BEEFING UP ORGANICS

BY CINDY GREEN

Natural food stores' frozen sections are ruled by vegetarian entrees - rice bowls, Szechwan noodles, spinach lasagna, roasted vegetable pizza. So where's the beef? An organic pork or beef entree is a rare find - even at upscale groceries and food cooperatives.

But soon, Farm Called Earth entrees, made with organic meat, will be vying for freezer space in stores nationwide. Not only are consumers getting what they want, but farmers are getting what they should demand - a profit, says Kent Wolfe, president of Kinship Resources. The St. Paul company has been marketing organic pork and beef since January and will introduce the entrees later this summer.

Culinary pleasure

The gourmet meat entrees are not your typical TV dinner fare: chicken picatta in wine sauce, creamy ham penne, ziti pasta with Italian sausage, rotini pasta and steak, and ham with dill sauce. The line includes six beef, pork and chicken dinner entrees that sell for about $6 each, and four breakfast entrees with variations on ham, sausage, steak, eggs, cheese and potatoes. Farm Called Earth also will offer one vegetarian breakfast bowl with broccoli and eggs.

"There are almost no organic meat dishes available in the stores," says AURI food scientist Charan Wadhawan, who tested 40 recipes designed by a professional chef for the company. "They have a real good chance," in the marketplace. "Because of food safety concerns, people are buying more organic products."

Farm Called Earth entrees use premium ingredients, "the best available," Wadhawan says. The chicken picatta entree, for example, uses chicken breasts that are coated with flour, spices and fresh parsley, then pan roasted with olive oil and wine, and accompanied by basmati rice. The ziti pasta includes hot Italian sausage, white onions, olive oil, sweet red and yellow peppers, fresh parsley and parmesan. "These are high-end products," Wadhawan says.

As she has done for hundreds of companies, Wadhawan analyzes how recipes will perform as commercial products, and where nutritional adjustment need to be made. "If it's too high in fat or sodium, I let them know and we work on reducing the amounts." She further evaluates the products in her test kitchen. With frozen dishes, "I warm them up and see how they cook out. If it's too watery, I look at reducing liquids. If they are using cheddar cheese, it can toughen up with high heat," so the microwaving instructions may need to be adjusted or another cheese selected.

Wadhawan is happy with the results achieved by Farm Called Earth products. "The products are of good quality, they taste good and of course all the ingredients are organic, which does increase their cost."

"There are about 15 other products in the pipeline that we want to bring out," including pre-cooked barbecued pork and beef ribs, Wolfe says.

Engineer to entrepreneur

The company was co-founded by entrepreneur Buck MacDonald, who helped develop Oats Cream frozen dessert for the American Oats company. "He had an idea for an organic business and wanted someone to help run it," says Wolfe who responded to a classified ad MacDonald placed in Twin Cities newspapers.

An engineer, Wolfe had spent five years in the food industry, was experienced in designing efficient processing and distribution systems, and understood sales, finances and management.

Throughout his career, Wolfe says he has "turned around operations, designed process controls - and this just fit well. I wanted to find something where I could be (personally) successful, rather than just be dictated to in a job." Wolfe says he is "a believer in the Lord," and "did a lot of praying, got my answers and we got started."

In July 2002, Wolfe started running all aspects of the company and took it in a different direction - manufacturing, costing, distribution, sales and marketing. For the first three months, Kinship planned to manufacture pork and beef entrees. However, when Wolfe and MacDonald started pricing organic ingredients, they found "it's absurd what it costs," Wolfe says.

"We looked at what farmers were getting paid - they were hardly getting anything. We kinda looked in the mirror and decided this was wrong. It was not something we would go into business and tolerate. We decided to pay the farmers a fair price."

"We lined up organic farmers and paid them 20 to 30 cents more per pound than the competition. To some farmers, that added up to $20,000 more in income."

Farmer-friendly from the start

Rather than starting out with manufacturing entrees, Kinship decided to market pork and beef cuts, ground meat, and some processed meats such as brats and wieners. With an economic recession, "it was tough to raise capital," for full-scale manufacturing, Wolfe says.

Through organic agencies, Kinship found beef and pork producer-suppliers in Minnesota, Iowa, Wisconsin, the Dakotas, Illinois and Kansas. "All our steaks are choice or prime meat, and 90 percent of hamburger is choice or prime," Wolfe says. Products made from pork trim, such as brats and breakfast links, are processed in Hibbing, Minn. and other products in Iowa. "We structured a lean machine so we would take less margin to support the farmer," Wolfe says.

