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Pushing the boundaries of Organic beef

Jon Condon, 07/09/2011

Looking over a sample of OMC's product in Brisbane's Char Organic restaurant are restarateur, John Kilroy and Sanger Australia's Richard Rains, seated, with distributor Duncan South, Bidvest, left, and OMC director, Alister FergusonThere was a time not that long back when the notion of featuring a piece of Certified Organic beef on the menu in a top-class restaurant was considered counter-intuitive.

Not only was Organic beef grassfed, but it tended to be slower-growing and more exposed to drought episodes due to lack of supplement and implant support, and was widely considered too inconsistent to serve to customers in the upper-end of the food service market.

But times are changing. Once, consumers were prepared to tolerate some darkness in meat colour, odd shapes or bruising in organic food product because ‘that was what Organic was all about.’

Now, consumers are still happy to pay the premium for an Organic option, but they expect it to be as good, if not better, than the conventional alternative.

Leading that transition is Australia’s largest Certified Organic beef supply chain, The Organic Meat Company, which today kills better than 400 head weekly through southern Queensland service kill provider, Stanbroke Beef.

OMC is an off-shoot of Sanger Australia, the nation’s largest non-packer exporter, which has deep market penetration into North America, North Asia, the Middle East and other export destinations.

Heading the OMC program over its six-year evolution has been Alister Ferguson, the company’s director and marketing manager. He believes Australia is well-positioned to take advantage of the growing demand for organic beef in the US and other key target markets, as Australia is one of the few countries that can generate 100pc grassfed range reared Organic beef in significant volumes 12 months of the year.

About 18 months ago, OMC took the decision to start grading its carcases under MSA principles, further underpinning the eating performance of its supply chain, and providing a catalyst for supply into high-end Australian restaurants (see today’s separate story “Restaurant explodes some myths about Organic”). OMC is believed to be Australia’s only Organic program backed by MSA.

Produced under Australian Certified Organic (ACO) and USDA Certified Organic principles, the company’s turnoff features in domestic and international retail segments including a large, high-end US natural and organic retailer. Increasingly, it is also finding niches in the restaurant food service segment, often where conventional restaurants feature an Organic beef option.

At the time of OMC’s establishment in 2005, Sanger saw Certified Organic as an emerging market segment with prospects for growth and a high degree of ‘marketability’, while diversifying the company’s operations.

But the business has been anything but an overnight success. Building a successful, large-scale organic meat business is a long, slow and sometimes painful process, Mr Ferguson said.

“Any development in organic is a measured process. It’s not like turning on a tap, and supply/demand can easily be destabilised,” he said.

“It takes three years for a participating livestock producer to gain full certification. When we started the business, we established relationships with a core group of producers who we wanted to work with. As the business has grown and new customers have been established, we have gradually added more supply.”

Because of the delicate balance in the organic beef market, it was important to carefully manage the development of both the supply and demand sides, he said.

The supply issue has been managed by spreading the livestock sourcing base across a broad geographic area. In Queensland, the major drawing areas are in the Blackall/Tambo/Augathella area; Capella/Emerald and nearby regions in Central Queensland; and the south-west. These are supplemented by other supply out of areas like Guyra and regions of central and northern NSW.

In some cases, cattle running into seasonal problems in one district can be taken on to co-operator properties in other areas for finishing.

Mr Ferguson said the big 2011 season across eastern Australian had proven to be a ‘dream year’ in terms of consistency of supply for organic meat.

“Our season has run a lot longer than we would normally expect, our body weights are up, and grading performance has remained high. Typically this is a tighter time of year, but this year has been exceptional,” he said.

Most dedicated suppliers to OMC now geared their turnoff to the company’s requirements, with the geographic spread of suppliers helping deliver over the 12-month window.

“We’ve built our business around continuity of supply. Especially on the retail side, we need to be there 52 weeks a year,” he said.

Typical carcase weights at this time of year are 280-320kg, but can be higher in the first half. Livestock suppliers are typically receiving 25-30pc above conventional cattle rates for similar cattle. 

'Seven years down a 30-year path'

In terms of the evolution of the global Organic market, Mr Ferguson said Europe was probably 30 years ahead in terms of its adoption of Organic foods, and Australia about seven years down the path towards being a ‘mature’ market. North America was half-way between the two.

“Analysts say organic is likely to handle five percent of the market in a mature market environment, so we are still a very long way from that in Australia, where it is still under 1pc,” he said.

Asked whether Organics demand tended to suffer more than conventional beef during times like this when there is heightened price sensitivity among consumers because of the state of the economy, Mr Ferguson said organic-oriented customers tended to stay very loyal to the program.

“What tends to happen, though, is the same as overall consumers – they move from rib-eye to a cheaper option, but will continue to make an organic choice,” he said.

“Just as is being seen in the conventional market, organic consumers during the economic downturn are also tending to eat more at home, rather than out at restaurants. It means they can still save money by buying a higher-priced raw material for home consumption or entertaining.”

Apart from its Certified Organic credentials, Organic was also filling a consumer demand for less intensively produced beef, trading more on its ‘100pc grassfed free range’ tag than its chemical-free tag.

Each The Organic Meat Company carton lid carries a long list of brand claims, including:

  • 100pc grassfed
  • Never confined
  • Free-range
  • No antibiotics
  • No HGP
  • No chemicals
  • Certified Organic
  • GAP Certified.

OMC is possibly the only Australian exporter supplying under the Global Animal Partnership (GAP) animal welfare standards into the Whole Foods Market retail network in the US. The system was discussed in detail on Beef Central in this article “Animal Welfare Labelling launched.”

Mr Ferguson said the Organic tag could now capture a premium right through the carcase, with cuts like knuckles used in organic stir dry, ox tail, and trim used in mince or hot dogs.

“There’s underlying demand at every point in the carcase for Organic. In fact the opportunity for premiums can be relatively higher on non-grilling cuts,” he said.

  • The Organic Meat Company has mentoring programs for beef producers interested in joining Certified Organic supply. Contact livestock manager Peter Gall for details: 0427 574 941 email: organicmeatco@bigpond.com  
     

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