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Staying Outdoors Fattens Hogs and Profits

Niman’s natural pork market boosts smaller Michigan producers

February 17, 2004 | By Patty Cantrell
Great Lakes Bulletin News Service

MLUI/Patty Cantrell
  Southwestern Michigan hog farmers John and Beverly Stamp were ready to quit their business until they discovered the Niman Pork Ranch Company. Niman, which specializes in traditionally raised livestock, says its sales are growing 35 percent annually.

One of the most sought-after entrees at fancy restaurants from San Francisco to New York City is a juicy, old-fashioned pork chop that, luckily, some pig-headed farmers in southwestern Michigan still produce. While the industry may consider them backward, these farmers are actually on the cutting edge of new markets for safe, succulent foods that offer a profitable way forward for Michigan communities struggling to keep farmers and farmland in business.

Over the past 10 years, Dave and Tena Warkentien, John and Beverly Stamp, Steve and Jan Petersen, Andy and Amy Pachay, and many of their farm neighbors in Cass, Van Buren, and several other adjacent counties resisted the industry rush to build and operate large animal confinement buildings, where most pork in Michigan and the nation is produced today. “I couldn’t work in one of those things, and I don’t think the hogs like it much in there either,” said Mr. Warkentien, his blue cap and earflaps framing his wind-chilled face.

Their stubbornness is paying off now that Niman Ranch Pork Company, the nation’s leading marketer of natural pork, has discovered their small-scale operations in this region, where it’s still common to see pigs rooting around outside and sows building deep straw nests to farrow their young. The company pays top dollar for pigs raised outdoors without the use of feed laced with animal byproducts, growth-promoting hormones, or antibiotics — routine ingredients in confinement systems. Such outdoor-raised pork has more fat in it than the confined variety, which makes the meat both juicy and very popular with high-powered chefs desperate to find it in a market where lean is king.

With hundreds of accounts at restaurants and stores in nearly 40 states, and sales growing at 35 percent per year, Niman Ranch Pork’s success is evidence of a widespread and fundamental shift in food markets. While still small in relation to food sales at Wal-Mart and other superstores, indicators suggest Niman Ranch Pork and other local and national sellers of natural foods are just beginning to tap a potentially huge and profitable market.

It is an opportunity that challenges Michigan’s small and mid-sized farmers to take stock of their resources and develop new strategies. Under the longtime influence of consolidating global food markets, financial and technical assistance to Michigan farms has been geared to helping them expand to factory size even as other, similar, ever-expanding farms elsewhere flooded the market, depressed prices, and eventually pushed many of them out of business anyway. In just five years, from 1997 to 2002, Michigan lost 700, or nearly a quarter, of its hog farmers. The change has hurt more than the hog farmers, according to Mr. Pachay.

“When more people were raising hogs around here, the stores and restaurants in Marcellus and other towns were busy,” he said. “Now everybody’s working in Indiana and buying their gas there.”

Stay Small and Stay In?
The idea of building local economic opportunity from a base of small and mid-size farmers selling natural and specialty farm products does not fit the “get big or get out” past. Yet it may well be the path to a future in which more families are able to make a living in farming, and more local businesses — from specialty food processors to restaurants and feed stores — benefit from family farm business growth.

As a result of their opportunity with Niman Ranch Pork, Amy and Andy Pachay are now investing in breeding stock and excited about continuing to raise their two young children on the farm. “It’s been a really tough market the last several years, and we were ready to quit.” Andy Pachay said. “We couldn’t justify keeping the farm if we couldn’t make a living with it. But now we’ve found a market that values the way we raise pigs.”

It was the Pachays who convinced Niman Ranch Pork manager Paul Willis to visit southwest Michigan and meet the many outdoor pork producers that persisted there. And it was also the Pachays who brought independent packing plant DeVries Meats of Coopersville, west of Grand Rapids, into the network.

Rather than ship live pigs all the way to a facility that Niman Ranch Pork works with in Iowa, these producers are saving money and saving stress on the animals by using DeVries Meats, only two hours away. It’s an example of how new sales for local farms can strengthen other businesses also trying to stay afloat as larger companies dominate markets.

