By Jim Schutze
By Rachel Watts
By Lauren Drewes Daniels
By Anna Merlan
By Lee Escobedo
"I'm an educated guesser, and I don't think the people in Vegas hold a candle to a rancher or a farmer," Fuqua boasted in a segment broadcast in August 1998 on CBS Evening News. But Fuqua was clearly more clever than even his fellow cowboys. Using the Bible (seven years of plenty followed by seven years of famine) and data culled from the National Oceanic and Atmospheric Administration (NOAA), Fuqua charts his business in cycles spanning years. His hay-buying binge and his water-capacity adjustments were prompted by information from NOAA's Web site revealing a sudden sag in ocean surface temperatures off the coast of Peru. The plunge signaled the onset of a strong La Niña, a dynamic that rattles global weather patterns. Since 1998, debilitating drought has choked much of the Southwest.
Parched grazing land isn't the only force that threatens to wither the beef industry. Last May, Canadian beef and cattle imports, some 10 percent of the U.S. market, were abruptly halted following the discovery in Alberta of a case of bovine spongiform encephalopathy (BSE), or mad cow disease. The cutoff struck in the thick of a steady upward swing in consumer demand. Supplies, already depleted by drought, were ruthlessly squeezed, stoking beef prices to record highs. Supplies of top-tier grades of beef, such as prime and the upper end of choice, all but dried up, prompting some to suspect that restaurant menus were infested with counterfeit prime. "It wouldn't surprise me at all," says Judd Fruia, general manager of Pappas Bros. Steakhouse. "You never know. "
But the squeeze eased with a crash on December 23, when mad cow disease was reported in a single Holstein dairy cow in Washington State. U.S. beef export markets instantly evaporated. Prices plunged to $78.50 per hundredweight (79 cents a pound) by February after topping out at $94 in November 2003. The beef industry braced for a devastating collapse in consumer confidence and a barrage of new regulations. "It's been a heck of a ride," Fruia says. Prices inched up in March to $84.
This ride doesn't rattle Fuqua. For years he's been gauging a set of subsurface forces that have long threatened to rip the beef industry from its 1930s-era moorings and shove it into the 21st century with its demands for sophisticated product and tracking information. History may record 2003 as the tipping point.
Consumers, long refining their palates with the Food Channel and fortifying their appetites with low-carb regimens such as the Atkins diet, have grown pickier. "By God, they know their beef," Fuqua says. To tailor his supplies to these market shifts, Fuqua steadily has been deploying an arsenal of sophisticated technology to satisfy consumer demands and to meet rapidly encroaching regulations as well. The new gadgetry includes analysis software, electronic identification and ultrasound imaging technology that allows him to determine the quality of his cattle before slaughter. "They want to know where that beef came from," Fuqua says. "Now the consumer is driving the market instead of just someone shoving beef down their throat." But even with such forward gazing, Fuqua has his work cut out for him if he is to successfully navigate these often unpredictable forces. Ranchers who don't grasp the shifting field simply will be cut out.
"I always thought they were just dumb animals," Fuqua says. "Cattle aren't stupid. Cows have extremely long memories. If you go out in my herd and you aggravate a certain cow, if you come back next year, she's going to know exactly who you are, and she's going to explain it to you."
His U Lazy 2 Cattle Co. has been in his family since 1894. Today, Fuqua manages some 600 head of cattle on his 1-square-mile ranch and another 5,000 head in his system across the nation, which includes a feedlot tucked in the northern reaches of the Panhandle.
Fuqua is careful not to startle his cattle or make them anxious. He shuns electric prods and aggressive swats. "There are actually some people in the world who use buckshot on animals to get them to do what they want them to do," Fuqua says. "Stupid."
He has good reason to coddle his cattle: marbling, the intramuscular fat that adds juiciness and richness to the meat. Marbling can mean the difference between beef that grades prime or top-tier choice--the cuts lusted after by restaurants and hotels--and the more mediocre select; the difference can mean hundreds of dollars per carcass. While just 2 percent to 3 percent of U.S. cattle production grades prime, Fuqua claims between 5 percent and 8 percent of his herd grades at those levels. "Marbling is 'fight or flight' energy," he says. "You don't do anything that will burn that energy."
