Cooperative meat venture growing

Grass Roots Co-op connects farmers, processors and markets

By Martha Hoffman Kerestes

Clinton, Arkansas — About a decade ago, a group of graziers producing and marketing meat in Arkansas started trying to address a problem. Demand for their production was growing, but delivering products, hauling animals to processing, and soliciting sales were taking a large part of their time.

“We started looking for a different model,” says Cody Hopkins, one of those graziers. “We were all experiencing the same problems.”

They wondered if there would be a way to share some of the marketing logistics, thus enabling the farmers to do what they do best: managing livestock and poultry.

Out of these ideas came the Grass Roots Farmers’ Cooperative, incorporated in 2014 with assistance from Heifer International, an international nonprofit. Partnership with Cyprus Valley Meats based out of Pottsville, Arkansas, has allowed processing and packaging to happen on a large scale.

Cody serves as CEO of Grass Roots, managing a team of 12 employees doing marketing, overseeing logistics, and coordinating production and technical assistance with farmers. His wife, Andrea, runs the day-to-day operation of their first-generation farm, and Cody helps out when needed when he’s not working with Grass Roots.

The co-op markets directly to customers, with online orders shipped across the country. The other 15% of sales are made through wholesale channels. The main goal of Grass Roots is to build and maintain premium market access for farmers.

Getting started
When Grass Roots was just an idea, a USDA feasibility study helped steer the group toward forming a cooperative. A USDA value-added producer grant for pastured poultry helped jump-start the business. While no individual farmer had the volume to sell wholesale to larger online e-commerce businesses like U.S. Wellness Meats, together the group could meet those sizeable demands.

As the business grew, Cody says he started looking for larger-scale processing access. “I know processing is just as hard, or harder, to make work than farming,” Cody says.

He saw the challenges processors faced, and how processors and farmers are often at odds over issues such as cost and scheduling. Cody says he recognized that processors do vital work that is rarely acknowledged by consumers.

“The farmers are the rock stars, not the processors,” Cody notes.

Processing partnership
With all these concerns in mind, Grass Roots wanted to form a partnership with a processor that could grow with the co-op. The producers found that partner in Cyprus Valley Meats and CEO Andy Shaw.

Grass Roots bought an equity stake in the processing company and formed a joint venture called Natural State Processing that does the poultry processing in Clinton, Arkansas. Large animals go through Cyprus Valley’s Pottsville plant.

Most of the farmers are within an hour or so of the processing plants. Recently, a cluster of poultry farms in Missouri joined the co-op, and the goal is to add one group of farmers at a time to promote transportation efficiencies.

Cody says the partnership has allowed Cyprus Valley to expand with confidence due to steady processing demand from one of their larger customers. And he says Grass Roots members are confident their supply chain is in good hands.

Heifer International’s role
The other key partner is Heifer International, an organization that works with smallholder farmers around the world in addressing poverty and hunger. Heifer approached the farmers early in the creation of the co-op. The nonprofit was revamping their U.S. program, and saw how they could help farmers by funding Grass Roots.

“Part of our mission is working with farmers in some of the poorest parts of the country,” Cody says. “(Heifer International) has been key in helping fund and grow this.”

Many co-ops have all farmers buy into the enterprise as the main way to raise capital for the business. Grass Roots farmers weren’t in a position to do that on a large scale, since many were beginning farmers who didn’t have the extra funds. So Heifer played a large role in startup capital, with the USDA also providing some funding.

While the farmers are the owners, Cody says they’re looking for a way to provide processing plant employees with ownership options. “Everyone understands how important the employees are to making this thing work,” he explains.

The board of directors is made up of farmers. “They hire the CEO, set the strategic direction, review and vote on the plans and budget presented by the management team, and generally make sure we are meeting our core values,” Cody explains.

Heifer International also provides current and prospective farmers access to education and training. The organization’s Heifer Ranch is a 1,200-acre working regenerative farm in Perryville, Arkansas, where farmers can spend a few days at a time learning about different pastured livestock production models.

Cody says the relationship with Heifer is “a really important part of our ecosystem and supply chain.”

A three-legged stool
He sees the operation as a three-legged stool, with Grass Roots serving as the marketer, Cyprus Valley as the processor, and Heifer International as support and education. The three legs work together to support the food chain from farmer to consumer.

Nuts and bolts
Grass Roots currently works with two dozen farms, half of them in Arkansas, with more farms regularly being added.

Chicken is the cooperative’s main seller, followed by beef, pork and a small amount of lamb.

All beef animals are 100% grassfed and finished, and producers sign a confirmation affidavit.

Cody and Andrea’s farm is one of the finishing operations that buy grassfed stockers at around a year old and finish them over the next 10-12 months. While supplying farms can do cow-calf and also finish, most do one or the other.

Pork is produced in wooded areas, with the hogs foraging for roots and acorns. Poultry are pastured and moved daily. All feed is sourced through one mill, which guarantees consistency of rations.

Feed is non-GMO but not organic, as meeting organic rules would likely double retail chicken prices that are already at a good premium above conventional supermarket chicken.

Grass Roots does not require any type of certification or third party audit. Members aren’t against the idea, but so far they haven’t found anything that adds enough value to justify the cost and complications.

“Given the scale of farmer we’re working with and the diversity of species, it’s been really tough to find a good fit for us that doesn’t end up driving cost,” Cody says.

Self-policing for standards
They also found that the myriad of market certifications confuses consumers. So at this point, Grass Roots feels that building trust with customers through transparency is preferable to third party verification.

The standards for raising animals are listed on the co-op’s website, and Grass Roots representatives are willing to answer customer questions.

Grass Roots employees frequently visit member farms to confirm that the co-op’s procedures are being followed, providing what they’ve found to be a simple and effective way of ensuring animals are being raised as customers expect. Employees also see the farm visits and phone calls as providing help and advice when needed.

Heifer Ranch is in the process of becoming a Savory Global Network Hub. Data on soil health, biodiversity, carbon sequestration capacity and other subjects are collected through this program to quantify the impact of regenerative farming practices. Individual Grass Roots farms may someday participate in such monitoring.

Wholesale pricing, not retail
The cooperative runs on lean margins, and the prices paid to the members are below what they could get by selling direct on their own.

For example, farmers are paid around $2.00/pound on the WOG (hanging bird without giblets) for pastured chickens. Grass Roots pays processing and transportation costs, while the farmers pay feed and chick costs.

That type of money won’t necessarily work for a farmer raising several hundred chickens, but 20,000 or so birds could contribute a good income on the farm for nine months of work, Cody notes.

For beef, pork and lamb, Grass Roots and the farmers split transportation costs 50-50. Grass Roots provides the contact information for transportation options, and farmers can coordinate trucking with nearby members.

Grass Roots buys from a variety of farm sizes. Beef herd sizes vary widely, hog herds range from 50 to 500, and chicken farming members produce between 10,000 and 30,000 chickens per year.

Some farmers sell to Grass Roots and direct market to their own customers on the side as well, and the co-op doesn’t discourage or limit that in any way.

Looking ahead, Cody says Grass Roots’ main goal is to help more farmers.

Creating opportunities
“Our goals are to continue creating opportunities for our farmers and processing partners and making healthy, pasture-raised meats more readily available,” he explains.

“One key way we measure our success is by how much we spend with our farmers and processors,” Cody adds. “Over the past 12 months we’ve purchased over $5 million from them, and we want to continue to increase that impact.”

Martha Hoffman Kerestes is Graze contributing editor and a grass farmer based in Streator, Illinois.