NDSU Magazine logo - Spring 2004

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Spring 2004

Vol. 04, No. 2


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From Gate to Plate

The meter starts running on a North Dakota cow-calf operator the moment a calf draws its first breath, bawling for mother's milk. The numbers game begins even before that, from the time he selects his breeding stock, and continues beyond the day a U.S. Department of Agriculture inspector slaps a grade to his beef on the rail.

Did he select cows and bulls with the right genetics to make premium grade? How much will he put into that calf, both in feed and veterinary care, before it reaches 600-800 pounds and is ready for finishing in the feedlot? How many calves will he lose to weather, disease or predation before it's time to sell? How much will it cost to transport each calf to a feedlot in Colorado, Kansas or Nebraska?

In today's scheme, North Dakota's cow-calf operator stands on the bottom rung of the beef processing profit ladder. From gate to plate, as they say in the industry, his calf will travel thousands of miles, crisscrossing the nation at considerable expense. It will be sold at least three times, maybe as many as five, to brokers, feedlot operators, big meat processors, diverse markets and, finally, consumers.

All the way down the line those people are taking another slice of the pie. Even at a modest 3 percent commission on every sale, that's 9 to 15 percent gain on the cow-calf operator's sweat and toil that he'll never see. Guys who have been raising cattle here for decades sometimes have to tip back their hats, scratch their heads and wonder - just who's getting slaughtered here, anyway?

There's only one way to move up the ladder, to take a bigger share of that choice final cut. Get smarter.

A new North Dakota Beef Systems Center of Excellence is being designed to help cow-calf operators do just that. In the process it also could improve food quality and safety, help educate North Dakota State University undergraduate and graduate students, create jobs in rural North Dakota and, just maybe, revolutionize the entire beef industry.

Small operator, small processor, huge opportunity

The Beef Systems Center of Excellence will be a small-scale beef processing and fabricating facility, located close to the NDSU campus, that can handle about 40 head a day. It's being designed as a living laboratory and ready market for North Dakota cow-calf operators' cattle. More than that, it will be a one-of-a-kind facility that links the private beef processing business with teaching and research. Many land-grant colleges across the country have a food or meat science emphasis, but none has a comparable facility, a commercial plant that also serves educational needs.

NDSU researchers and students at the center will focus on innovations ranging from genetics to range and feedlot management, nutritional regimens to slaughter processing and fabrication. Research goals will be to discover optimum carcass traits for specific markets and improve quality and safety associated with beef products.

Wade Moser, executive vice president of the N.D. Stockmen's Association, says an effort to develop this kind of knowledge has been a long time coming. "No matter what we do on the ranch - feeding trials, grasslands work, genetics, the whole thing - we end up putting that product on a meat shelf somewhere and hoping consumers buy it. We use management techniques and ship our cattle out, but we really don't know how what we're doing on the ranch impacts beef quality."

The center also will add a fourth core area of research expertise to the Department of Animal and Range Sciences so it can better prepare students for the real world, where food quality and safety reign. Currently, the department has three strengths: beef cattle or ruminant nutrition, reproductive physiology, and range science or range management. With the opportunities created at the Beef Systems Center of Excellence, meat science will be the fourth.

"We have the research and extension capabilities to tell you how to feed 'em, how to breed 'em and how to grow the grass. But when it comes to that animal heading for a slaughter facility, we don't have enough expertise in that area yet," said Greg Lardy, associate professor of animal and range sciences and Extension Service beef specialist. "We need this facility to take the North Dakota beef industry to the next echelon."

To take that next step, a group led by the Department of Animal and Range Sciences and the North Dakota Association of Rural Electric Cooperatives (RECs) is taking advantage of funding from the 2002 Farm Bill, which authorized rural development grants for Agricultural Innovation Demonstration Centers across the country. North Dakota was one of the first states to be awarded a grant. It created the new NDSU Agricultural Innovation Demonstration Center, which is helping to fund the NDSU Beef Systems Center of Excellence.

BACKGROUNDING - the confined feeding of calves following weaning to prepare them to be put on a finishing ration at a feedlot.

North Dakota has a strong history of agricultural innovation. In a state where agriculture's economic role is five times as large as it is nationwide, adding value to agricultural products isn't just logical, it's necessary. Depending on the year, for producers it might not even be about growth, but economic survival.

Cooperative ventures like American Crystal Sugar, which has been operating for decades and is a major player in the sugar industry, and the Dakota Growers Pasta Cooperative (now Dakota Growers Pasta Co.) are just a couple of examples of North Dakotans pooling their knowledge equity, financial resources and hard work to add value to products grown here.

In beef cattle, the legacy of innovation dates as far back as 1883, when the Marquis de Mores set out to build a beef-processing empire in the Badlands of what is now western North Dakota. By bringing the processing facility to the range, the Marquis surmised, he could cut out the middlemen from Dakota Territory to East Coast markets. Not only would his system put more money in his and cow-calf operators' pockets, but it also would lower costs for consumers.

