Progression of the Bison Industry, Past, Present and Future (1980-2020)

Del Hensel
Mountain Man Bison
11246 Rifle St.
Commerce City CO USA 80022

The following article was originally presented at the International Bison Conference in Edmonton, Alberta in August 2000. The conference covered a wide array of bison topics including production, marketing, genetics, history and much more. This article has been reprinted with the permission of the IBC2000 Chairman.

To predict the future of the bison industry would be quite a challenge especially due to the fact it is still in it's infancy. It would be much easier to predict the cattle, pork or poultry industries with their historical trends. Rather than trying to predict the future I will give you a tiny bit of past history and some ideas of what events and factors may have an impact on the development of the bison industry for the next 20 years.

To speculate any farther than 20 years would be folly. To look back 20 years is absolutely no help. I bought my first bison 22 years ago. At that time it was estimated that there were about 30,000 bison and most were in public herds. The carcass price for prime market animals was under $2.00 a pound, if and when you could find them. I would say the first event that occurred that would set an example and set a trend for the future of the bison industry happened in the early 1960's when Roy Houck of Ft. Pierre SD (Triple U Ranch), sold his entire cattle herd and replaced them with bison. Houck eventually ended up with a herd of more than 3000, built his own processing plant and proved bison could be produced on a cattle ranch and be more profitable than beef.

After that the industry progressed moderately until approximately 10 years ago when several events occurred that greatly increased the interest in bison. The two most prominent were, Ted Turner entering the bison business and later the establishing of the North American Bison Cooperative (NABC). The media coverage of Turner helped to stimulate interest in the industry and the NABC not only stimulated interest but also gave producers a place to go with meat animals. Prior to that time herds were not growing very fast due to some diseases, especially tuberculosis and brucellosis (which were eliminated in US herds and have not reoccurred). During that time more females were culled. Breeding stock prices were fairly constant until 8 years ago at which time they began to escalate more and more each year. Bison followed the basic law of economics and as demand increased so did the price. Prior to about 10 years ago supply and quality of bison meat varied considerably more than it does today.

As I thought more and more about this presentation it occurred to me that it would be much more meaningful to survey some bison producers and some bison meat purveyors in the US and in Canada and get their thoughts on this industry and where it might be in 20 years. I chose about 20 of the most prominent and aggressive operators and they very graciously offered their opinions. I questioned them regarding how they thought the bison industry will progress over the next ten to twenty years, what they feel were the most important issues determining our progress and how Canada and the US will develop individually and relate to each other during this development.

The opinions of the producers in many cases were similar to the meat purveyors but on some issues they were quite different. In my attempt to compile this survey it became very obvious that many prominent meat purveyors also have a production herd. It is also a fact that the North American Bison Cooperative and it's bison meat sales company is solely owned by producers. From that we can assume that producers sell by far the majority of bison meat, thereby it is in their best interest to maintain a fair price for the live animals.

To contemplate the trend of an industry one must understand how it operates. When you analyzes the bison meat business it is basically no different than any other red meat business. In the link between producer and consumer every entity involved will add a fixed margin of profit. On a down market these entities may temporarily lose money but in most cases they can readjust and quickly go back to a profit basis. The producer cannot. He has his initial investment, his fixed expenses and his selling price is completely dependent on the market. For that reason it is very important that the producer be concerned with marketing and promotion for he has the most to gain or lose.

The market is completely controlled by the consumer. The consumer must first desire the product then must be able to find the product. This is where marketing, education, distribution and promotion come into play. Without all of that process in play the consumer will not or cannot buy the product.

The most prevalent comment I received is the industry's lack of marketing and distribution. Some would say that very recently bison have been over produced. The better assumption would be that bison have been inadequately marketed and distributed.

Survey results from producers

Among Canadian and US ranchers everyone emphasized the fact that bison are easier to raise and are presently more profitable than beef. Everyone feels that as this becomes better known, more and more ranchers will convert to bison especially in Canada and the northern part of the United States.

Some Canadians I spoke to felt that bison meat consumption would continually increase and someday outsell beef. Canadians also felt that more and more large ranches will enter the bison business for economic reasons. Canadians also felt that more alliances will be developed between Canadian producers and US meat purveyors because animals can be produced cheaper in Canada and the meat sold for more in the US.

All producers felt that bison will always bring a premium over beef. Some felt they may become only 20% to 30% over beef while most feel that they will always be nearly double the price of beef. Almost everyone is of the opinion that most of their profit will always come from their females and less from the males.

The majority felt the most important factor that will effect the future is educating the consumer and the beef rancher. Some felt educating the ranchers regarding the attributes of bison to be most important while others felt the need to educate the consumer regarding the reasons to eat bison. A good example of that is in South Dakota. The producers there hold regular seminars throughout the state to educate other ranchers and the public on how and why to raise bison.

No one that I spoke to believe that artificial insemination and embryo transplant will ever become a factor in the bison business. They feel it makes no economic sense today and will not in the future.