Fuqua has built his life around his herd. His ranch house, composed of plasticized concrete, stone and steel, is bored into a hill. The roof is topped with a layer of earth more than 5 feet deep. The skylights that peek through the earthen roof are capped with bulletproof glass to keep the cattle grazing on his roof from crashing down onto his dining room table.
Fuqua veers the Hummer onto his long, meandering driveway, where he meets a Ford traveling the opposite direction. He doesn't immediately recognize the men in the truck, but he invites them to lunch anyway.
They're salesmen from Temple Tag, a manufacturer of livestock identification systems like the large bright yellow and purple plastic tags that dangle from the ears of cows and steers. But Fuqua isn't interested in these. He toys with an electronic transponder, designed to be embedded in the animal's earlobe. When a wand tethered to a laptop computer is passed by the transponder, an identification number pops into a spreadsheet. An endless stream of data can be linked to the number, from genetic composition to feeding, weight and medical history strung all the way back to the animal's parents. To chew on this data, Fuqua has developed patented tracking and economic analysis formulas that allow him to manage, cull and replenish his herd for maximum profitability while keeping a few paces ahead of regulators, who are poised to shovel bushels of rules at ranchers in the wake of the discovery of that mad Holstein in Washington. Fuqua says his rich data sets will far outstrip any traceability requirements he anticipates from regulators.
The cattle industry has long opposed many of the regulations that have been proposed or handed down in the past few months, including mandatory country-of-origin labeling and a ban on slaughtering downer cows (animals that are too sick or injured to walk) destined for the human food supply. But industry leaders seemed to execute an abrupt about-face when confronted with the possibility that a mad cow scare could reduce the industry to rubble.
"It's not really a flip-flop, but more so a response to what is going on in the marketplace," says Dan Murphy, spokesman for the American Meat Institute, a trade association. "That's why we shifted gears...When you're in the business of marketing a food product and selling to consumers, if you don't have a solid core of consumer confidence in your product, you have nothing."
The potential disaster posed by mad cow disease was terrifying. As writer David Plotz posits in a January 2001 article in the online magazine Slate, mad cow disease fits the profile of a disease likely to ignite widespread panic. Diseases such as polio, AIDS and Ebola garner far more attention than other far deadlier afflictions such as influenza, diabetes and kidney disease because they are mysterious, afflict young people and strike in particularly gruesome ways. Mad cow disease, known in its human form as Creutzfeldt-Jakob disease, fills this bill. It kills by driving its victims insane before melting their brains into spongy mush. The disease is caused by a prion, an aberrant form of a normally harmless nerve protein that, once lodged in the brain, multiplies by inducing benign proteins to refold into deviant shapes, causing nerve cell destruction and riddling the brain with holes. Freakier still, prions do not trigger detectable immune system responses and have Terminator-like resiliency, resisting extreme heat, freezing, irradiation and normal sterilization processes.
Spread by consuming infected brain, nerve, intestinal and possibly bone tissue, the fatal disease carved an awful legacy across the Atlantic in the 1980s when 183,000 cattle were infected in the United Kingdom. It killed 140 people and forced the destruction of 4.5 million animals. When four cases of mad cow disease were discovered in Japan in 2001 and 2002, beef sales plummeted, meat companies went belly-up, two top agriculture ministers were forced to resign and a health official committed suicide.
North America has so far averted such dark turmoil, but the U.S. Department of Agriculture immediately deployed an array of strident measures that some beef industry officials say are overkill and consumer groups claim are not enough. Among the stiffer regulations announced by Agriculture Secretary Ann Veneman on December 30 are the acceleration of national animal identification and traceability systems, a ban on tissues likely to harbor infectious agents from animals older than 30 months in the human food supply, a ban on stunning devices that can dislodge portions of the brain and infect meat, and a ban on downer cows in the human food system. To halt the disease's spread, the use of ruminant (cow, sheep) animal proteins as a feed ingredient for other livestock has been prohibited in the United States and Canada since 1997.
