Sunday, October 2, 2011

Rebecca and the big bad meat company

[Disclosure:  I don't think that Rebecca Thistlewaite over at honestmeat.com  likes me one little bit.  In fact, I'm pretty sure she hates me.  But I sure do love her.  ]

I read Rebeccas blog from time to time because she talks about stuff that I'm interested in.  She has a completely different point of view from mine on many subjects. 

So I'm reading her most recent entry, about a new farm operation that is starting in northern California, by the name of belcampo meats.   

So the basic facts about Belcampo: 

They're claiming to have purchased 10,000 acres of farmland
They're showing up in farmers markets and gatherings
They claim to be building their own processing plant (which they also say will be available to other farmers to process their product)
 And they plan on doing a variety of products, beef, pork, chicken, lamb.  

Rebbecca goes on a rant about the evils of rich people, and how the sky will fall if...  well, go read it for yourself.  But here's my take: 

One of the biggest barriers to entry for a farmer is finding the land to farm on.  you've got to have land to farm, and there's no way around that.  And land, particularly land near population centers, is going to cost a lot. 

So this company purchased 10,000 acres, and looks to be getting into business producing food.   Someone sold them those acres, presumably at market prices.  That's a nice exit strategy for folks who own land - I'm sure they were happy to sell. 

But the point is that belcampo now has to come up with a business model and plan to make money after paying retail prices for land, and here's how that helps small farmers: 

If they can make a profit after paying retail for the land, so can any other entity -- corporation, family or individual.    If they can do that using good practices, even better. 

I think that the "multigenerational farms" that rebecca quoted are one of the things that make farming particularly hard to enter.  If they're using land that they own outright it's a HUGE competitive advantage over someone who has a mortgage.   And often that translates into production that is actually below the true cost.  And those lower prices in turn mean that folks with mortgages have an even harder time. 

Rebeccas own experience on leased land shows that land ownership is one of the key elements that makes a farm stable.  Don't know why she's pitching a fit about someone who's going the other way -- buying the land first. 

UPDATE:   Rebecca is claiming that farmers are losing "thousands of dollars of sales" to belcampo -- but they're apparently not.  See the comments in this thread.   

8 comments:

Ken said...

Of course, in your country a corporation is 'someone'. It will be a pity if a whole lot of current producers go to the wall while this new someone establishes a marketshare, and a pity for their communities,too. Here in NZ over the last fifty years I've seen whole communities hollowed out by farm aggregation, or in towns, from the incursion of big-box national-level retail into local merchandising. In most cases what I saw was not good for the community. But you'd know about that already, I guess, having seen the burgeoning prosperity of your middle and working classes over the last 30 years.

colliefarm said...

Oh, this is so interesting, as I had spoken to one of the ranch managers there, a person who is in charge of purchasing breeding animals to build up their herds. Indeed it does seem like a very big undertaking which must require significant capital investment.

Some of their situation reminds me of Thundering Hooves, that there is this huge demand for a particular type of product and marketing, and in order for a company to meet that kind of demand, they kind of have to "go big." But not without risk.

It seems like a variety of people are trying to solve this problem, of how to supply organic meat in high enough volume to meet demand. It's not a trivial equation, with USA inspection in the mix!

I know in local farmers organizations here, we've talked about how even banded together, we are not nearly big enough to meet this demand or handle the year-round production and distribution channels required- not to mention, achieve consistency of product. So it almost mandates large corporations fulfill the need, yet we have cultural aversion to that notion. A dilemma indeed!

I think we'll all be watching this endeavor with interest.

Bruce King said...

Corporations are people under the law, and I think that is unfortunate, but thats out of the scope of this conversation.

We've had decades of farm consolidation in this country; in virtually every community where farming is the primary job, the population has dropped, to the point that we're at less than 1% of the population says that they farm for a living.

I'm guessing since they're going places and doing things that they'll have to hire folks to do that, and that those folks will be paid a fair wage.

I agree that our middle and working class workers have seen real wage cuts in the last 30 years, and that's unfortunate. I don't have much sympathy for folks that cannot take competitors.

Competition is a fact of life in our society. It's silly to think that farming would be immunune from it.

Bruce King said...

And yes, thundering hooves is exactly what I was thinking. They're apparently spending tens of millions of dollars on this.

jason said...

I just went and read her post. That is annoying and she is just very bitter towards anybody who has any kind of success in their life.

Anya Fernald said...

