Bay Area Ranchers’ Cooperative

We are a group of forward-thinking, entrepreneurial ranchers who have built independent ranching businesses, our own brands, and our own customer-bases. We share a commitment to humane husbandry that treats our animals with dignity and respect, to regenerative practices that sustain our land, and to serving our Bay Area community by providing responsibly-raised local meat. We are inviting you to invest in our venture, a recently-formed rancher-owned agricultural cooperative to create a much-needed local harvest option for our animals, in keeping with our values and those of our community.

🚛 We were forced to truck our livestock to harvest facilities 150 to 250 miles away.

For all of us, one of the most difficult aspects of our business is finding affordable harvest and processing options for our livestock that are in keeping with our values of environmental sustainability, animal welfare and fair labor practices. When the only facility in the Bay Area closed its doors to private-label clients in January, we all were forced to truck our livestock to harvest facilities 150 to 250 miles away, some of us making round trips of more than 500 miles every other week. This was unsustainable for our businesses, and the stress on the animals of the long trip, as well as the environmental impacts of all that travel, were unacceptable to us.

🗒 Taking control of processing

A group of us began discussing in January how we could take control of the processing element which is so essential to our businesses. Among us we not only have many years of experience running successful ranching businesses, but many of us have had careers in business outside ranching and bring all those skills to the table. By June we had done extensive market analysis and created a business model based on the operation of a mobile harvest unit (MHU). At a meeting for the local ranching community in late June, 16 ranchers signed up as founding members of our co-op and elected a board of directors. We incorporated as a California agricultural cooperative on July 28.

🙏 90% percent of the respondents said they would use us

 As part of our market analysis, we surveyed 96 ranchers in Northern California who direct-market meat under their own labels and need USDA-inspected harvest services, and found that they collectively harvest more than 10,000 head of livestock or 6200 beef-equivalents (BE) every year. This number is twice the maximum capacity of our MHU, operating five days per week, 52 weeks per year. Ninety percent of the respondents said they would use our MHU. More than 60% of these ranchers were less than 50 miles from the proposed location for our facility.

Details of our market survey:

90% of respondents say that they would use the MHU.

Of the 4% that would not use the MHU, 80% cite the closure of their business as the reason.

Reasons cited by potential customers for using the mobile unit:

• 65% of respondents said excessive distance to their current processor is their main reason for coming to the MHU. Shorter distances mean -

• Smaller carbon footprint. Most ranchers are sending animals a hundred plus miles one way to be harvested just so they can market product within fifty miles of where it was raised.

• Less stress on the animals.

• Less stress on the rancher

• 35% of respondents like the fact that it is a multi-species facility.

• Price was the deciding factor for only 2% of respondents, while 27% were fine with the possibility that BAR-C harvest services might cost more.

1. For our market analysis, we reached out to all 96 ranchers and managed to speak with 48 of them. The annual estimate of livestock to be harvested (10,052) was achieved through statistical analysis using known data and additional factors to arrive at a number representing the entire private‐label potential. Thanks go to Dr. Normand St‐Pierre, Director of Research & Technical Studies at Perdue Agribusiness for his statistical counsel.

2. Based solely on the numbers from the 48 ranches who answered our questions ‐ making no allowance for the animals represented by all the ranches that couldn’t be reached ‐ the annual number is 4000 BE or 1.2 times the capacity of the mobile harvest unit. 

🍂 Seasonality   

Our market analysis also addressed the issue of seasonality. This is key because other MHUs have struggled to remain “full” at all times of year due to weather and regional patters of livestock management. Success for this unit would require confidence that the maximum daily throughput can be maintained year-round. Ranches interviewed provided the total annual numbers to harvest of each species and the timing of those harvests throughout the year. Analysis of these results showed an overall average of 96% of maximum capacity, with no month dropping below 84% and only two months below 92% capacity.

It’s noteworthy that the 38 ranches on which this analysis was based represent only 54% of the animals revealed in the market survey. If the full estimated marketplace is taken into account (2x annual capacity) as well as the potential that ranches in the region will *grow* as a result of the confidence that they can consistently, reliably access slaughter services, there is every reason to expect that each week will find the unit operating at full capacity with an additional waiting list.

🌳 Competition

There is no other USDA-inspected multi-species harvest option in the Bay Area. This MHU will operate from a centrally located site in Sonoma county, providing a private-label harvest for all species of livestock less than 50 miles from the majority of surveyed producers. The logistical and administrative savings to each ranch will change their viability and quality of life significantly for the better.

🥩 Communities served

57% of the ranches surveyed are located in either Sonoma or Marin counties, and more than 60% of the animals come from the two counties. Additional counties anticipated to feed into the enterprise include Mendocino, Yolo, Napa, Contra Costa, San Mateo, Solano, and Nevada Counties.

✍️ Ownership

Small-scale animal harvest under USDA inspection requires a highly-skilled, dedicated team. Staff turnover, high labor costs, and a business model that turns on narrow margins can sometimes lead processors to make decisions that are decoupled from the needs of their rancher customers. However, the dearth of options available to ranchers has left them vulnerable to the whims of the processor. The decision to establish this mobile harvest operation as a producer-owned agricultural co-op under California statute will ensure that the needs of the ranching community are always prioritized.

Producer-members elect a board of directors from among their ranks to hire and guide the staff. The staff will conduct daily operations and make most operational decisions to maintain the level of service, quality, and financial success required. The board shapes the bylaws which govern the cooperative as a whole. The entire body of producer-members will participate in an annual meeting where they will receive updates on the business and vote on major decisions. In this way, and through the accountability of the elected board to the membership, the producers themselves have ultimate authority over the business and cannot be arbitrarily shut out or placed at the mercy of a sole entrepreneur.

🙏 Staff

The efficient delivery of quality, USDA-compliant harvest services requires a skilled workforce, and retention of employees will be essential for success. Rates of compensation built into the financial models exceed Sonoma county averages for similar work. In other words, this business functions even under the assumption that workers will need to be paid well above the market rate. Additionally, we plan to offer health benefits and paid leave.

Even with the competitiveness of the compensation, however, turnover is inevitable. Over the long term, relationships with local workforce development programs and educational meat processors like the UC Davis Meat Laboratory and the CalPoly San Luis Obispo, CSU Chico, and CSU Fresno Meat Processing Centers will facilitate a reliable pipeline of skilled staff into the operation.

💰 Financial information

Case studies of efforts in other regions have shown that when an MHU fails, the enterprise typically falters due to either insufficient throughput to keep the business operating at full capacity, or inefficiencies of scale that lead to a cost/revenue imbalance that ultimately compromises the business.

In the case of the proposed enterprise, the marketing and financial analyses demonstrate that both of these challenges can be successfully met. Estimated market potential exceeds the annual capacity of the unit by 20-100% and is well distributed across the cycle of seasons. This means that equipment and staff will not sit idle. To combat any cost/revenue imbalance, the pricing for services has been structured to reflect a comprehensive accounting of inputs. This pricing structure not only meets the needs of the business, but it beats two out of five regional competitors and closely matches the average across all five.

With the confidence provided by a secure market and competitive pricing, the business will be cashflow positive in 17 months, with gross revenues of  1.196 million dollars in year two, 1.550 million dollars in year three, and 1.582 million dollars in year four. (Disclaimer: These are forward-looking projections and cannot be guaranteed).

How investors make a return. Beginning in 2021, and for the first five years after purchase, investors are entitled to annual dividends of 2% in retail credits redeemable for Co-op members’ products. After the initial five-year term, annual dividends are guaranteed at 4%, up to half in retail credits and the remainder in cash.