"I think it's fair to say the regulatory response the USDA put together in the wake of a single case of BSE was extraordinary in terms of exceeding in several areas accepted international guidelines," Murphy says. "Downer cattle are not solely the result of disease processes. In fact, they're more likely to be the result of accident or injury, which would no way endanger the safety or even the quality of the meat derived from that animal."
Yet the Consumer Federation of America's Carol Tucker Foreman, a former USDA official, says Veneman's moves were too general. In particular, she criticized the USDA for not providing any details on the structure, timing and enforcement of a uniform national animal tracking system. Foreman points to the difficulty the USDA has faced tracking down the 80 cattle that made their way to the United States along with the infected heifer. (Only 28 have been accounted for.) Then on February 4, a group of international scientists assembled by the USDA concluded that other cases of mad cow disease are likely to pop up here in the future, which could stiffen foreign bans on U.S. beef exports and sorely test appetites. Though Mexico partially lifted its ban on U.S. beef in early March, Japan insists it won't resume U.S. beef imports unless every animal is tested for mad cow.
"The problem with this disease is there are still a lot of unknowns," says Michael Hanson, a researcher at Consumers Union, a group that has been critical of the beef industry. "So we're not willing to say beef is unsafe. That would be foolish to say that. But we do say there is a risk out there. Given the scientific uncertainty, we don't know the size of the risk."
So far the risk largely has been met with indifference from consumers. According to a poll released by Rutgers University's Food Policy Institute in January, 68 percent of those who had heard of the mad cow discovery in Washington State said their confidence in the nation's beef supply remained unchanged. Astoundingly, 8 percent said their confidence in beef actually increased after the discovery. Murphy believes that uptick may be attributable to the media coverage of the USDA's response, which highlighted the protective measures already in place. Statistics from the U.S. Department of Labor show that while the seasonally adjusted retail price of beef edged up for most of 2003 with a 6.2 percent spike in November, it dipped 1.8 percent in January and another 1.6 percent in February, though this most likely was caused by the loss of a $3.8 billion beef export market rather than a nervous slackening in demand.
"Mad cow was the best thing that ever happened," because it eased prices, says Samir Dhurandhar, executive chef at Nick & Sam's steak house. Gene Street, chairman of Dallas-based Consolidated Restaurant Operations, says his III Forks Steak House posted its best night ever this past Valentine's Day, raking in more than $125,000 in one-day sales.
"Our business has gone crazy," says Mark Hoegh, marketing director for Gary Yamamoto Custom Beef in Mabank. "We can source-verify our cattle. We can tell you who the grandfather was. We can tell you what pasture in Texas that carcass would have been born in, if it had ever had a snotty nose." Yamamoto exclusively raises the beef that is in short supply: prime and Kobe beef, the hyper-marbleized meat that fetches $55 for a pound of tenderloin.
Kate Lowery-Monteilh, a spokeswoman for Whole Foods Markets, says the grocery chain has seen its beef sales pick up since the mad cow discovery, but she attributes the rise to Whole Foods' natural beef program, which permits meat from only cattle slaughtered under 24 months of age (mad cow has a long incubation period and primarily strikes older animals) and fed a strict vegetarian diet without hormones or antibiotics. "Is the uptick in sales attributable just to mad cow?" she asks. "It's hard to say, because there are a lot of people out there seeking the high-protein options with the whole low-carb diet craze...Over the past year we've had record sales in our meat department."
But the mad cow incident doubtless has invigorated the niche market for special products. Richard Sechrist, chief executive officer of Homestead Healthy Foods, a cattle and chicken producer in Fredericksburg and the first certified organic ranch in Texas, says his sales have surged 300 percent since late December.
"Our business since that happened is up 33 percent. Prices have come down substantially," says Richard Chamberlain of Chamberlain's Steak and Chop House. "Demand for beef has remained high. But particularly the demand for high-end steak houses has gone up, because life's too short to eat cheap beef."
