But increasingly, producers, individuals, or groups, are identifying and developing their own niche markets. Not every effort is a success, but many are. And a successful venture can extend the good times and insulate producers from down markets.
And sometimes, as Producer Dave Miller explains in this profile of a North Dakota beef co-operative, the effort to develop a niche market can generate some additional opportunities.
For the past 26 years, John Cable has raised cattle on his ranch near Esmond, North Dakota. This group of almost 100, which represents about half of his herd, is approaching market weight.
For most of his career, Cable was paid whatever the market offered for his cattle. Over that same time period operating costs have increased and profits declined.
Realizing his survival was based on capturing more income from his animals Cable began to look for ways to increase his profit margin.
John Cable, Esmond, North Dakota: "Well, we need an opportunity to sell our meat here locally. We have as much as an eighteen hundred dollar cost just in shipping these animals that you've just been taking pictures of to get them to a market. The markets are south and east of here in the Kansas City area or Des Moines, Iowa, that kind of thing."
Cable's search ended a few years ago when Central Dakota Beef, the local cattle association, offered him a chance to buy in to a unique venture - part ownership in a packing plant. Though on the surface it appeared to be a risky investment, Central Dakota's research told a different story. There was a relatively untapped niche' market for beef sales to people of the Islamic faith living in major cities like Detroit, Kansas City and Minneapolis. To take advantage of this market, ranchers would have to raise their cattle according to the religious tenants of Halal, a series of rules that outline feeding regimes and processing procedures.
Along with a USDA inspection program that would assure sales almost anywhere, the business plan involved raising enough money to equip a packing plant and then finding a town in the area that was willing to construct a building to hold it all. A total of sixty people, mostly ranchers, decided owning the entire production stream, from farm gate to dinner plate, was worth the risk and formed Dakota Halal. The rancher-investors bought more than $950-thousand in company stock at a price of $10-thousand per share. Each share gives an investor the right to deliver 100-head to the processing plant.
Several communities competed to bring Dakota Halal and its 19 full-time jobs to their town. When the bidding process was finished, Harvey, North Dakota, came out on top and built this $1.1-million building.
Wendell Grondahl is the General Manager of Dakota Halal.
Wendell Grondahl, General Manager, Dakota Halal: "Oh, there was a lot of skepticism, of course, we were a long ways from all markets...Everybody knows we have the best cattle in the world up here, our genetics are great and feed is not a problem...we need things here. If the next generation is going to be here we need things other than just raw agriculture."
To satisfy the religious needs of their customers, the rancher-investors of Dakota Hill avoid feed containing meat bi-products and vitamins derived from animals. Further, no antibiotics, or hormones, are used during the last 120 days before delivery. Detailed records on the lives of their calves, from birth to the back door of the plant, are kept and certified. The whole process takes almost two years, slightly longer than for conventional cattle production but the pay off comes in the form of lower transportation costs and production practice premiums. As an example, a producer can garner a higher bonus for keeping a calf free of animal bi-products, drugs and hormones for its entire life.
Coupled with the monetary reward, producers are provided with carcass data on each animal. This report card gives a clear indication of the performance of both feed and genetics. John Cable, Esmond, North Dakota: "Being involved with the plant here in Harvey, North Dakota has not only allowed me to see what my animals look like after they're butchered, I see what the product is, I see whether I've done a good job, I get an idea from a local guy as to whether or not what we've done is what we set out to do."
In May of 2001, the first meat went out to Islamic consumers across the U.S. as well as one shipment that eventually went to Saudi Arabia.
The Holy Land grocery and deli in Minneapolis, Minnesota, is one of Dakota Halal's most consistent customer-accounts. Though the primary customer base are members of the Islamic faith, the owners of Holy Land claim as much as 40% of their clientele are not Islamic.
Majdi Wadi, is Holy Land's General Manager.
Majdi Wadi, Holy Land Grocery and Deli: "Now, people are getting more educated and they're finding Dakota Halal to match the organic, as I told you, but with the prices like any other product. Organic prices are kind of high for them, not affordable for them but Dakota Halal, it has organic specification with lower prices."
Wadi is so pleased with the product that he has been steadily increasing the size of his order since receiving his first shipment.
Dakota Halal products run the gamut from case-ready steaks and breakfast beef, a product that resembles bacon, to a line of deli meats and frozen dinners marketed under the name Zem Zem. Wadi even grinds some of the bulk product into hamburger.
On September 11, 2001, five months after its first product went out the door, terrorists slammed airplanes into the World Trade Center and the Pentagon. The orders all but stopped.
Realizing they had a quality, source-verified product, Dakota Halal identified another market: the health conscious consumer. In late September of 2001, they began selling their entire product line to regional grocery stores, as well as area restaurants, under the Sheyenne Valley label.
As America gets further away from September 11, things have begun to improve for Dakota Halal. Orders from Islamic customers are on the rise, the Sheyenne Valley label is taking hold and the plant has taken on some custom processing work. Cable, who sold only 12 of his animals to the company last year, just sent 21 animals to the plant for processing at the end of November. He sees the increase as encouraging and hopes that next year an even larger percentage of his herd will be needed to fill orders.
John Cable, Esmond, North Dakota:"... we think we have a really good product but we don't think everybody knows about it. So, we're looking for a niche market and we think in the meantime we're also supplying a product that the American public wants."
For Market to Market, I'm David Miller.