Low-sodium meat attracts health industry
Ada processor has a foot in the door at U.S. hospitals.
Several years ago, Ada Valley Meat Co. listened to the health care industry, and this year it finally paid off in a big way. It’s good news in an industry struggling with high prices and increasing government regulation.
In August, Ada Valley announced it has finalized a supplier agreement with Premier Inc., a group purchasing organization buying for tens of thousands of commercial kitchen facilities in the United States, including about 3,000 health care facilities ranging from hospitals to nursing homes.
While it is considered a small meat processing business, according to Ada Valley president Walter Rozeboom, it has annual sales of about $8 million. It is a family-owned business that goes back to 1961. It perfected its low-sodium cooking process for beef about six years ago and has been promoting it ever since.
U.S. Foods “has been a great starting point for us,” said Rozeboom.
U.S. Foods, based in Rosemont, Ill., is one of the nation’s largest food distributors supplying restaurants, health care facilities, government facilities and educational institutions. It carries more than 350,000 national brand products and its own private-label items ranging from meats to produce to frozen foods.
U.S. Foods has sold Ada Valley’s low-sodium products to major hospitals including Henry Ford in Detroit and Aurora Health Care in Milwaukee. Both systems are members of the Premier GPO and they put in a good word at Premier for Ada Valley, according to Rozeboom.
Every three years the Premier supplier contracts are up for renewal, and in the latest round of bidding, some Ada Valley products were finally approved by Premier, including fully cooked and raw fresh and frozen beef.
The three-year contract with Premier (NASDAQ: PINC) begins Dec. 1.
“Reaching this agreement is very gratifying. This is a great achievement for all our employees that are working so hard to serve the health care community with quality products. We look forward to assist Premier Inc. to reach more program compliance among their members,” said Rozeboom.
Ada Valley Meat Co., located on Fulton Street on the outskirts of Ada, employs about 25 people, including some part time. It was founded as Valley Meat Co. in 1961 by Gerrit Rozeboom and a partner. Today, Ada Valley Meat is owned and operated by Gerrit Rozeboom’s sons: Walter, Dale and Gerrit Jr. All three have spent their entire careers working at their father’s former company.
The company packages its product under the brand Ada Valley Gourmet Foods. In addition to other lines, it produces fully cooked meats that are low-sodium, gluten-free and allergen free.
"This endorsement and partnership confirms our leadership role and resulting responsibility in today's healthy eating arena", said Paul TenElshof, national sales director for Ada Valley.
Products it provides to the health care industry include traditional pot roast, roast beef, prime rib, corned beef and raw meat items. Ada Valley’s most recent additions to its product line are guaranteed antibiotic-free Angus roast beef, and 95 percent lean ground beef patties.
According to Walter Rozeboom, their father’s company was an offshoot of the former Ada Beef Co., a major slaughterhouse on Grand River Drive. Valley Meat was totally independent but shared the same facility and did custom processing and packing for West Michigan farmers.
Rozeboom said when his father had the business, custom processing was growing — then came the PBB disaster in 1973. According to the Michigan Department of Community Health, polybrominated biphenyls are man-made chemicals used as fire retardants. In early 1973, PBB and magnesium oxide, a cattle feed supplement, were both produced at the same chemical plant in St. Louis, Mich. Between 500 and 1,000 pounds of PBBs were accidentally put in the wrong bags and shipped to feed mills. PBBs are strongly suspected to be carcinogenic, having caused cancer in mice.
It was probably the biggest economic disaster in Michigan agriculture to date. By the time the feed mix-up was discovered in April 1974, PBB had entered the food chain through milk and other dairy products, beef products, and contaminated swine, sheep, chickens and eggs. More than 500 Michigan farms were quarantined and approximately 30,000 cattle, 4,500 swine, 1,500 sheep and 1.5 million chickens were destroyed by government order.
“Nobody wanted any beef from a farm in Michigan at that point,” recalls Rozeboom, so Ada Valley Meat began buying beef wholesale from the West and continued packing and selling steaks, roasts and other cuts. In 1988, it relocated to its present location.
Ada Valley does not do any slaughtering, but buys chunks of beef from a business in Plainwell and another slaughterhouse in Green Bay, Wis.
Rozeboom said “a lot of small (meat) processors have gone away,” with “onerous” government regulations part of the reason. In selling through Premier, Ada Valley is competing with huge corporations such as Sara Lee, Tyson and Cargill.
Government regulations on the amount of sodium in meat products is “getting to be stiffer and stiffer,” he said.
While its sales are about $8 million annually, Rozeboom pointed out it’s a “very inventory-intensive” business to be in, with a great deal of investment required in its raw material.
“It’s a huge challenge right now because beef prices have gone up so much,” he said.
Raising beef cattle is capital-intensive, he said, and the recession cut off much of that capital. At the same time, there have been crippling droughts in Texas and western states since then — “a lot of disincentive” for those farmers and ranchers.
“The beef herd (in the U.S.) has diminished significantly since 2008,” he said. In fact, he has heard claims that the U.S. herd is “as small as it was in, say, the 1950s.”
Poultry and pork producers can increase their supplies within three or four months, but beef producers are in a cycle that is “more like a year and a half or two years.”
“There’s a real supply problem right now,” said Rozeboom. There is what industry insiders call a typical cattle cycle, “but it’s a little atypical (now) because of the drought and because of the recession, and the tightness of money.”
U.S. pork producers also suffered a disaster over the past year when an outbreak of disease killed many of the piglets in the U.S. Any shortage in the animal protein market tends to drive up prices across the board, and consumer price increases lag behind the industry price spikes while the processors and retailers keep hoping the spike is just temporary because they don’t want to raise consumer prices unless it really is a long-term situation, according to Rozeboom.
Today the drought in Texas has finally been relieved by severe flooding this summer — another disaster of sorts for agriculture there — but the drought continues in states such as California.
Rozeboom believes the upward price pressure in protein may be easing, but he predicted: “I think we’re stuck for another year or so” with high beef prices.