In regard to how Canadians and Americans feel about how the bison trade will progress between the two countries over the next several decades - most on both sides agree that Canadian production will increase more rapidly than in the US. Many, especially Canadians believe not only will Canada ship more and more meat South, they also feel breeding stock will reverse directions and will be sold in greater numbers from Canada into the US.

Survey results from meat purveyors

All meat purveyors think that bison meat will continue to gain market share. Some feel that to do that, prices will come down to where the super markets can sell the product more to the average income consumer. Some feel that perhaps just the trim products need to be priced more competitive while innovation could sell more of the roast products and a premium price can always be obtained for the primal cuts.

Some feel that the industry must stop trying to compete head to head with the beef hamburger market and instead must develop products that utilize the majority of the trim into unique, tasty products that take little or no complicated preparation.

Most purveyors claimed that total volume of business was up considerably but bottom line profits were down due to more required marketing costs and promotions.

Several concerns seemed to be on every meat purveyors mind. The most predominant concern was the fact that while most companies spend a lot of money on marketing and promotion there are a few who spend no money to do either but instead come into established markets and obtain market share by under cutting prices. Another major concern pertains to the fact that many producers do not align themselves with meat purveyors on any type of a long-term basis. This makes it hard for the purveyor to plan his production ahead and when the producer does have animals ready that need to be killed immediately the purveyor does not need them and cannot pay market price.

Many purveyors are very concerned about the immediate future. They feel that if something doesn't happen very quickly as in some new major markets opening or some deep pocket entity with major promotion dollars enters the picture, supplies will overwhelm the market and prices will fall quickly and drastically.

What was very evident to me from speaking to all of these business people is that everyone is very concerned about this industry and is working as hard as possible to make it succeed.

Population Statistics

After the census done by the NBA and Wyoming State University last year and using figures given by the CBA there are now approximately 200,000 bison in the US and 100,000 in Canada. The population has been growing approximately 15% per year for at least the last 10 years. Based on those figures approximately 19 million pounds of boneless meat will be processed from prime bison bulls and cull animals this year. If this trend continues we will have approximately 5 million bison and be producing 302 million pounds of meat in 2020.

Presently the human population of the US is approximately 275 million with 31 million in Canada The rate of increase is about 0.6% annually. This projects to be 330 million in US and 40 million in Canada by 2020. For at least the last 25 years the per capita consumption of beef in the US has declined and the total cattle numbers have remained between 90 and 110 million animals in the US and about 10 to 12 million in Canada. Imports and exports in the US are about equal. Total red meat (beef and pork) production in the US has been between 30 to 33 billion pounds (boneless) for many years.

From this we can assume that total production and consumption of red meat in the US will not change much in the next 20 years. That means Canadian and US bison meat will have to replace 302 million pounds of other red meat in the US and that would reduce the total other red meat production from an estimated 31 billion lb. to 30.698 billion lb., not including poultry, lamb or Canadian meat. Bison would still be barely over 1% of total US red meat production. In 20 years bison should still have an advantage over all other meats because of its mystique, it's healthy and natural image and it's prestige among affluent diners. Compared to other meats it would still be in short supply and it is the only red meat product produced 99.9% in North America.

Several projections have been published that may or may not effect red meat demand. It is predicted that due to better economic times world meat consumption will increase by 35% in the next 20 years. That demand will come mainly from the Far East, Mexico, Columbia and Brazil. It has also been reported that beef demand in the US has increased in the past year by 3.5% attributed to more media hype regarding high protein diets.

Table 1 describes projected bison population and meat production from 2000 to 2020. It was prepared by Brian Ward based on the best available information that we presently have. He used the following assumptions in its development:

Table 1. Bison population through 2020 - projected from recent growth in the US and Canadas.

1) total herd growth rate calculated at 15% from:

a) 72% true weaning percentage
b) 1.5% annual death loss
c) 15% annual slaughter (prime & cull)
d) 36% of the total herd mix are cows

2) meat production calculated from:

a) 8.5 % of total herd (prime bull slaughter)

1) 1,050 lb. average live weight

2) 42 % boneless yield

a) 19 % trim (burger)
b) 16 % roasts
c) 7 % steaks

b) 6.5 % of total herd (cull animals)

1) 1,000 lbs average live weight

2) 39 % boneless yield

a) 38 % trim (burger)
b) 1 % steak (tenderloin)

Based on these assumptions, total meat production in 2020 is 301.6 million lb. Ward summarized his calculations indicating that the current and projected "annual US consumption of red meat exceeds 30 billion lb. (boneless). If we can sustain our present growth rate for another 20 years, we will supply 1 % of this demand".

Some things to ponder

Food safety will become more important. Because of more and more media attention the consuming public will become more and more demanding for safety of the food they eat. Meat that does not have an inspection logo will likely not be allowed. Irradiation or some other type of microbial removal process will probably become routine. The first irradiated beef is presently being sold in a Florida test market and is reported to being very well received.

Natural products with no contaminants, antibiotics and steroids etc. will become ever more popular. Have you noticed the natural food stores becoming more common and the natural sections of the super markets becoming larger?