At the same time consumption has been creeping upward, ranchers have been progressively liquidating the U.S. cattle herd, primarily because of the persistent drought that has afflicted much of the West and Southwest over the past few years. The cattle population at the end of last year was 94.9 million head, down 8.3 percent from a 10-year high of 103.5 million head in 1996. Texas has by far the largest cattle population of the 50 states with 13.9 million head, well above Kansas, the second-most populous cattle state with 6.65 million head.
The supply-demand pincer first tightened in May, when the United States banned beef and cattle imports from Canada. Not only did the market lose roughly 10 percent of its supplies, U.S. exports surged because U.S. ranchers picked up Canada's foreign customers who also blocked that country's beef. "In the last two years, our export volume of beef and beef products has really jumped and become an important part of our entire industry...it's high-value stuff," Davis says.
According to Davis, the United States and Canada are the only two countries in the world commercially producing high-quality grain-fed beef on a large scale. The United States exports some 10 percent of its production, with Japan, South Korea, Mexico and Canada biting off 90 percent of those shipments. "U.S. beef has set a quality standard that a lot of countries wish they could produce but have not been able to," says Lynn Heinze of the Meat Export Federation. Yet Heinze adds that roughly one-third of what we sell overseas are not well-marbled steaks, but offal, which includes things like stomachs, tongues, hearts and brains.
The market was further aggravated because as beef prices surged through summer and fall to record levels, ranchers drove their cattle to market ahead of schedule, hoping to capitalize on the high price before the United States reopened the door from Canada, which would loosen supplies and depress prices. Those cattle were slaughtered at lighter weights, with many fewer grading high choice and prime. "Our costs went up 30 percent across the board, every cut that we bought," Chamberlain says. "It's by far the most increase in beef this country's ever seen, from a high-end beef standpoint. The price of beef is probably the most consistent thing out there. We've never seen fluctuations like this."
Price isn't the only dynamic that has fluctuated. According to some who remember eating the finer cuts of beef 30 years ago, quality has been in steep decline for decades. Jeffrey Steingarten, author of the award-winning culinary travelogue The Man Who Ate Everything, claims that the government's quality grading system has been significantly and deliberately degraded over the past 50 years. "I have heard old-timers say that the fabled marbling of Japan's costly Kobe beef today looks just like a USDA prime steak did 50 years ago," he writes in Vogue. "The downgrading of American meat is a major scandal, a venal conspiracy first to deprive every American of her right to dine on a profoundly tasty, plump and juicy steak..." Is America's premium beef a lot of baloney?
Beef quality grading began as a set of tentative government standards in the 1920s. The move was met with stiff resistance from major packers, who instead introduced their own house grades, such as Swift Premium and Armour Star. But many in the beef industry argued that those grades were nothing more than the best beef a packer had in a plant on a given day. That inconsistency stirred unrest among operators of hotels, restaurants and supermarket chains.
It wasn't until after World War II that the voluntary USDA quality grading system was universally adopted. In 2003 roughly 92 percent of all cattle slaughtered were graded. The program is divided into eight grades: Five--prime, choice, select, standard and utility--apply to cattle under 42 months old; four grades--commercial, utility, cutter and canner--are used for older cattle. Meat settling into the upper reaches of the grading system is generally channeled into restaurants and hotels, while choice and select are abundant in supermarket cases. Standard and commercial grades are generally sold as "store brand" meat, while utility, cutter and canner grades are rarely sold retail and are instead funneled to packers who grind it out as ground beef and processed products such as sausage and pizza toppings.
In addition to age, grades are determined by carcass color, texture, firmness and, most important for flavor, marbling--the degree to which the meat is flecked with intramuscular fat. Meat graded prime or choice is delineated further, depending on the amount of marbling. These factors are driven by days in the feedlot, type of diet and genetics. The difference between prime and choice is roughly 1.5 to 2 grams of fat per 100 grams of meat. But the process is highly subjective, and inspectors usually spend just a few seconds evaluating each carcass.
