Vertical integration makes "farm-to-fork" a reality

Feb 8, 2013

There’s something unique and “old school” going on in the colorful Rocky Mountain state. In the world of increasing “farm-to-fork” attention by consumers, one Colorado rancher has made it a reality.

Jon Pauling is a second-generation rancher out of northeastern Colorado. His father purchased the ranch in 1961 and Pauling started working it after he left high school. Since then, he has built up his operation and made it something unique in today’s cattle world, which is often characterized by extreme compartmentalization; it is almost completely vertically-integrated from “conception to consumption.”

Pauling is an extremely diversified rancher, operating an Angus seedstock herd, a feeding operation, and a farming operation. Though his father used to run a commercial cow herd, Pauling now sells animals to his commercial buyers and then buys back their calves for his feed yard.

The potentially most interesting and most unusual element to Pauling’s ventures is his direct-to-consumer market where his beef takes the proverbial cake.

“I don’t believe anyone else in the country is doing this sort of thing,” Pauling said of his operations.

At the Two Mile Ranch Market which Pauling owns, customers can find his dry-aged beef for far less than what one would pay at a standard grocery store as well as products from about 125 different local Colorado producers. Featuring other local producers is a big deal for Pauling.

“We do need to support the local entrepreneurs, and there are tons of them in Colorado,” he said fondly of his fellow Colorado producers.

The market is relatively new, having opened in November of 2011. The location had previously been home to other so-called “farmers market-style” grocers like Whole Foods and Sprouts, but now is the name-sake of Pauling’s feeding operation.

When asked about his motivation to branch out into a retail market, Pauling explained that it had as much to do with his personal values as it did economic benefits.

“A lot of it has to do with the slow food movement. I felt that I had to go to retail.”

The slow food movement, according to Slow Food USA—the U.S. branch of an international organization founded in Italy 26 years ago—is “an idea, a way of living and a way of eating.” Specifically, the movement focuses on eating locallyproduced food, eating according to the seasons, and tying individuals to their food through education and participation. Another large facet of the movement, according to Slow Food’s international organization, is preserving localized food traditions which the founders and proponents feel are being edged out by fast food, modern farming practices, and the global nature of the current economy.

“It’s more about supporting local food and your local economy,” said Pauling of the movement. “People starting to take control of [their food] from the ground up. When you look at the market, we try to focus on that.”

In the market, the effort is made to tell consumers the story of various products, be it the beef to the produce to small-batch goatmilk soap. Consumer education is another emphasis.

The butchers at the meat counter are quick to point out the different cooking requirements of dry-aged beef and answer any questions customers may have.

All of the beef available at the market is dry-aged. That detail, too, stems from Pauling’s personal values.

“It’s something that I believe in. I don’t think beef should be wet-aged. I believe in dry-aged. I’m just kind of old school like that.”

He also spoke on the added quality of dry-aged beef, both in added effort and improved flavor. “And in the end, we’re supposed to be here for the customer.”

There is another added value for the customer which comes from Pauling’s integrated business model: no middleman. The significant lack of different hands the cattle and then beef needs to travel through has a noticeable impact on the price of the beef for the consumer.

Since price is constantly quoted in consumer surveys as the number-one driving factor behind protein purchases, anything that can make beef more attractive economically is a valuable investment. “The fewer middlemen you have, the better,” said Pauling. “We need to make food more affordable.”

The effort is one of both benefits and challenges, like anything. On the positive side, not only do the integrated model and the market embody some of Pauling’s personal values regarding food by offering a true farm-to-fork operation to his local community, he said it’s just a plain good business plan. “It’s a way to control and limit risk.”

Unsurprisingly, a lot of the challenges stem from competition with wellknown names in specialty grocery such as the aforementioned Whole Foods and Sprouts/Sunflower. Another challenge is that it is not something that was (or could have been) done overnight and it’s certainly not for everyone.

“If I hadn’t have done the carcass research, I wouldn’t have been able to do this. It’s the strength of the genetics that makes the market possible. It would take someone at least 15 years to replicate what I’ve created here.”

Pauling has been doing individual herd research and extensive carcass testing for over 20 years as well as sharing information with the commercial cattlemen who buy his bulls, which he said is a very loyal group. “We do close outs on all our cattle. But they are not just carcass cattle, they are performance cattle.”

He explained that despite the consumer-centric nature of the market, focus cannot be piled on one area of the chain alone but instead each link requires dedication and attention. And Pauling’s attention has paid off on the two extremes of the beef chain at least; on the one hand, his herd ranked in the top 1 percent nationally, and on the other, Pauling reported 70 percent of his beef qualifies for the Certified Angus Beef program.

As mentioned, the market is a fairly new addition to Pauling’s ventures. Prior to opening the market, most all of his beef went directly to high-end area restaurants, particularly in the Denver area. He still sends his beef to restaurants in the area, but with the continued diversification of his ventures, the general retail customer can now benefit as well. — Kerry Halladay, WLJ Editor