fyi for those of shopping at Safeway in the Bay Area, CA
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February 11, 2001 (SF Chronicle)
Better Beef Through Biotech/Safeway forms partnerships to develop genetic tests to breed cattle with higher-quality, tastier meat
Tom Abate



   Safeway has roped genetics into the quest for the perfect steak.
   The Pleasanton grocery giant is quietly lining up alliances with a beef
grower and a biotech firm to use genetic tests to guide the breeding of
tastier, more healthful beef to sell to its shoppers, The Chronicle has
learned.
   Although other meat producers and biotech firms are racing to develop
similar breeding programs, the Safeway alliance seems poised to be the
first to use genetics to shake up traditional cattle ranching practices.
   "As far as I'm aware, none of this technology is being used in commercial
breeding yet," said Mohammad Koohmaraie, a scientist at the U.S.
Department of Agriculture's Meat Animal Research Center in Clay Center,
Neb., which has discovered genes that could be used in Safeway's program.
   Safeway has tried for months to keep its cattle deal under wraps, in part
to avoid tipping off competitors. The company also fears that its genetic
test program could be confused with the more controversial genetic
engineering. But in response to questions from The Chronicle, Safeway
spokeswoman Debra Lambert reluctantly confirmed that the grocery giant has
"an early-stage relationship" with Future Beef, a Denver cattle raising
and slaughtering firm.
   Future Beef Vice President Darrell Wilkes declined to discuss his dealings
with Safeway, but stressed that Future Beef will not be doing the sort of
genetic engineering that would alter cattle.
   "We're not talking about transgenics or genetic modifications," he said.
Wilkes confirmed that Future Beef has negotiated with AniGenics Inc. of
Concord, Mass., to develop screening tests, akin to DNA fingerprints.
   These tests would identify bulls and cows with desired traits, such as
fast weight gain, disease resistance and tenderness. With this
information, cattle ranchers could be steered to breed only the best
animals, which would raise the quality of beef over time.
   "We won't touch these animals' genes. We're just cataloging their genetic
profiles," said AniGenics Chief Executive Officer Steve Niemi. "Their sex
will happen the way it has for millennia."
   Future Beef and AniGenics are still wrangling over the details of their
proposed collaboration.
   Evidence of Safeway's role as the patron of this cattle-breeding program
surfaced after two financial newsletters reported that the grocery chain
helped Future Beef win a $160 million loan last year to build a new meat-
packing plant. One newsletter also reported that as part of the deal,
Safeway made a 10-year purchase contract with Future Beef.
   Andy Wolf, a financial analyst who follows Safeway for BB&T Capital
Markets of Richmond, Va., was unaware of the deal with Future Beef, but
said it would be a logical move. As one of the nation's largest grocers,
with 1,680 stores across the United States and Canada, Safeway has already
put its Safeway Select label on roughly 30 percent of the products it
sells, everything from bread to corn to cola.
   "Beef is about 10 percent of a store's dollar volume," making it a
tempting target for a private label, Wolf said.
   Moreover, industry observers say beef is a product that demands
improvement.
   "The consumer wants three things -- quality, consistency and convenience
-- and for a long time the beef industry wasn't delivering on any of
them," said Wayne Purcell, director of the Research Institute on Livestock
Pricing at Virginia Tech in Blacksburg, Va.
   For instance, 1 out of 5 times, Purcell said, the consumer who paid extra
for a choice cut got beef too tough to chew. Consumers had no reliable way
to distinguish quality beef, and the market had no way to reward ranchers
who raised better cattle. Purcell blamed this failure on fragmentation in
the beef business.
   Cattle raising begins with hundreds of thousands of ranchers, most of whom
only own a bull and a couple of dozen cows. The ranchers breed and raise
calves that they wean and sell to yearling operators.
   The yearling operators graze cattle in fields before selling their herds
to feedlot operators. Feedlots pen the beasts and fatten them on grain
before selling them to packing plants. The packing plants render the
carcasses and ship them to the butchers and grocers who trim the meat to
fit our plates. COMPETITIVE SYSTEM
   Margins are thin at each step. "We're talking about 1 or 2 percent in a
good year," said Brad Caudill, spokesman for Fresno County's Harris Ranch
Beef Co.
   Faced with thin margins, the multilayered market tended toward cutthroat
tactics, with each producer trying to increase profits at the expense of
its predecessor.
   Purcell said this market system robbed ranchers of any incentive to set up
breeding programs to improve their herds. Why bother, when any extra
profit for quality would be swallowed by the packing plant or the grocer?
   While beef ranchers bickered, Purcell said, pork and chicken producers
were improving the quality and consistency of their meats using selective
breeding programs driven by artificial insemination technology.
   "Chicken was kicking our pants," said Purcell, who has charted the steep
decline in beef consumption, relative to chicken and pork, between 1979
and 1998.
   During the past few years, however, beef producers have halted the slide
by forming business alliances that give ranchers up and down the line a
share of what they hope will be higher profits by producing superior,
branded beef. HARRIS RANCH ALLIANCE
   For instance, Harris Ranch has enrolled 75 ranchers, running 40,000
cattle, in a breeding alliance designed to produce branded beef for
smaller grocers like Cala Foods, Piedmont Market and Bell Markets.
   Harris shares its higher margins with the ranchers who follow its cattle-
rearing regime. That system involves tracking physical characteristics to
determine which bulls produced the best offspring -- and thus should sire
future generations.
   Future Beef and AniGenics propose to take this sort of profit-sharing
alliance to a more scientific level by using genetic tests to pick the
best breeding stock.
   Niemi said AniGenics will help Future Beef develop quick, cheap DNA
sampling tests that will track 5,000 cattle to start. Ranch hands will tag
and track these cattle throughout the two years before they reach the
packing plant, recording how long they take to reach certain weight
targets, how often they get sick and how much feed they consume.
   At the new Future Beef packing plant, which will be finished within
months, workers will record the ratio of meat to waste and other
characteristics like tenderness.
   By the second year of the program, Future Beef will be tracking 45,000
cattle, Niemi said, creating an enormous database of genetic traits cross-
referenced with meat production characteristics.
   By finding patterns in this data, the partners expect to identify the best
bulls -- it's easier to breed through males because they typically service
two dozen or more cows -- resulting in meat of a consistently high
quality.
   "In two years we hope to know some of the (important) genes, and in four
years we hope to begin changing the cattle in the production system,"
Future Beef's Wilkes said.
   E-mail Tom Abate at [log in to unmask] 
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Copyright 2001 SF Chronicle