"It's kind of like pornography," says rancher James Fuqua of prime. "I can't tell you exactly what it is, but I know it when I see it."
Prime beef supplies have been in steep decline for some 20 years. Beginning in the mid-1960s, the percentage of beef graded prime hovered from 5 to as much as 10 percent before dropping precipitously in the mid-1980s. Since then, the amount of beef grading prime has bounced between just 2 and 3 percent. The supply was reduced by the drive to increase yield (more red meat per carcass) and a consumer push for leaner meat. "Marbling has decreased...from 25 or 30 years ago," says Michael E. Dikeman, professor of animal sciences at Kansas State University in Manhattan, Kansas. "In general, cattle have gotten leaner, and in general when you reduce the fatness, you tend to have a reduction in marbling."
Fuqua doesn't dispute that prime beef quality has hit the skids over the past 30 years, but he doesn't buy the argument that it's caused by dumbing down USDA standards. If that was the case, he says, the percentage of beef grading prime wouldn't have plummeted to such low levels. Instead, he pins the decline to 1974, when ranchers started mixing English breeds that produce robust marbling with inferior breeds that boost yields and resilience. "Somebody got the bright idea that meat was meat and more pounds were all you needed," he says. "But if you're producing crap, more of it doesn't help."
Dikeman and Fuqua contend that both beef quality and quantity are poised to rise sharply over the next decade as ranchers get savvier applying genetic information. "I think we're trying to come back and improve marbling again and do it genetically, which makes it a more permanent change," Dikeman says.
This has prompted Richard Chamberlain to chuck prime altogether. "There's a lot of crossover," he says. "I've eaten steaks at prime steak houses I didn't think were prime. I didn't even think they were high-end choice."
Chamberlain says he still can't tell the difference between high-end cuts such as Certified Black Angus and prime. That's why five years ago he changed not only his menu, but the name of his restaurant from Chamberlain's Prime Chop House to Chamberlain's Steak and Chop House. Now he tenders Kobe beef as the premium lid over his Black Angus offerings. "The step from Angus to Kobe is substantial," he insists. Chamberlain says he also has deployed organic beef on his menu, buying cuts from Davis Mountains Organic Beef in Fort Davis, which founding partner Rocky Beavers claims far exceeds the quality of prime.
Pappas Bros. Steakhouse also has been seduced by Kobe, offering cuts for $15 per ounce with a 6-ounce minimum. "That's a $90 steak--we still move it," says general manager Judd Fruia.
But Gene Street, whose company operates Silver Fox Steakhouse and Cool River Café in addition to III Forks, says the Kobe/organic paradigm is hogwash. After assembling tasting panels to test both Kobe beef and Davis Mountains Organic beef, Street was unimpressed. "We didn't get the flavor profile," he says. "We had six or eight people lined up and testing this stuff, and I mean, it was slam dunk--didn't have it." Street is sticking with prime and Black Angus.
But does the hunger for prime breed fraud? Beef professionals are certain some operators load their menus with counterfeit prime, although they admit they have no proof of it. "I personally think that it has happened in some restaurants," says a high-end beef purveyor who spoke on condition of anonymity. "I have [heard of it], but I'm not at liberty to say," Fruia says.
But Matthew Mabel, president of the hospitality consulting firm Surrender Inc., snickers. "That's one of those urban myths," he says. "'I've heard of it, but I can't say I've ever seen it.' It's a great story. I mean, how many guests really know what they're getting?"
Fuqua thinks it's a myth, too--in part. Over dinner at a Quanah steak house, he explains that if counterfeiting prime was widespread, supplies would be looser. "There probably is fraud," he says. "I mean, there is in every damn walk of life. But I don't think it's rampant. If it was rampant, then the price wouldn't be as high. It'd be hard to cover it up."
When the dinners arrive, he scans the steaks, most of which are huge 16-ounce T-bones. But hiding among those T-bones is a single 6-ounce prime rib eye. It's wafer-thin, gray and parched, with the edges curling up from the plate. Fuqua shakes his head and laughs--and orders a platter of fried catfish.