HI all - I am the CEO of Belcampo. I tried to post my response to Rebecca's post on her blog and she has not approved my comment...so I guess I have been censored because I have called her on a total lack of fact checking or accuracy. Here is an extract of my response to her post:
- I personally developed the idea for Belcampo Meat Company and the business plan for it. I am thrilled there’s an investor who believes in this vision, has the land to support it, and is willing to provide the patient capital it takes to do things right. We are opening a group of butcher shops in California in the next few years, we are also opening our own slaughterhouse. More than 80% of the meat we process in our slaughterhouse starting next year will be from other farms. I think many small farmers in Oregon and California will be thrilled about this.
- Will our stores take business away from small farmers? We are not going into farmers markets, we’re not wholesaling to any restaurants….I think I am going to be opening a complementary business that will raise awareness for quality meats that will have a real benefit for small farmers in the Bay Area.
- Belcampo is not owned by an investment firm. The primary shareholder in Belcampo also owns Global Portfolio advisors, these are completely separate investments. The trademark for Belcampo was pulled by a company that coordinates the primary investor’s work simply because we had not yet received the business license for Belcampo.
- When I was running a sustainable food and farm business consulting company, I met the investor behind Belcampo – Todd Robinson – and developed the concept for this business, wrote the business plan, and secured his investment in the business. As part of that, me and other people from our team called various small farmers to verify numbers and assumptions. We did this for all kinds of businesses I planned. There is no good general data on sustainable, extensive animal husbandry data so we had to build it from the ground up. Often, we paid people, sometimes they were offended when we asked. So we played it by ear. I think that the development of good generalizable economic data around sustainable farming is crucial to making more farms more successful. The majority of farmers we spoke with were happy to help out.
- I am the CEO of Belcampo, I have closed my consulting company to focus exclusively on Belcampo. I am not a lobbyist/marketer.
- The biggest meat provider by far at Eat Real are Del Monte Meat Company (their sustainable line) and Whole Foods. There was no exclusivity for Belcampo at all in either Los Angeles or in Oakland. There were dozens of other meat companies present at the event. One of our goals at the festival is to get many local street food sellers to use quality meat. To that end, Eat Real has built relationships with companies that produce quality meat, we achieve that by having as many meat companies participate as possible. As an FYI, Eat Real is now becoming the annual fundraiser for the non-profit Food Craft Institute, hopefully the relationship with all our meat providers will continue to thrive.
Thank you for giving me a chance to tell our side of the story. Honestmeat is not so honest.
Anya Fernald

Anya said...

HI all - I am the CEO of Belcampo. I tried to post my response to Rebecca's post on her blog and she has not approved my comment...so I guess I have been censored because I have called her on a total lack of fact checking or accuracy. Here is an extract of my response to her post:
- I personally developed the idea for Belcampo Meat Company and the business plan for it. I am thrilled there’s an investor who believes in this vision, has the land to support it, and is willing to provide the patient capital it takes to do things right. We are opening a group of butcher shops in California in the next few years, we are also opening our own slaughterhouse. More than 80% of the meat we process in our slaughterhouse starting next year will be from other farms. I think many small farmers in Oregon and California will be thrilled about this.
- Will our stores take business away from small farmers? We are not going into farmers markets, we’re not wholesaling to any restaurants….I think I am going to be opening a complementary business that will raise awareness for quality meats that will have a real benefit for small farmers in the Bay Area.
- Belcampo is not owned by an investment firm. The primary shareholder in Belcampo also owns Global Portfolio advisors, these are completely separate investments. The trademark for Belcampo was pulled by a company that coordinates the primary investor’s work simply because we had not yet received the business license for Belcampo.
- When I was running a sustainable food and farm business consulting company, I met the investor behind Belcampo – Todd Robinson – and developed the concept for this business, wrote the business plan, and secured his investment in the business. As part of that, me and other people from our team called various small farmers to verify numbers and assumptions. We did this for all kinds of businesses I planned. There is no good general data on sustainable, extensive animal husbandry data so we had to build it from the ground up. Often, we paid people, sometimes they were offended when we asked. So we played it by ear. I think that the development of good generalizable economic data around sustainable farming is crucial to making more farms more successful. The majority of farmers we spoke with were happy to help out.
- I am the CEO of Belcampo, I have closed my consulting company to focus exclusively on Belcampo. I am not a lobbyist/marketer.
- The biggest meat provider by far at Eat Real are Del Monte Meat Company (their sustainable line) and Whole Foods. There was no exclusivity for Belcampo at all in either Los Angeles or in Oakland. There were dozens of other meat companies present at the event. One of our goals at the festival is to get many local street food sellers to use quality meat. To that end, Eat Real has built relationships with companies that produce quality meat, we achieve that by having as many meat companies participate as possible. As an FYI, Eat Real is now becoming the annual fundraiser for the non-profit Food Craft Institute, hopefully the relationship with all our meat providers will continue to thrive.
Thank you for giving me a chance to tell our side of the story. Honestmeat is not so honest.
Anya Fernald

Joanne said...

Wow, looks like she really stepped in it. If she was actually honest in her writing, I'd have thought that the proper way to go about things would have been to redact the body of the post, and update it with an apology along with a notation that the post itself had been redacted and why. Instead, she just pulled it. We all make mistakes, I've shot my mouth off enough times and was called on the carpet to know how embarassing it is to apologize publicly for something like that. But that's what a person should do.

Regarding the 'true' cost of production in farming, or any other business for that matter, it's going to vary between businesses/business models. An exempt sole proprietor will have a lower labor cost per manhour than a business with employees. Someone who pays cash for land, infrastructure, equipment, etc. will have lower overhead than a business that borrows money for any or all of those. If I start my business on the side while working another job and boot strap that business to the point that I can retire from my former career and work my business full time, I'll have lower overhead than someone who takes out a small business loan.

Someone who raises livestock on a very small scale probably will have a higher cost of production than someone raising them on a larger scale. At the very least the larger scale will make it possible to buy feed by the ton instead of by the 50# bag (a considerable savings).

So the true cost of production is a moving target, and I think it's inacurate to say that someone who owns the land they're working on outright is able to sell at below the true cost of production. Heck, if you rent acreage your overhead will be lower than if you take out a loan to buy it.