The business is welcome at DeVries Meats, a smaller processor that, like small farmers, cannot compete with massive packing plants but does well serving profitable niche markets. Owner Ken DeVries is now investing in upgrades that will help the plant keep up with Niman Ranch Pork’s growing demand. He also foresees a possibility of adding to his total of 14 employees. “If this continues to grow, absolutely,” Mr. DeVries said.

Niman Ranch Pork has plenty of room in its network for more Michigan farmers, especially those who can produce year-round, because the company needs a consistent supply of fresh meat through the year, said Niman's Mr. Willis: “We’re getting 50 to 150 pigs a week so far in Michigan. We could use another 1,000 pigs per week right now.” Niman Ranch Pork’s parent company, Niman Ranch, also sells beef and lamb nationwide to high-end restaurants and stores.

Often A Tricky Transition
But selling to Niman Ranch Pork is not the entire answer for large or even many mid-size farms that are still paying off millions of dollars in loans for the factory systems they’ve built. “The premium offered has to be large enough to justify the switch,” said Jerry May, Michigan State University swine extension agent.

Some who have not gone too far down the factory farm road are thinking about making that switch. Niman Ranch Pork pays as much as 50 percent more than average market prices — enticing money for pork producers like Donald Williams, who raises hogs in a semi-confinement operation in Eaton County. He is not sure he can make the transition successfully, although he wants to. He sees Niman Ranch Pork as a way to stay in business and keep his family farming for at least another three generations in the Bellevue area, between Battle Creek and Lansing. The tough part is giving up on major investments he’s made in confinement systems. “These buildings we have built will be of no value with Niman,” he says. “But it’s getting harder and harder to sell hogs otherwise.”

He said the answer for him and the other farmers in his predicament is for lenders and farm agencies to stop helping farms build factories and instead start helping them build profitability.

“I’m against building any more what I call monuments out here. I don’t see the future for these anymore,” he said. “As things are evolving today, what I’d build now would be nowhere near enough in five years. Why spend millions of dollars now when it will be obsolete in five years?”

John and Beverly Stamp live up the road from the Pachays and, like them, were preparing to quit hog farming until the Niman Ranch Pork opportunity came along. John and Beverly are well matched in energy and farm style — he in dark blue coveralls and hers fluorescent orange — as they busily ramp up their operation from fattening 400 pigs last year to totally producing 1,000 this year. “Without Niman Ranch this would have been our last year raising hogs,” Mr. Stamp said.

He added that he never even considered investing in confinement systems: “I just got the farm paid off; I don’t want to go borrow $3 or $5 million. It was hard enough paying off just a fraction of that, and times were better then.”

Going Whole Hog Restores Community
Nearly all the outdoor pork producers now selling to Niman Ranch Pork have explored selling their meat directly to consumers and restaurants hungry for the taste that chefs and shoppers can’t find in most stores. “The problem is it’s easy to sell pork chops and hams. But what do you do with the rest?” Mr. Pachay explained. “Niman Ranch buys the whole hog, which is a real help.”

Even more important, perhaps, is Niman Ranch Pork’s marketing power, something that none of these southwest Michigan farms could ever muster alone, said Jan Petersen, who farms with her husband Steve near Decatur.

“It is so great that Niman came along when it did with its great marketing talents,” she said. “We had always hoped to market our own niche products, but this makes it so much easier for us to get our product out there.”

One of the more surprising pleasures of selling to Niman Ranch Pork is working more closely with neighbors, Ms. Pachay said. Getting pigs to market now means, for example, going from farm to farm to pick up a few at each and filling up a truckload to take to the packing plant. “Before we were all on our own,” she said. “Now we’re working together and more of a community.”

Patty Cantrell, an economist and journalist, leads the Michigan Land Use Institute’s Seeds of Prosperity project, which aims to strengthen new entrepreneurial agriculture. You can reach her at patty@mlui.org.

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