on feed
All CNB cattle are processed at AB Foods in Toppenish, Wash. However, with the co-op expanding membership to the east side of the Rocky Mountains, use of a second feedlot and processing plant (probably in Colorado or Texas) is being considered to cut down on trucking costs to the Northwest.

All CNB cattle are fed at Beef Northwest Feeders in Boardman, Ore., where feedlot owner John Wilson is also a member of a CNB family ranch. The working partnership with Beef Northwest is important, because not only does it have to provide space for 12,000-15,000 head at any one time, it also must segregate the co-op cattle and provide a special feed truck and other special care.

“We constantly collaborate with the ranchers on animal handling, health and nutrition,” says Wilson. “Beef Northwest Feeders essentially acts as a partner in a vertically integrated extension for CNB.”

Because CNB customers want lean beef and smaller cuts, its cattle stay on feed an average of only 92-94 days, as opposed to the industry average of 120- 140 days. CNB carcasses typically are about 600 to 700 pounds in an industry where 1,000-pound carcasses are the norm.

“Ideally, we feed to produce a carcass that will yield 40 percent Choice and 60 percent Select beef,” Lowell says. Since Select beef is leaner, it is a bit more challenging to cook properly. But for health-conscious consumers looking for smaller, leaner cuts of beef, that’s a small price to pay. Indeed, a primary reason the co-op was launched was to recapture consumers who had stopped eating beef on a regular basis.

“Working with Whole Foods, we are creating a strong, consistent market for our shorter-fed beef,” Lowell says. Whole Foods currently buys about 60 percent of the co-op’s beef.

“We believe their high-quality feed, less stress and better living conditions lead to a more tender cut of meat and a better flavor,” says Jim Thomas, meat associate coordinator for Whole Food Market’s Northern Pacific Region.

Other major buyers include more than 100 restaurants, New Seasons natural food stores in Portland, Bon Apatite (which supplies colleges and hospitals), and Burgerville, a Northwest burger chain that prepares burgers only with fresh beef.

A community of shared values
Marge McClaran, an 80-year-old CNB member from Joseph, Ore., says that rural America is changing in such a way that she often feels as if “we are losing our community of place.” She cites the closure of her community’s local school and livestock auction yard as examples of this trend. But when she gets together with the rest of the co-op members for CNB annual meetings, she feels as if this community of place has been replaced by something even better: “a community of shared values.”

As further evidence of the favorable impact the co-op is having, young people who once had little or no intention of returning to their family ranch after college are now coming back home to continue the family tradition as cattle producers. Hatfield says the co-op has been credited for helping to attract 11 young families back to ranches. Her own daughter, Becky, married into the Hyde family, CNB ranchers who own the Yamsi Ranch near Chiloquin, Ore.

“At our last co-op meeting, we had more than 200 in attendance, and there were 25 children under the age of five,” Hatfield notes. The co-op arranges for babysitters at these meetings so that parents can fully participate in the business sessions. Connie has insisted on offering this service, recalling that when she was a young mother, how frustrating it was for her to have to miss business sessions so that she could care for her young children. “I always swore that if I ever got in a position to do something about it, I would work to arrange things so the wives could fully participate.”

“We hope our business model spreads,” she continues. “We’re helping to sustain family ranches and doing it by producing a product that is bringing more people back to beef. I’m sure it can be replicated by others. We would give our right arm if sharing information about what we’ve done can help others do something similar. It is our hope that 100 years from now, families will still be raising cattle on these ranches.”



Meeting the Argentine challenge

"Country Natural Beef is an idea that needs to be constantly examined, not an entity that can be bought and sold."

There is no mystery as to what conditions sparked the creation of the Country Natural Beef cooperative. “We were all going broke in 1986 selling beef into the commodity market!” recalls Connie Hatfield, who along with her husband, Doc, runs a herd of 400 mother cows on 28,000 acres. (Like most co-op members, their ranch includes both land they own and lease from the Bureau of Land Management). The nearest town is the tiny hamlet of Brothers, Ore. — “one of those ‘blink and you missed it towns,’” says Connie.

Here as elsewhere, the mid-1980s were the worst period for agriculture since the Great Depression of the1930s, she says. Over-production, plummeting land values and soaring interest rates took a heavy toll on farms and ranches all across Oregon.

To make matters worse, beef in the 1980s was a whipping boy for dieticians and food faddists. “All you heard in the media at that time was ‘don’t eat red meat,’ and that ranchers and farmers were raping the land,” Hatfield says.

She got the co-op ball rolling after a visit to a health and fitness club in Bend, Ore. “At that time, it was the only health club in town; now there are about eight,” she says. She asked the fitness trainer his opinion on eating red meat. “He said he recommend all his clients eat beef at least three times a week.” This was music to Connie’s ears, but she crashed back to earth a minute later when he added, “But we have so darn much trouble getting beef from Argentina here in Bend.”

When pressed as to why he preferred Argentine beef, he said it was because they raised beef without antibiotics or growth hormones and it was “short fed,” meaning it spent less time on the feedlot, making for leaner meat.

“He had no idea we were raising beef that way just 50 miles away from his club,” Hatfield says. “It was our own fault. We had a great product, but we didn’t market it. We just sold our calves to buyers when they came around, and then we whined about the prices they paid us.”

Soon thereafter, the Hatfields organized a meeting with about 34 other Oregon ranchers and invited the health club director over to talk about beef. After that, 14 of the ranch families agreed to form CNB to pursue the lean-beef market.

One of the first tasks of the new co-op was to draft an organizational goal, which reads in part: “Marketing is consumer driven. Our goal is to provide a sustainable means through a group to profitably market quality beef ...while retaining every possible bit of independence.” It goes on to say that the co-op will be producer controlled and contain administrative costs to a bare minimum, while costs of operation come from a percentage of producer’s revenue. It concludes: “Country Natural Beef is an idea that needs to be constantly examined, not an entity that can be bought and sold.”



July/August Table of Contents