North Coast
Meats:
An Integrated Meat Processing, Distribution and
Marketing Facility for California's North Coast
Samuel Goldberger, Phyllis Faber
North Coast Meats
75 Eastview Ave., Tiburon,
CA 94920
866-374-9213
Introduction and Rationale
The pastures and grasslands
of the Northern California coastal region from San Francisco to the Oregon
border are among the best in the nation. Animal agriculture predominates there,
especially milk, beef and lamb production. In Marin County, for example, animal
agriculture accounts for 98% of the total farm revenues. With few exceptions,
the producers are family farmers, many of whom have been on the land for
generations.
We know that family farms have been disappearing at alarming rates across the country, victims of industry consolidation, cheap transportation, falling food prices and escalating land values. That so many of our coastal ranchers have survived is a testament to the efforts of a variety of organizations and individuals, including the State Legislature, the Coastal Commission and the Coastal Conservancy, the Marin, Sonoma and Mendocino Land Trusts, the Farm Credit Bureau, and the UC Cooperative Extension Services and others. But even more, it is tribute to the dedication of the farmers and ranchers themselves, many of whom must supplement their farm income with non-farm jobs.
Today, we find that animal
agriculture on the North Coast faces new challenges, but also some promising
new possibilities. On the one hand, the infrastructure upon which small-scale
farming depends is gradually eroding. This includes both the facilities and
businesses required to support the farmer during production such as feed
suppliers, machinery vendors, transportation mechanisms and farming supply
stores, as well as the sales and marketing mechanisms that link the farmers to
the markets for their products. For example, because of massive consolidation
in the lamb industry and intense competition from New Zealand, there is now
only one company that purchases North Coast lambs, Superior Farms of Dixon,
down from three companies just a few years ago. Thus the producer has no choice
but to accept whatever price Superior offers, a price which reflects the more
abundant lamb from the large irrigated pastures of the Central Valley, as well
the lambs that that Superior itself produces and imports from New Zealand. Yet
the Coastal lamb is of exceptional quality, with a unique delicate taste, and
is in most cases is raised naturally without supplemental grain feeding,
hormones or fertilizers. Thus the coastal farmers do not benefit from their
higher quality product. Meanwhile, Rancho Meats of Petaluma, the last remaining
slaughterhouse serving the needs of coastal dairymen and beef producers, is
scheduled to close its doors within two years, another victim of industry
consolidation and rising land costs.
On the other hand, in the
marketplace the definition of "quality meat" itself is changing. Where once
this meant heavily marbled beef, typically from feedlots close to sources of
cheap corn, now consumers are beginning to seek out healthier meat,
specifically locally grown, grass-fed and organic. This segment of the market
has been growing at nearly 20% per year. Moreover, when properly marketed, such
meat commands a significant premium, such that producers can expect to receive
up to double the price per pound for their animals compared to conventional
production. This has led many coastal ranchers to reconsider their production
strategy in order to achieve a more sustainable return from their efforts by
accessing the specialty market. But this opportunity will remain out of reach
without the proper facilities and marketing and distribution
mechanisms—the agricultural infrastructure.
North Coast Meats
Over the past year, we have
been exploring these issues in detail with a variety of stake-holders: farmers
and ranchers, the current owners of Rancho, County agricultural commissioners,
planning departments and Boards of Supervisors, the regional Land Trusts,
environmental groups, the Agricultural Extension Service, supermarkets and
specialty butchers, restauranteurs, facility designers and others. A clear
consensus has begun to emerge.
What is needed to support the coastal meat producers to meet their
current challenges and take advantage of their new opportunities is a new type of vertically integrated facility
that can bridge the gap between the farm and the market, while capturing a
greater proportion of the total profit for the producer. We intend to
develop such a facility, one that we call "North Coast Meats." It is designed
to serve producers primarily in Marin, Sonoma and Mendocino and Lake Counties.
The elements and
characteristics of this facility include the following:
A state of the art, humane, and environmentally friendly multi-species slaughterhouse that can process animals in conformity to the most rigorous USDA, organic and Humane Society standards.
An integrated meat cutting and packing plant ("cut and wrap facility"), which can break down the carcasses, and package the resulting cuts in accordance with the needs of different market segments
An effective marketing and distribution group, one that can sell into both conventional and specialty markets, and then transport the products to buyers safely and efficiently.
A facility and operations design in full accord with "green" principles of construction, resource utilization and waste treatment, with the objective of minimum or zero fossil energy use and zero waste emissions; to include methane digestion and electricity co-generation, and onsite bio-diesel production from suet.
An employment policy under which all employees receive top wages and full benefits; and with processing equipment and procedures ergonomically designed to minimize physical injury and psychological stress.
A profit-sharing mechanism to assure that participating ranchers benefit from the success of the facility.
An educational and price-based incentive program to support ranchers to transition to higher-margin meat production methods like grass-fed and/or organic.
Most North Coast producers
have relatively small herds. Hence transportation of animals to the facility
would normally be costly and time consuming, especially from the more remote
portions of the region. The best solution is for the facility to run its own
fleet of bio-diesel vehicles, picking up animals at the ranch or a local
distribution point and transporting them to the facility for processing.
Although the producers will naturally share in the transportation costs as a
function of number of animals and distance, such costs will be significantly
mitigated by the facility's economies of scale. There is good precedent for
such a transportation strategy: the aforementioned Superior Farms of Dixon
sends its trailers to ranches across the state, weighing the animals and paying
the producer on the spot. North Coast Meats should do no less.
During this interval, we have
identified teams of facilities designers to develop and prepare the plans, and
have educated ourselves about the county and municipal planning and approval
process. We have an array of technical support resources available through the
University of California. We
have had preliminary discussions with sources of debt and equity. A major
federally funded feasibility study has already begun, one
which will help determine optimal location, size, design, costs, and
economic and environmental impacts (see below). All in all, we are convinced that the project is urgently
needed by the ranching community and is thus an important element in the
preservation of agriculture on the North Coast. Moreover, we believe it can be
environmentally beneficial, technically and politically feasible, as well as profitable for all participants.
Current Status
The US Economic Development Administration (a division of the US Department of
Commerce) has approved a $100,000 grant to conduct a thorough feasibility study
of the facility such as we have envisioned. This includes an assessment of the
availability of animals and the elasticity of supply in the four county region,
pricing considerations, determination of the optimal capacity and design of a
"clean and green" facility and associated costs and projected revenues, and a
marketing and distribution assessment. Also included will be an evaluation of
the regional and local economic and environmental impacts of the facility. Its
results will serve as the foundation of a business plan for raising the
necessary private sector capital to finance development and construction.
Over this period, we have
become increasingly convinced that the time is right for this project and that
the necessary financing can be secured. Moreover, we are confident that once
the facility is up and running, there will be sufficient operating revenues
above costs of operations to pay the ranchers generously, while repaying
obligations to lenders and generating attractive returns for investors. And we
have strong indication that such a facility could serve as a model for meat
producing regions across the country, regions that are facing the same array of
challenges and opportunities.