The Marquis didn't make it (see sidebar), but every good idea has its time, especially if it encompasses broader, more laudable goals than amassing a personal fortune.

For decades ranchers and economic developers have kicked around the idea of processing beef in North Dakota to help cow-calf producers move further along the profit food chain. In 1991, a group of them initiated action, and they formed Northern Plains Premium Beef in 1995.

The first equity drive for Northern Plains netted commitments for 500,000 cattle at $1 a head from ranchers in five states and two Canadian provinces. The plan was to build two plants with capacities of 250,000 head annually. When that failed, Northern Plains launched a second equity drive and began planning for a 400,000 head a year slaughtering plant in Belle Fourche, S.D.

But it wasn't enough. Opinions vary on what caused Northern Plains' demise. There were questions related to the timeliness of a USDA system that was supposed to help producers buy shares, varying opinions on how many plants there should be and their capacities, and other issues. In the final analysis, the winter of '96-'97 probably killed it. Much of the Upper Midwest had record snowfalls that year, with blizzards raging through the plains with frequency and ferocity.

"People who had committed cattle to the project lost a lot of them," said Paul Berg, associate professor, animal breeder and geneticist in the Department of Animal and Range Sciences and former Northern Plains adviser. "All of a sudden, instead of being a successful cattleman, you're struggling for existence. They didn't want to spend the money."

FINISHING -- Adding another 400-500 pounds to cows through a high-concentrate diet, from grains like corn or barley, to take them to slaughter weight, usually 1,250-1,300 pounds.

Northern Plains was dead, but Berg wasn't ready to let the core idea die with it. Two years ago he had an even better idea. "I said we should look at an incubator system," he said. "We learned from Northern Plains, where we should have been talking about a small pilot plant and building from there with a lot of little plants across the state."

Not only would the plant provide a ready market for North Dakota cattlemen that cut out many of the middlemen; it would provide data they need for improving breeding and management strategies to produce higher quality beef. The facility also would improve tracking and accountability for addressing food safety and quality issues, serve as a research and educational facility for NDSU students and faculty, and provide economic data that others need to obtain financing for small processing plants across the state.

"For business planning purposes, there really isn't any efficiency data out there on what small plants can actually do," Lardy said. "What does it cost to run them? What are the labor costs, equipment costs, and utility costs? You need those answers if you're asking a banker to finance a smaller plant."

With Sen. Bill Bowman, R-Bowman, leading the effort, the North Dakota Legislature passed a bill in its most recent session that provided $800,000 for a Beef Systems Center of Excellence. To access those funds, organizers were required to first raise at least $1 million in private plus $1 million in federal dollars.

The federal Agricultural Innovation Demonstration program provided the perfect springboard for the plan, as well as the potential for the necessary $1 million in federal money. Shortly after passage of the federal Farm Bill, U.S. Sen. Kent Conrad, D-N.D., organized a meeting that included NDSU, the RECs, and North Dakota's farm organizations and commodity groups. That meeting led to the state's proposal for a USDA rural development grant.

"We all agreed that if this program is going to be up and running across the country, let North Dakota be one of the first," said Scott Stofferahn, Conrad's deputy state director. "There are a lot of things we hope will come out of this, in terms of food safety and processing, that we think have the potential to revolutionize the beef industry."

Bringing more to the table

Organizers are well on their way to raising the money. The next steps will be to complete a design for the plant, secure a location and enter into an agreement with a private plant operator.

"We envision this coming together as a public-private partnership, very much like what Phoenix International or Alien Technologies have with the university," said Lardy. "We don't have a desire to be in the business of marketing meat products, but we'd sure like to be involved in teaching our students how to do that."

Organizers are working to complete a design with a firm in New Zealand that specializes in small processing plants. Berg says the New Zealand system has two major advantages over the current North American system. First, is extreme cleanliness, with residual carcass bacterial counts of one-tenth typically found in the United States. Second, New Zealand has been able to achieve 35 to 40 percent increased production per worker. High efficiencies come from plant design, training and worker retention.

With the efficiencies created, data collected and knowledge developed, the center will be able to achieve all three of its broad objectives related to education, research and economic development.

The facility will employ 20-25 people at an average annual salary of $40,000. Information collected at the center will make other small plants in the Velvas, Hettingers and Bowmans of North Dakota possible, multiplying those figures in rural economic development gains.

"We need to see how small and efficient we can make a plant and have it be profitable," said Berg. "Then, if we can do a 10,000-head-a-year plant and have five or six of them around the state, we will have actually created more jobs, benefited more localities than one big plant stuck out in the corner of the area somewhere. That's what we're after."

