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Protein Diet Craze, Thin Supply of Cattle Fatten Ranchers’ Wallets

DILLON, Mont. — After years of having been seldom seen, local ranchers are stomping into the only jewelry store in this cow town. You name the bauble. Men with manure-crusted boots are buying it for their wives this Christmas season.

By Blaine Harden
Washington Post Staff Writer

(Thanks to Jim McCray of Dow, Lohnes & Albertson, PLLC http://dowlohnes.com/ for passing this along- Russ)

Ditto down at Dilmart Furniture. Carpets, sofas and large-screen TVs are riding off in pickups that usually haul heifers.

A more sizable stampede of spending is underway at Dillon Implement and the local Chevrolet dealership, where $85,000 tractors and $35,000 pickups are jumping out of the lots.

"There is a buzz in Dillon," said Ryan Gaasch, sales manager at Dillon Implement, where year-to-year tractor sales have doubled. "Business couldn’t be better."

The buzz, echoing across cattle country from Montana to Texas, comes from what the U.S. Department of Agriculture calls the highest beef prices on record. Ranchers who have endured decades of declining consumer demand for beef — as well as five punishing years of drought — now find that what they are herding is just what the doctor ordered. That is, the late Robert C. Atkins, along with his many imitators in the low-carbohydrate, high-protein diet craze.

Dietary fashion, having long punished ranchers for their supposed role in making Americans fat, is handsomely rewarding them for their supposed role in making Americans skinny. Here on the mountain-ringed rangeland of southwest Montana, in the heart of the state’s No. 1 beef-producing county, obesity is not an entirely discouraging word.

"That Atkins diet has really helped demand for beef," said Bill Garrison, 62, who, along with his two sons, raises cattle on 18,000 acres north of Dillon. He is also the immediate past president of the Montana Stockgrowers Association. "Prices are higher now than I thought I would ever see."

Compared with last fall, Garrison and other ranchers around Dillon received about $100 more for each calf they sold in November for delivery to feedlots in Nebraska and Kansas. That spells a $40,000 spike in income for the average local rancher, who sells about 400 calves in the fall. It also means that Dillon, a beef-dependent town of 3,752, is suddenly swimming in cash.

"Because ranchers are spending this money in the community, it creates an influx of dollars," said Clint Rouse, president of the State Bank & Trust Co., a Dillon lender that specializes in cattle loans. "It is a real positive thing, there is no doubt about it. We have a lot more money to loan. . . . I attribute it to Dr. Atkins."

There is more, of course, to this fall’s record-setting spike in beef prices — and Dillon’s infusion of cash — than diet fads.

Part of it is weather driven. Severe drought across much of the cattle-raising West has seared rangelands since 1998, stunted grasslands, dried up reservoirs and water holes, and forced ranchers to cull herds.

The number of cattle in the United States has fallen to a seven-year low, according to the USDA. There were 103.5 million cattle in 1996; at the start of this year, there were 96.1 million. Many ranchers around Dillon have been forced to cut their herds. Five consecutive years of drought here have shattered rainfall records that date to the Dust Bowl days of the 1930s.

"Nationally, this year’s calf crop is the lowest since 1951," said Ronald Gustafson, chief beef analyst for the USDA in Washington. "That means prices are going to stay high for at least a couple more years." Although prices have fallen slightly since their peak in October, analysts expect them to remain high and increase in the coming years.

In addition, a ban on imports of Canadian beef and cattle — after a single cow in Canada was confirmed in May as having bovine spongiform encephalopathy, or BSE, known as mad cow disease — has reduced supply and helped increase prices.

What makes ranchers smile, though, is that the declining supply of cattle is coinciding with a jump in consumer demand for beef. It is up 10 percent since 1998, according to the National Cattlemen’s Beef Association, a trade group. (The association calculates demand by correlating how much beef consumers eat with how much they are willing to pay for it.) Spending on beef has increased $14 billion in the past four years.

Tweezing out reasons for increased demand is not an exact science. But association officials say that the rising popularity of Atkins, South Beach and other diets that emphasize protein over carbohydrates has played an important role.

"Atkins has helped, there is no doubt about it, although it is hard to quantify," said Mark Thomas, vice president of global marketing for the Beef Association, which is funded by contributions from ranchers. "It is part of a realization by many, many Americans that beef is powerhouse nutrition."

The nation’s taste for beef fell off the table in 1977, when a Senate select committee issued dietary recommendations that instructed Americans to eat more chicken and less red meat.

Almost immediately, to the horror of the $93 billion cattle industry, consumers did as they were told. The year before the recommendation, per capita beef consumption was at an all-time high of nearly 89 pounds a year. Within three years, it slumped to 73 pounds a year. It finally bottomed out in 1993, at 61.2 pounds a year, which represented a 31 percent decline in beef consumption.

It appears unlikely that Americans will ever again eat as much beef as they did in the 1970s. Although per capita consumption has increased since the mid-1990s, it was just 64.4 pounds last year.

The silver lining for ranchers is that consumers are eating much fancier beef than ever before. The USDA says consumers have acquired a taste for high-end beef — known as "choice" in grocery stores — that is more expensive to buy and more profitable to produce.

"Choice beef is more toward what restaurants are serving," Gustafson said. "It will eat more consistently from purchase to purchase, and the beef comes from younger animals. Here in Washington, Giant has switched more and more to choice beef. As recently as three years ago, a consumer would find ‘select’ beef, which tends to be tougher and less tasty."

Choice beef comes from cattle that are slaughtered between the ages of 16 and 24 months, that have spent a considerable amount of time eating grain in a feedlot and that have been genetically selected so that their fat is marbled into their muscle. All this makes choice beef taste better — mostly because it is tender and flavored with fat.

Beef experts acknowledge the irony: High-protein diets, such as Atkins and South Beach, are driving consumers to stores where they buy choice beef that, in many cases, is more marbled with fat than the supposedly heart-attack-causing select beef that alarmed federal officials in the 1970s.

"What the beef industry has found out is that consumers don’t like lean beef," Gustafson said. "They have provided something that provides good eating."

What all this means to many ranchers in Dillon is that they may — if beef prices remain high — be able to climb out of a deep hole of debt.

Ranchers here have taken out larger-than-normal operating loans in recent years, owing to the drought, smaller herds and depressed beef prices.

"What we are trying to do is make up for losses we suffered for five straight years," said Rick Kuntz, 53, who raises cattle on 20,000 acres south of Dillon.

During that period, drought and lack of range grass forced him to cut his herd by more than 30 percent, to 450 head from 690. He said he has had to borrow more and more money just to keep the ranch operating. At the same time, he said, he has not been able to spare any cash for mending fences, painting his barns or buying new equipment. His 30-year-old tractors and haying machines, he said, are held together with spit and chewing gum.

The hurt, though, seems to be ending. The government forecast is for higher beef prices — as long as the cattle supply remains low, and as long as fat Americans believe they can get thin by eating beef. "If prices will stay this way for the next three years, a lot of us guys will get healed up," Kuntz said.

© 2003 The Washington Post Company

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