Following a successful grass-fed beef trial on Hawaii Island, Parker Ranch and Ulupono Initiative announced the launch of the Paniolo Cattle Company, a joint venture aimed at statewide local beef production.
The pasture-to-table enterprise taps into a growing demand for high-quality, affordable, locally raised beef.
Paniolo Cattle Company will begin with 1,400 head of cattle to be raised at Parker Ranch on Hawaii Island. This represents the largest commitment of grass-fed beef by a single ranch in the state and will increase the supply of grass-fed steers to the market by nearly 35 percent.
Parker Ranch provides calves and cattle management expertise for the joint venture and Ulupono Initiative contributes the intellectual capital to develop best practices for profitability and sustainable agricultural methods. Both entities have financial interest and will handle the commercial aspects of the business. Parker Ranch, headquartered in Waimea on Hawaii Island, is Hawaii's largest cattle operation, and the state's second largest landowner.
Ranching profitability has long been impacted by fluctuating costs of oil and corn. The price of cattle over the last decade has increased about 57 percent, while the price of feed has increased 129 percent, causing conventional ranching returns to suffer. Paniolo Cattle Company seeks to reduce costs substantially by animal husbandry based on sound pasture management.
"This joint venture is about trying to level the cost of beef, creating an at-home thriving cattle industry that is energy-efficient and protects us against volatility in fuel and feed costs," said Dutch Kuyper, CEO of Parker Ranch. "Restaurants, food markets and consumers want quality and consistency in beef, at reasonable prices."
The goal is to create a more robust local beef supply chain and ensure that a quality, consistent product is available to all Hawaii consumers, not just the high-end market. In the pre-commercial trial on Hawaii Island, conducted from September 2012 to May 2013, 80 percent of the beef was graded "choice."
Market research conducted by Ulupono indicated that Oahu consumers would make the shift to local beef if the quality was consistent and prices were reasonable.
Ulupono has been exploring the grass-fed beef model for nearly four years.
"We view this as an equal partnership of capital and capabilities based on shared values, mutual respect, and a commitment to the future of ranching in Hawaii," said Kyle Datta, general partner of Ulupono Initiative.
Ulupono Initiative is an impact investment firm focused on Hawaii operations that promote a self-reliant community.
Paniolo Cattle Company plans to expand statewide and has begun talks with ranchers on Oahu, Maui and Kauai to broaden the program’s reach and benefit Hawaii ranchers, processors, and consumers in every county. The pace of expansion will be based on the market demand.
Kuyper and Datta said meetings with Gov. Neil Abercrombie and cattle ranchers were the catalyst behind pursuing a value-based brand that increases the sustainability of Hawaii’s food supply and reduces the headwinds facing the local ranching industry.
"The State understands the food security issues. We’ve gotten a lot of support and guidance from Scott Enright, State Department of Agriculture board chair," said Datta.
Paniolo Cattle Company will be involved in the full cycle of beef production, from grazing and finishing to working with processors and distribution.
In the initial grass-fed stage, cattle are free to roam and graze pasture until they reach about 800 pounds. The finishing stage requires active management to assure consistent nutrition to grow to 1,150 pounds, which produces high-quality meat that has the tenderness consumers seek.
Paniolo Cattle Company will operate irrigated finishing forage pastures and employ rotational pasture techniques to achieve consistency and quality, an approach not widely practiced in Hawaii.
"Parker Ranch and Ulupono Initiative both share the core value of caring about our aina and we’re committed to finding solutions that allow us to be here for the long-term providing affordable, high quality food for our community," said Datta. "The rotational grazing approach is a regenerative agricultural method that will improve soil health and increase pasture fertility. Converting pasture to higher yield grasses, and reinvesting in our natural capital will pay dividends for years to come."