Joel and Dakota Beef founder, Scott Lively (right)     discuss organic beef production at the Rissman Farm

Researching the Cattle Producers

As Scott began his research on organic beef producers, one of the first ranchers he met was Joel Rissman, whose organic steaks were better than he thought possible. Joel explained that raising cattle using organic methods kept them healthier, reduced their stress levels, and resulted in beef products that were consistently high in quality.

So Scott asked, why isn't everyone raising organic beef?

There's no market for them, Mr. Rissman replied. Like many other organic ranchers, he sells his products at small farmers' markets and over the Internet. But people like him are rare. Most ranchers have small operations and can't devote the time and energy it takes to handle the entire process of raising, marketing, and selling products directly to consumers. Some have tried to sell their beef through grocery stores, but the retail industry is dominated by major chains that only want big suppliers who can deliver goods to all their stores.

Why aren't these independent ranchers banding together to create such a market?

To answer that question, Scott decided he needed to understand the beef industry, and what he learned really opened his eyes. Like most people, Scott assumed that cattle are raised for a few years, then sent off to processors, prepared for retail sale, then placed on a grocer's shelf. But in fact, the traditional beef industry is divided into several small segments with ownership changing hands every few months as calves grow to their full, marketable size.

It begins with breeders selling bulls and cows to replenish or expand a rancher's stock. Ranchers, or cow/calf producers, as they're called, maintain ownership of a herd of cows, selling the year's calves as soon as they're weaned. These yearlings are sent to pastures owned by backgrounders, who specialize in putting weight on their animals. After spending a season maturing, they are auctioned off and moved to feed yards, where their diet is changed from grass to grains to quickly reach their optimum weight before being sold again to processors. Each segment is interested in one thing - increasing their cattle's weight as quickly as possible. Because of this, growers are constantly looking for inexpensive ways to improve weight gain, which explains their reliance on growth hormones and antibiotics. This often results in poor-quality steaks.

The only way to change this strategy is to convince ranchers to raise high-quality beef that meets or exceeds the expectations of consumers. Everyone along the supply chain would have to work together, which would take vertical integration.

Scott knew that vertical integration was possible, especially among certified organic producers who were already required to document their cattle's treatment and feeding programs. The documents on each animal could then be examined to determine the best management practices and relay this information back to ranchers in Dakota Beef's program. When ranchers implemented these changes and delivered superior cattle, Dakota Beef would then financially reward them for their efforts.

Researching the Retailers

Scott also interviewed many different retail buyers from big chains to local butcher shops to gauge the potential of the organic beef market. During his discussions with meat managers at the stores he visited, many had tried to sell organic beef but with mixed results. They had placed organic beef on their shelves and would initially see encouraging sales. However, when their local rancher ran out of supply, the cattleman would suggest buying from another rancher to keep the product in front of consumers. This often turned into a disaster, when the second rancher’s cattle didn’t measure up in taste or quality to the original rancher’s cattle. Customers were quick to react. Many felt tricked and refused to return, others simply gave up on organic beef altogether.

Dakota Beef is Born

Once he had researched the demand from consumers for organic products, his entrepreneurial spirit took over and Dakota Beef was born. His goal was to bring together organic cattle ranchers in the Midwest and beyond with health-conscious customers who are concerned about the way their food is grown. Scott determined that the only way to succeed was to establish procedures for all of the ranchers working for Dakota Beef. He quickly hired a number of seasoned managers with beef/cattle experience.

Dakota Beef personnel then developed a proprietary formula of certified organic grains to improve marbling. This mixture is standardized for all of its cattle to ensure a consistent flavor and high quality product. In the conventional beef market, cattle are administered antibiotics to offset the effects of stress. In the organic beef program, antibiotics cannot be used, so instead, the company developed protocols for ranchers to educate them on the most humane treatment methods for cattle ranching. This keeps cattle stress levels low so their natural immune systems can work properly.

The company also purchased its own certified organic processing plant in Howard, South Dakota, in order to control food safety and the quality of the product. In keeping with Scott’s original goal, Dakota Beef has created jobs in a community that had struggled for years to keep its young people from abandoning their farms for jobs in other states.

Dakota Beef is now providing consistently tender and flavorful certified organic beef to chefs, retailers and distributors across the country. As the company grows, Scott expects that even more ranchers will recognize the opportunity to join Dakota Beef and will convert their land to organic production. This will result in even more jobs in South Dakota while increasing the number of acres using sustainable agriculture to raise food.