Evans 
secures Rancho

02/27/2014

After a difficult winter of drought, beef recalls and slaughterhouse closures, West Marin’s ranchers finally have some news to celebrate. Marin Sun Farms CEO David Evans is purchasing the embattled Petaluma slaughterhouse facility that centered in Rancho Feeding Corporation’s massive recall of 8.7 million pounds of meat earlier this month. The move by Mr. Evans, a fourth-generation rancher who pioneered grass-fed beef when he founded the company in 1998, coincided with an announcement that he has started purchasing cattle supplemented with grain in their diet due to the lack of rain. 

“Dave is the rescuer of North Bay ranching,” said Mike Gale, who co-owns Chileno Valley Ranch with his wife, Sally. “I’ve known him for 16 years, and he’s a first-class act. They’re the hope for the future—he and his sister, Loren Poncia and Albert Straus—the ones who went off to Cal Poly, got an education and wanted to do something slightly different than the way their parents did. They’re much more entrepreneurial in their spirit and outlook.”

The United States Department of Agriculture is currently reviewing Mr. Evans’s application “in accordance with our regulations and policies to ensure the firm meets requirements,” a statement last week said. Pending approval, Mr. Evans said he plans to have the facility open by the end of March. 

“I’m so excited I can’t stand myself. Dave was a mentor for me from the start,” said Tara Smith of Tara Firma Farms. “All of this weight came off my shoulders. I was concerned that we would have to shut down.”

Her small operation could not afford to drive animals to a slaughterhouse in the Central Valley. Not only would she have to pay for a trailer and driver, gas to truck cows to and from the slaughterhouse and a hotel while waiting for ante-mortem inspections, she would also have to schedule most of her animals at once to make the trip worthwhile or even get a space at the slaughterhouses frequented by larger clients.

“I’m glad that Rancho is going to be opened again—not as Rancho, but by somebody local who stepped up to get it done,” said Loren Poncia of Stemple Creek Ranch. 

Mr. Evans would not disclose details of the sale, which is currently in escrow, outside of saying the purchase and upgrades would cost “several million dollars” funded by Marin Sun Farms and investor capital. Mr. Evans is purchasing the property from Singleton Investment Corporation, run by Rancho owner Bob Singleton, and will lease the facility to Marin Sun Farms. 

He had considered acquiring the slaughterhouse twice before. In a 2011 presentation for Slow Money, a group of entrepreneurs and investors pursuing innovation in food systems, Marin Sun Farms said it intended to raise $3 million to acquire the facility and expected the acquisition to contribute $80 million in gross potential. On Tuesday Mr. Evans said he did not remember the rationale behind those calculations.

“We’ve only purchased the land and the facilities. Marin Sun Farms will be starting a new business there,” Mr. Evans said. “Everything will be started again from scratch.” 

Some mid-level employees who have “specialized skills and knowledge of the facility” will be retained, including Scott Parks, the plant’s former quality control manager, he said. 

Mr. Evans said he also hopes to keep many of Rancho’s former “branded” clients, like BN Ranch and Stemple Creek. He would not elaborate on which ranches and diaries qualify as “branded” beyond that it has a rancher’s name and values behind it, but added the plant will not accept “older, unhealthy dairy cows,” which have been suspected as the cause of the recall.

The slaughterhouse acquisition completes Marin Sun Farms’ vertical integration, with services from pasture to processing to plate. The newly available “suite of services,” including slaughter in Petaluma and marketing and distribution in San Francisco, had been difficult for small processors to cobble together, and often costly, Mr. Evans said. “We’re able to offer it all in one package,” he added. “We want even more Northern California sustainable meat producers to enter the market.”

He plans to expand the slaughterhouse’s processing from only cattle and pigs to lamb and goats. He will also seek organic certification, which requires a facility to take measures to prevent commingling of organic and non-organic meat. Rancho’s lack of certification had prevented some local ranchers, like Kevin Lunny of Lunny Beef Ranch, from processing at Rancho.

“I think it’s a fantastic plant that could play a more important role,” Mr. Lunny said. “The agriculture in Marin has taken a shift to a more local view, with more local marketing direct to consumers. To have that dream and that shift happen, we really need local processing.” 

Allegations and questions

Under Marin Sun Farms’ ownership, the future looks brighter for the slaughterhouse, but many questions remain about the reasons for Rancho’s initial suspension of operations and the blanket recall of a year’s worth of beef. 

“There’s been no answer out to all of us, no transparency in what actually was the problem,” Tara Smith said. “I want to know why. What’s the cover up?”

Rancho Feeding announced a voluntary recall of a year’s worth of meat on Feb. 8, an expansion of an earlier recall of cattle slaughtered on just one day. The U.S.D.A. maintains that the plant processed “diseased and unsound” animals without full inspection.

In a 27-word statement last Thursday, the U.S.D.A. clarified the focus of the investigation into Rancho Feeding. Inspectors were present “during normal operations as required by law,” the statement said, but the company repeatedly circumvented inspection. Beyond those two sentences, the agency’s spokespeople have refused to comment on the case due to the ongoing investigation.

