Texas Distributor Brings Native American Beef Back to Native American Reservations

April 2015

Lynn Brezosky, Business Reporter San Antonio Express-News

Native American Kurt Sandoval has raised cattle on Jicarilla Apache reservation land in New Mexico since 1984, but don’t make the mistake of calling him a cowboy. He wears a beaded medallion rather than boots and a Stetson, and takes a philosophical turn when asked about veering from traditional grazing practices.

“I don’t think there’s such a thing as traditional,” he said. “Wherever you’re raised, that’s how it is.”

But Sandoval is interested in getting a better price for his beef and found himself hooked on the notion of Native American beef getting star billing at Native American steak houses.

Hence his presence at a celebratory dinner Monday at upscale Biga on the Banks, where a banquet cook served thin slices of Native American beef with dabs of rosemary chimichurri and coffee aioli. Entrees included Native American New York strip and rib-eye with sides of smashed fingerling potatoes, Brussels sprouts with red pepper, and slow-baked tomatoes.

The dinner was sponsored by San Antonio’s Labatt Food Service, a family-owned distributorship that in 2013 had more than $1 billion in sales. The celebration marked Labatt’s rollout of a ranch-to-plate quality and distribution system that in three years has made Native American beef one of the top sellers at Native American casino restaurants.

“I believe in the concept,” Sandoval said. “The way I look at it, it’s almost like promoting sovereignty, promoting an animal for consumers, and the consumers can actually be my people.”

Not that there isn’t something in it for Labatt. As the first private enterprise able to take the Native American beef vision to execution, Labatt potentially has a market lock on a niche product that sells as much on emotion as on quality.

“We have what is called a product that has a halo on it,” said Al Silva, Labatt’s general manager and chief operating officer. “It doesn’t only just feed you, it actually creates a social good. ... You’re actually creating jobs.”

For now, the main customers are reservation casinos with high-end restaurants. For later, Labatt envisions selling Native American beef to restaurants and high-end groceries throughout its growing territory, if not nationally and globally.

It’s been a challenge. Some reservation land is so poor a tractor wheel can wipe out the vegetation on its path for several years. The meat has had a reputation for being stringy and low-grade. Lacking the negotiating power of the mega-ranchers, operators have had to settle with selling their small number of head as a commodity that fetches only the lowest price.

Labatt’s approach has been to gain trust with the producers, bring in experts who teach how to improve genetics and meat grade, and oversee the feed lot, processing, tracking and shipping so they can then sell Indian nations back a verified line of Native American beef.

“Somebody had to put all that together, and so that’s kind of what we did,” company CEO and President Blair Labatt said.

Monday’s dinner capped the second of a three-night educational and networking conference that brought ranchers from several Indian nations into the same classroom at Labatt. The symposium featured discussions on genetics, herd health, feed-yard economics, tracking and record keeping, and producing higher grades of beef. It was also a chance to discuss two years of data.

“We’ve been compiling all of the data, the performance data, the health data, the carcass data,” said Jason Byrd, operations director for Labatt’s Direct Source Meats division. “Now is a good time to get all of the producers that have contributed to the program together and talk about where we need to go.”

Labatt’s Native American beef journey started in 2009, when the company acquired Zanios Food Inc. of Albuquerque, New Mexico. Until then, Labatt’s growth had been organic. An acquisition was uncharted territory.

Labatt believes it’s critical to get to know one’s marketplace, and for New Mexico that included 23 Indian tribes.

“When you’re in this kind of business, you have to think about why would some group of people who don’t know you want to know you. What do you have that’s going to help them?” he said.

Buying local was catching on, and there was a concept of selling New Mexicans some New Mexican beef. But with no major feedlots or slaughterhouses in New Mexico, animals got sent out of state and were lost in a vast processing system.

“It kind of crashed and burned,” Labatt said. “We picked it up and reinvented it, and we do it to this day. But in the process, Al and I said, 'Why couldn’t we do this with the Indians?’

“Here’s the deal,” he added. “It’s poor land, high unemployment, virtually total unemployment. The root systems are so narrow, are so shallow, that the land actually has to be worked on horseback. You can raise an animal, (but just) one for every 200 acres”. … But, you know what, guess how many acres they have — 25 million!”

The company connected with a federal demonstration ranch called Padres Mesa, a 60,900-acre portion of the New Lands area of the Navajo Nation.

They met with reservation ranchers and convinced them they could be their own best customer. Padres Mesa could teach techniques and genetics to improve their product. Labatt could provide the assets needed to get the meat to market.

Labatt described the initial meetings as “Henry Kissinger diplomacy.”

“Literally, you’re kind of having to overcome doubt and uncertainty and explaining why it’s valuable,” he said. “They have a reason to be cynical. They’ve been exploited for many, many years. So you come in — why are you any different?”

Next was partnering with a feed lot operator, in this case, Billy Hall of Premium Sourced Cattle LLC in Chappell, Nebraska, and Eckley, Colorado.

“When I take ownership those calves weigh 500 pounds and then we own them all the way through till they’re harvested,” Hall said. “All of our employees are BQA (Beef Quality Assurance) certified. They are trained in low stress handling, sorting, different things like that.”

The lot pays a premium for the calf, Hall said, then returns data from performance to harvest. It pays an incentive premium for choice and prime grades.

Hall is pushing Angus genetics over popular American breeds that include Brahman.

“That’s another thing that’s real important on our spec, just because those cattle genetically don’t tend to marble near as well,” Byrd said. “When you’re talking about Brahmans, they typically fall in the select category, whereas this program is choice and above.”

Having two meat-processing plants, including the only one in New Mexico, gave Labatt another edge in the game, as does a fleet of trucks.

By bringing on IMI Global, a tracking firm, Labatt was able to ensure what was sold as Native American beef was an animal that was born and grazed on a reservation.

“Anybody can speed in marketing, anybody can tell you what they want to, because there’s nobody giving tickets,” Silva said. “You have to do the opposite. You have to actually go in there and you have to hire somebody to police it, because it’s unpoliced.”

In 2014, the program put about 1,200 head of cattle on feed. Labatt returned about 430,000 pounds of steaks and burger meat to the reservations.

Labatt knew it had scored when a load of about 35 cattle graded 85 percent choice and 15 percent prime.

“Prime is only 2 percent of all animals, so now it’s kind of like the home run — the ultimate,” Labatt said.

Tim Kozenskie, food and beverage director for the Navajo Nation’s Twin Arrows casino resort, said Native American beef is getting rave reviews at the property’s Zenith Steakhouse. There, “Source Verified Navajo Beef” menu items (served with a cipollini cabernet demi glace) cost from $28 for petite filet mignon to $50 for a 34-ounce long bone rib-eye or a 22-ounce porterhouse.

“Our main mover is Navajo beef,” he said. “It’s a piece of beef that has a sweetness to it. It’s got a buttery texture as well as a sweet flavor to it. Almost to the point of fork tender, that’s how good it is.”

That works for the Navajos, said Leo Watchman, director of the nation’s Agriculture Department.

“I can see us meeting demands in the near future above what we’re doing now,” he said. “Our role is pretty limited, but we have been sold and we want to be more of a player on our part.”

Fewer than 3 percent of the nation’s ranchers have signed on to the program, he said.

“The Navajo nation as a whole, pretty much if you were to qualify as a ranch, it’s the largest ranch in North America. But there’s a lot of independents. And we’re just scratching the surface of a market that’s uniquely native.”