Feedlots needed to sustain these plants will be able to use agricultural byproducts from sugarbeet, wheat and ethanol processing for feed. On the other end of the spectrum, byproducts from beef processing could add even more value to the state economy. For example, hides might be used to further develop the leather industry in North Dakota.

There are also positives related to decentralization of food processing. While a terrorist might be able to infiltrate a large processing facility to spread an organism or agent to affect immense volumes of food product, a smaller, decentralized facility - where everybody knows everybody else - offers security advantages. There might be an opportunity, then, to tap into federal homeland security funds.

The Beef Systems Center of Excellence is about more than meat science or the final product, Lardy says. It's about developing knowledge and capturing profit through the entire beef industry continuum. From farm to fork, if the organizers' vision is realized, everyone in North Dakota will benefit.

"We're discovering things every day, not just here at NDSU but across the country, about how management and genetics interact to produce either a higher- or lower-quality product," said Lardy. "With this facility, there will be unique things we can explore all along the chain that will play a role in how well a consumer enjoys a steak when it ultimately gets to their plate."

-- Martin Fredricks

The Marquis de Mores

Antoine-Adedee-Marie-Vincent-Amat Manca de Vallombrosa - the Marquis de Mores - arrived by rail at the Little Missouri River in Dakota Territory in late April 1883. He pitched a tent on the east bank, broke a bottle of wine and christened his chosen spot Medora for his new bride. Then he set out to build a meat-packing and shipping empire.

The flashy, titled and aristocratic Frenchman could have settled into luxury in his homeland or his wife's native New York, but that wasn't enough for the Marquis. The entrepreneurial 25-year-old yearned for the untamed adventure and financial potential of the West.

The Marquis had heard the stories of easy money to be made in cattle in the Midwest, where bountiful grass waved in expansive, open rangeland. Recent innovations in the meat-packing industry further piqued his interest and imagination.

The Marquis was prepared to improve on Chicago meatpacker Gustavus Swift's pioneering method for slaughtering cattle and shipping dressed meat to profitable markets on the East Coast. In his book, "The Marquis de Mores: Dakota Capitalist, French Nationalist," North Dakota historian D. Jerome Tweton wrote that in 1877 Swift "...converted boxcars into beef carriers by installing a framework on which meat hooks were mounted. Leaving car doors open for ventilation, he shipped his beef on the Grand Trunk to New England." Since the cars were not iced, Swift's method only worked during the winter. He next contracted with a Michigan company to build refrigerated cars. "The Marquis carried Swift's thinking one step further," wrote Tweton. "If it were possible and more profitable to ship dressed beef from Chicago packing plants to the East by refrigerator car than to drive or ship cattle alive, why not slaughter and dress beef right on the range."

When he arrived in Dakota, the Marquis saw unlimited potential. Good grazing land for fattening cattle was abundant, and water, ice and fuel were close at hand. Ample game for hunting in the rugged Badlands provided diversion for the Marquis and his equally adventurous wife, Medora, daughter of successful Wall Street banker Louis A. von Hoffman.

With financial backing from his father-in-law and other investors, including an executive with the Northern Pacific Railroad, de Mores formed the Northern Pacific Refrigerator Car Company. He acquired 15,000 acres along the Little Missouri and built a plant that began slaughtering in October. The Marquis believed he could process "150 beeves per day," but slaughtering began on a limited scale of only about 50 per day."

He was not to be deterred. The Marquis began plans for additional slaughter houses and icehouses in southern Dakota, Montana and Minnesota. He quickly started several additional enterprises, including the shipping of salmon from Oregon to New York by rail and the founding of the Medora Stage and Forwarding Company, which ran from Medora to Deadwood.

With the activity and opportunity surrounding the plant, Medora had 251 permanent residents by the end of 1884. There were three hotels, a church, a dozen stores, a brick yard and a newspaper, The Badlands Cowboy. But by June 1885, the Marquis' meat-packing venture faced serious challenges.

One problem was the failure of local marketing. Another was how to get fat steers to butcher all year when range cattle were at their best only in the fall. Still another was that East Coast consumers preferred corn-fed beef. Finally, the big packers of Chicago got better rates from the railroads. The Medora plant ceased operations in November 1886.

Estimates of de Mores' losses in Dakota ranged from $300,000 to $1.5 million. "The Marquis' interests were too varied, and his knowledge of the business was too scant to effect a viable organization," concluded Tweton.

In 1887 the Marquis returned to France. The following year he went tiger hunting in India and promoted an Indo-Chinese railroad. He became embroiled in bitter political controversy in his native country, but continued his adventures around the world. In 1896, at the age of 38, he was murdered in the North African desert.

The Marquis de Mores left an indelible mark where his ideas crumbled into the red Badlands dust. Medora is one of North Dakota's premier tourist attractions, where on the west edge of town travelers can stand at the base of a towering smokestack, one of the few remaining remnants of his meat-packing dream.

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