The entrees are "non-GMO, certified organic, and animals are treated good, with humane processing," Wolfe says. "We don't do any corporate farming."

Enter the entree

In the fall of 2002, Julie Andres joined the Kinship Resources team. Though an improbable fit, with a background in psychotherapy, "she has lived organic for years ... and she helped connect us to investors."

"So along the way we raised some money," and hired the Kenyon Marketing Group in Minneapolis to design a logo and packaging for the company's Farm Called Earth organic meat line.

Kinship Resources now has 40 individual investors and has gone back to its original plans to make entrees. The frozen products will be manufactured by Siyeza, a minority-owned company in Minneapolis, which "use to do a lot for General Mills until they shut down their organic entree line," although the company still markets frozen vegetables and other organic products.

Scaling-up nationally

Distributed by Roots & Fruits Produce, Farm Called Earth entrees will be sold in about 20 food cooperatives and upscale groceries such as Kowalski's and Byerly's in Minnesota, Wisconsin and Iowa. The company expects to eventually be in at least 100 stores and is focusing on California markets. "We want to kind of blast open the entree market ... go to a big market and open up the volume," Wolfe says. "We're in talks now with some nationwide distributors."

Current sales are about $10,000 a month. "Our goal is to be at $100 million in seven years. If we are funded, we will hit that." Wolfe says the company projects it will have more than 50 products on the market within three years.

Fair price bottom line

As much as it wants to grow in profits and distribution, Kinship Resource's bottom line still includes a profit for farmers. For example, studies show organic hogs cost 65 cents per-pound live weight to raise, but some organic food manufacturers only pay 60 cents per pound, Wolfe says. "That's not right. We found (organic) farmers going to the bank to get loans to stay in business. Some were near bankruptcy."

"My feeling is almost 100 percent of companies out there don't treat the farmers right; they give them a price to keep their margins fatter. We work the opposite - we pay a fair price for labor and support the family farm. We work that through our margins."

Maximizing profits will come through value-added processing, Wolfe says. "As profits increase, we'll give more to farmers. ... Besides paying the highest price, we give farmers shares in our company - so as the stock price increases, they build a nest egg."

"We will be responsible to shareholders, but we also want to change the industry."

Kent Wolfe, president of Kinship Resources, prepares boxes of steaks and other organic meat products for distribution to food cooperatives and upscale groceries in Minnesota, Wisconsin and Iowa. Later this summer, the company will introduce Farm Called Earth organic beef, pork and chicken entrees, which will be marketed nationally.

 

What defines organic?

Organic meat, poultry, eggs, and dairy products come from animals that are given no antibiotics or growth hormones. Organic food is produced without using most conventional pesticides, synthetic fertilizers, sewage sludge, bioengineering or ionizing radiation.

Before a product can be labeled "organic," a government-approved certifier inspects where the food is grown to make sure the producer is following USDA organic standards. Companies that handle or process organic food before it gets to the supermarket or restaurant also must be certified.

To be accredited, producers and handlers must submit their production practices, substances used, record-keeping procedures, and methods for preventing organic products from commingling with non-organic products. Operations that sell less than $5,000 a year in organic products are exempt from certification and can label their products organic if they abide by the standards, but they cannot display the USDA Organic seal. Retailers, such as grocery stores and restaurants, do not have to be certified.

Labeling standards are based on the product's percentage of organic ingredients. To be labeled "100 percent organic," a product must contain only organically-produced ingredients. Products labeled "organic" must consist of at least 95 percent organic ingredients. Both may display the USDA Organic seal.

Processed products that contain at least 70-percent organic ingredients can use the phrase "made with organic ingredients" and list up to three organic ingredients or food groups on the principal display panel. For example, soup made with at least 70-percent organic ingredients and only organic vegetables may be labeled either "made with organic peas, potatoes, and carrots," or "made with organic vegetables." The USDA seal cannot be used anywhere on the package. Up to $10,000 in civil penalties can be levied for knowingly mislabeling a product "organic."

Imported agricultural products may be labeled "organic" if they are certified by a USDA-accredited agent or approved foreign agent.

The term "natural" on meat and poultry labels is not regulated by USDA National Organic Standards, but by the agency's Food Safety and Inspection Service. A "natural" labeled product may not contain artificial ingredients or added color and can only be minimally processed without fundamentally altering the raw product. The label must explain the "natural" term such as "no added colorings or artificial ingredients; minimally processed."

For more information, see www.fsis.usda.gov.