Hedgeapple Blog

Dr. Barao is a graduate of Michigan State University where he received a doctorate in beef cattle nutrition and management. He also holds a masters degree in microbiology and a bachelors degree in human nutrition and biochemistry.

Scott held a faculty position in the Dept. of Animal Sciences at the University of Maryland for 20 years where he served as the state Beef Cattle Specialist and Beef Program Leader. There, he directed all beef research and education programs at the university's Wye Research and Education Center, the home of the historic Wye Angus herd.

Scott has been with the Jorgensen Family Foundation since 2006 overseeing the operation of both the foundation and the farm.

Dr. Scott Barao, Executive Director

By Scott Barao

Sept. 2017

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Like so many simple questions, the answer is not quite as simple as one might think. After all, there has been a major, and probably well-intentioned, promotional push by local economic development agencies and other advocacy groups to try and link-up local farmers and growers with local restaurants under the banner of “Farm to Fork” or the larger “Eat Local” and “Locovore” movement.

There are many and varied motivations for this effort like reducing the “transportation (carbon) footprint” related to food procurement, improving consumer health, enhancing the viability of local farms, moving toward “sustainability” in the food system (insert your definition of that here), improving food quality and food safety, eating “fresh,” enhancing consumer perception of farmers, “saving” the Chesapeake Bay, preventing global warming, saving Polar Bears… okay, I’m getting carried away.

My point is that sound-bites sound nice but are often not supported in facts. For example, some time ago we had a visit to our farm by a young lady who was hired – on a contract basis – to energize the “farm to fork efforts” in Frederick County. She was being paid to convince farmers that it was somehow in their best interest to sell their home-grown farm products to local-area restaurants (especially during restaurant week) so as to enhance their farms’ exposure to consumers and hence their profitability and sustainability. At least that’s how she explained it. Lots of glitz and glamor, you know, to see your farm name on such-and-so restaurant with their 5-star chef. “That will certainly drive customers to your farm market.” Maybe yes; maybe no. Seems hard to tell and even harder to measure. But, results don’t really matter when your contract salary is fixed and does not depend in any way on the actual results of the program you are selling. Just dazzle the farmer with, well you know, the stuff our bulls produce and get them to agree to sell their products to the local chefs.

Now before I hear cries of outrage, please understand that I love and respect chefs and the very hard work they do, in a very competitive environment, to provide exceptional dining opportunities to their patrons. There is no question in my mind that if you give a 5-star chef a 5-star product (like Hedgeapple Beef) to work with, the result will be a 10-star dining experience. I also know that just about every chef and restaurant owner is faced with very difficult financial and economic decisions every day as they plan their menu offerings.

Often, I hear chefs and restaurant owners use something called “The 30% Rule” as they look at their purchasing options. This means, a chef wants to pay no more than 30% of the advertised menu price for the center-of-the-plate protein on the purchase of that protein. Remember that they still have to add at least a starch to the plate and have server costs, overhead, and other expenses to cover through their menu prices. Here is an example; Let’s say restaurant X offers a 16 ounce New York Strip Steak at $25.00. Applying the 30% guideline, that chef would seek to purchase that strip steak for no more than $7.50 regardless of the source (local farmer, provisioning company, Sam’s Club, Costco, etc.)

Knowing this, I am reasonably obligated to decide if I can profitably offer our NY Strip Steaks, which normally sell for between $15.95 to $19.95/lb. to our local customers, to a restaurant for half that price at wholesale. And, (now venturing into some knowledge that is often lacking with many small, local, part-time farmers) what is my cost of production on that NY Strip steak? Does $7.50 even represent any profit for us? If not, does the “glitz and glamour” balance off the loss? Am I investing in some sort of advertising that will pay dividends later in the form of more customers coming to the farm and paying the regular price? Maybe and maybe not. Hard to measure for sure.

In addition, chefs may not order on a consistent or predictable basis. Also, working with local restaurants requires a willingness to provide an adequate volume of specialty cuts, generally the higher-end cuts, which are easily sold in other ways at greater profit.  So, if I sell my premium cuts at wholesale, what does that do to my inventory of product left at the farm? Is this scheme ever economically sustainable for the farmer? 

You would be hard-pressed to find any restaurants willing to accept only a seasonal supply of your products, especially the menu mainstays like steaks. Couple this with the fact that the true costs for producing “off-season” grass-fed and finished beef are extremely high and generally unprofitable for producers unless stored forage can be produced on-farm in a cost-effective manner.  Most small to mid-sized farms are incapable of this if the true cost is understood and accounted for.

There is no way a local, small-scale farm can compete with the Midwest feedlots and larger cattle operations on price and we should not have to. In most cases we produce value-added specialty products that come with a higher cost of production, lower volume and limited (or even seasonal) availability. That is not our niche and no glitz and glamor can change that fact.

Remember the person who visited the farm with her smoke and mirror pitch? I asked her if she had considered asking the restaurant folks if they would be willing to raise their menu prices for the local items to be able to pay a fairer price to the farmers. I figured this would also provide a good indicator of the patrons’ commitment to “put their money where their mouth is,” so to say. The question insulted her!

So I have to ask, why is it always the hayseed farmer who is supposed to concede? Maybe she touched a nerve and I am overstating the issue. But, I know first-hand - with precision - what it costs us to put a pound of beef in our meat case at Hedgeapple Farm. That cost drives almost all of our business-related decisions, as it should, if we endeavor to achieve economic and environmental sustainability. That is just the cold, hard reality of the business of, well, everything that is business! How’s that for a simple answer? Happy local eating!

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