The North American Bison has a wonderful health positive image that must be maintained for us to get more market share of the meat business. Bison is perceived as environmentally correct and we need to keep it that way.

As bison meat becomes more and more competitive there will be much pressure to reduce cost of production and improve quality. Cost of inspection will be a factor in that cost. Consumers will more and more insist on tenderness. American Angus Association has developed a DNA test that can determine a calf's potential for tenderness any time after it is born. Will this happen in the bison business?

Identification methods from the farm to the plate will most likely be required in the US. In the event of any pathogen or disease problems a system will be in place whereby food can very easily be traced from a restaurant back to the specific farm that raised it. Canada has a plan for that already in place and it will be required in all beef by July 1, 2001.

More humane treatment will probably become law, from handling on the farm, to transporting and euthinization at the abattoir.

Regarding Canada and US Bison trade

Much will depend on the value of the Canadian dollar vs. the US When I first came to Canada in 1970 the Canadian dollar was worth more (about $1.15 to the US dollar) and that could happen again.

We must continually work together between our countries through our associations as we did regarding the tariff and through our personal relations across the border. We have so much in common and we must maintain that with a give and take attitude, such as we have had in the past.

We must not allow our governments to place unreasonable restrictions on either side of the border that would hinder the free flow of bison or bison meat.

Bison Meat Inspection and Nitrites

Several people have asked me if the United States Department of Agriculture (USDA) will ever include bison in the meat Act, (that would make inspection free), if nitrites will ever be allowed in pure bison meat and if the USDA will ever integrate a grading system.

I have been diligently involved in the meat inspection issue for 20 years and I still do not have an opinion if it will ever happen. We are constantly in their face and they acknowledge us, but it is a very political issue. At the present time I feel it has a 50-50 chance. If not now I feel that when the industry becomes large enough perhaps then enough political pressure can be applied to make it happen.

The nitrite issue comes under the US Food and Drug Administration (FDA). I have also been involved with this issue for 20 years. Nitrites have been considered to be carcinogenic and have only been allowed to be used in meat products that were grandfathered into the Food, Drug and Cosmetic Act prior to 1958. Bison was not. Will pure bison meat products ever be allowed to legally contain nitrites? FDA has told us not to petition for nitrite approval in pure bison meat until a 5-year study that was began in 1995 was completed. That study has now been completed and has somewhat mixed results but more on the positive side than the negative. Maybe now it is time to move on this issue.

Meat Grading

In the US there is not a Federal grading system in place. It is a possibility but I feel it will be a long time coming if ever. I would think inspection would have to be in place before grading could be done. Instead we may see quality more controlled by brand name identification. A federal grading system is expensive and who would pay for it?

Bison Associations

Bison associations will become more and more important as time goes by. In order for this small industry to survive and become more viable we will constantly need to be organized and united. As time goes by we will need to have a stronger voice in the way government can and does regulate our industry and our international trade. The associations must provide the best and most thorough communication systems. We will constantly be facing new and ongoing disease threats that will require research and information.

One faction of marketing in our industry is educating the consumer. That is the part of the process that associations can do so well. To accomplish that will require much more money than they presently receive. For the national associations to become more effective and to accomplish what the membership needs and expects will require the producers to step forward with much more funding. At least 3 times the present rate.

Summary

It is my personal opinion that for bison to continue to bring a premium price in the red meat sales we must create and maintain an image that is far above all other meat products. First of all in quality, secondly in natural and uncontaminated production and third to maintain a high quality of food safety. A safe product that has been inspected and free from food borne pathogens such as e coli 0157 and salmonella.

Then we must constantly educate the public about all the attributes of bison and if we never tarnish that image we can expect the demand for bison to continue to increase for 20 years and more. We can expect fluctuations in price over the years to come the same as any other commodity.

The sale of breeding stock will depend somewhat on the economics of the beef industry. It's pretty hard to convert a cowman when he's making money. All the past history tells us that the beef industry is down more than it's up so we must take advantage of those down years.

We must find innovative ways to utilize the secondary meat products, namely roast and trim. The snack food industry is growing faster than any other portion of the food market, 4% per year increase. Last year Americans purchased 50 billion dollars in snack food. Precooked and case ready meals are the next trend in marketing.

I feel it is pretty clear that bison is one of the most viable of any agricultural products. Our product will always be in demand. As in all agriculture there will be ups and downs. Contrary to others in the meat business, ours is not so much a matter of supply and demand but more of a problem of getting the meat to the consumer (distribution and easy accessibility). For the producers to succeed in this industry it will be more up to them to support the marketing. Beef producers have lost control of their product and are at the mercy of the very large meat purveyors. Now is the time to step forward least we go that way too.
What can each of us do today to help market our product? One small little item we can do that will go a long way is, every time we go into a restaurant or a food store we can ask one simple question, "do you serve bison, well why don't you, haven't you heard how popular it is". In the larger scheme of things we need to support all those who are doing a good job of marketing.