Whereís the Prime?
Prime steak is an enigma. It's the grade steak aficionados incessantly crave, steak houses incessantly promote and almost no one can spot.
There are reasons for this elusiveness. Thirty years ago, cattle ranchers began breeding cattle for yield and efficiency instead of meat quality--that means more meat, less fat. Prime beef supplies promptly plummeted. In 1976, for example, 1.4 billion pounds of beef were graded prime. In 2003, just 608 million pounds made the grade. But even that doesn't tell the whole story. Because cattle weren't being bred primarily for taste quality, more of the beef stamped prime settled at the bottom of the prime rung (slightly as opposed to moderately or abundantly marbled), blurring the distinction between prime and lesser choice grades. The aging process, which tenderizes meat fibers, shifted as well. There was a time when almost all prime beef was dry-aged, a process by which the meat is stored uncovered in a refrigerated room for up to 28 days. Dry-aging deepens and concentrates flavors, but it is also expensive because weight falls as water evaporates from the meat. Since the 1960s, with the advent of vacuum-packing, wet-aging, a process by which the meat is vacuum-packed in plastic bags to mature for up to 21 days, gradually became the norm.
Has prime beef gone to pot? To find out, we visited six Dallas prime steak houses with a Texas Culinary Academy graduate who did boot camp at The Mansion and Abacus before taking a post as senior chef instructor and meat specialist at Aims Culinary Academy. His name: Johannes Pot.
Stone Trail Restaurant, 14833 Midway Road. Stone Trail brags shamelessly. "Finest Quality Prime Steaks...Not just ordinary, it's extraordinary," swaggers the restaurant's Web site. We sniffed and ordered a rib eye and a New York strip, which arrived on a simple white plate. Juice dribbled from every fiber. Meat behaved like silk in the mouth, smudging it with a pronounced, sweet richness that lingered on and on. Both steaks flaunted exquisite charring and expert seasoning. "Oh, that's pretty," Pot says. Prime conclusion: Stone-cold hottie.
Dunston's Prime Steak House, 5423 W. Lovers Lane. Dunston's has been serving steaks for about 35 years, and it prides itself on prime value. Steaks are cooked on an open mesquite grill. Smoke blankets the place. It swamps the steak, too. Our prime tenderloin and sirloin strip offered little else. No juice. No tenderness. No richness. Just fume. These are true hollow wonders, void even of grill bar stripes. "It's like they were steamed," Pot says. Prime conclusion: Smoking is hazardous to your prime.
Dakota's, 600 N. Akard St. Dakota's is one of the few venues offering dry-aged beef, though we didn't notice the anticipated extracted flavors in our bone-in cowboy rib eye and our Kansas City strip. Though well-charred and expertly seasoned, the steaks were tough, gristly, tepidly flavored and, in the case of the K.C. strip, riddled with pockets of soapy flavor. Prime conclusion: Put it on a rope.
Pappas Bros. Steakhouse, 10477 Lombardy Lane. Pappas has its own dry-aging locker on the premises, which is ostensibly loaded with the one thing missing from most prime steak houses: the one bite that removes all doubts. "Prime ought to be just out there with the succulence, the robust flavor that you'd expect; a smacking-you-in-the-face type thing," Pot insists. After sampling the small rib eye with its bittersweet char crust and the New York strip with its exceptional tenderness and rich nutty flavors, doubts flocked off. This was special. Juices gushed. The flavor spectrum was broad, right through to the lingering finish. Prime conclusion: Turn the other cheek.
Paris Vendome, 3699 McKinney Ave. Other than rich flavor, the primary expectation of prime is tenderness. One thing you don't expect from prime is a need for power tools. Paris Vendome might want to consider offering them. Both steaks, a rib eye and a sirloin, were beautifully prepared to the casual glance. But the rib eye was infested with gristle, and the sirloin was so hard to cut that we boxed it up so we could finish it at our work bench. Flavors were bland, with that watery weakness we discovered at Kirby's. Prime conclusion: Order the freedom frites and oil up the Black & Decker.