Unnamed sources in a San Francisco Chronicle story Wednesday alleged that the plant’s management slaughtered dairy cows diseased with eye cancer when inspectors were not present, discarded the heads and mixed the carcasses with other meat to be sold. 

An official for the food safety inspectors’ union detailed multiple problems at the slaughterhouse that resulted from a close relationship between a veterinarian and the plant’s management, based on documents he received from an inspector formerly stationed at Rancho who asked to remain anonymous. The records show instances of questionable inspections and inhumane treatment that were ignored by the veterinarian, said Paul Carney of the National Joint Council of Food Inspection Locals.

“The veterinarian is the ultimate authority in the slaughter operations, whether in plant deficiencies or plant accomplishments or staffing or anything,” Mr. Carney, a 40-year veteran of the industry, explained. “Some have far too close of a relationship with the industry.”

Dr. Ernesto Lardizabal, the plant’s veterinarian according to records from November, allegedly passed carcasses into commerce that the inspector had identified as suspect. 

Mr. Carney said the veterinarian’s failures shift the blame for alleged problems at Rancho. “This is an agency failure. It’s just a shame to see the types of money and business destroyed by its failed supervision.”

The U.S.D.A.’s claims of investigation into wrongdoing by the plant management may be misdirected, Mr. Carney added, since the department will likely want to protect itself and its employees.

Dr. Lardizabal retired around the date of the first recall of 40,000 pounds of meat. He had been discussing retirement for a long time, said a former Rancho employee who asked to remain anonymous. Dr. Lardizabal did not respond to phone calls to his home.

The Light requested records about Rancho’s recalls and disputes with inspectors under the Freedom of Information Act, but this week, the U.S.D.A. denied a request for expedited processing, claiming the paper did not establish a “particular urgency to inform the public.” The Light is appealing the decision.

With problems alleged only among retired dairy cattle, Bill Niman, the owner of BN Ranch, and many of West Marin’s high-end producers are anxiously awaiting for the U.S.D.A. to decide whether their custom processed meat will be exempted from the recall. 

Last week, Mr. Niman presented U.S.D.A. officials with detailed records of his company’s protocol for slaughter. Because he or an employee of BN Ranch was present for each of the 426 animals killed last year, he argued he could verify not only that was his meat safe and never commingled with any other meat, but also that a U.S.D.A. inspector was present at every step. The  U.S.D.A. has not received any reports of illness.

With 100,000 pounds of grass-fed beef in cold storage, Mr. Niman could lose at least $300,000. Although an initial letter from Rancho’s management said the company “would credit your account for product returned,” Mr. Singleton recently told the Nimans that Rancho would not be reimbursing them, said Bill’s wife, Nicolette Hahn Niman. 

“When they realized how much money was involved, they tried to see if they could take this legal position,” Ms. Hahn Niman added. “They’re making us fight for something that they know we are legally entitled to.”

Rancho’s owners could not be reached at the slaughterhouse and did not respond to phone calls to their homes. 

Grass-fed pioneer shifts model

As Mr. Evans prepares to assume ownership of the slaughterhouse, he is adapting his business model to provide a new, three-tiered system for marketing his meat. Marin Sun Farms now offers three varieties to consumers: green-labeled “Grass-Fed” for 100 percent grass-fed beef, yellow-labeled “Pasture-Raised” for free-range animals whose diets are supplemented by grain and black-labeled “Foodshed” for animals who spend some portion of their life in pens. The new labels were introduced at the wholesale level more than two months ago and hit the retail level this week, Mr. Evans said.

The labels will not distinguish between cattle breeds raised for their milk, like Holsteins, and those raised primarily for their meat, like Angus and Wagyu. Most of the yellow-labeled beef will be “non-productive stock” from organic dairies in the North Bay, Mr. Evans said. 

“There is no distinction. Cattle are cattle. Dairy breeds produce really good beef,” Mr. Evans said. “I don’t distinguish between breeds. I’m after a quality product.”

Jeff Bordes, the company’s marketing director, told the Los Angeles Times, “Marin Sun Farms has been built on 100 percent grass-fed beef since it started. It has definitely been a tough move for us. What this drought has done is really force us to diversify our program when we’re facing seasons like this winter. It was either do this or go out of business.”

The shift marks one of the first regional ranches—and the only one interviewed for the story—to change feed for some of its cattle due to the drought. Other grass-fed and grass-finished producers say they are relying on certified equivalents, like hay, or are sending their cows to slaughter early.

Marin Sun Farms’ new system will adapt quantities of each label based on a return to seasonality, a more realistic model for grass-fed beef, Mr. Evans said. His grass-fed beef won’t change, he added, but there are now other alternatives available. 

After considering the new model for three years, he said he was prompted to implement it this year by the drought. The expansion will also allow the Marin Sun Farms infrastructure to be constantly operational: the slaughterhouse, butchers and distributors cannot function on a seasonal basis, he added.