Betting the Ranch: Saguache cattleman Mel Coleman

Article by Steve Voynick

Livestock – September 1998 – Colorado Central Magazine

THE COLEMAN RANCH in Saguache is one of the West’s most-visited working cattle ranches. Regular guests include newspaper and magazine writers, television crews, supermarket meat buyers, and executives from across the U.S. and Japan, along with range management experts, proponents of natural foods, and environmentalists.

What makes the Coleman Ranch special is how it raises its cattle. The ranch is the birthplace of both Coleman Natural Beef — beef produced without antibiotics or growth-promoting, synthetic hormones — and of Coleman Natural Products, Inc., a multi-million-dollar, international marketing corporation that represents one of the most successful innovations in modern American agriculture.

The tour guide at the Coleman Ranch is Mel Coleman, a 73-year-old, fourth-generation Saguache rancher. Wearing his omnipresent Stetson, Mel shows visitors around the sprawling ranch, talking not only about natural beef, but about everything from range improvement and sustainable ranching to humane treatment of animals and preservation of agricultural land and rural lifestyles.

Mel is often asked how he came up with the idea of natural beef. He touches the brim of his Stetson and says modestly, “Well, hell, we had to do something to save the ranch.”

In 1979, Mel Coleman and his wife Polly were in the same general predicament as countless other ranchers across the West. Thanks to soaring operating costs and a chronically depressed cattle market, they had fallen way behind on interest payments on their mortgaged-to-the-hilt ranch. To make matters worse, droves of American consumers, concerned about taste, fat, and chemicals, were turning away from beef.

The Coleman Ranch, one of the biggest ranches in the San Luis Valley, operates across 240,000 acres (about 375 square miles, or the size of Lake County). Most of the ranch, which stretches from Saguache west to Cochetopa Pass and the Continental Divide, consists of public grazing leases. Mel’s and Polly’s great-grandparents homesteaded the deeded land in the 1870s, and it had been passed down over the years.

Mel Coleman was twenty-five years old when he took over management of the ranch in 1950. He soon found that ranching amounted to a few good financial years interspersed among a lot of bad ones. Ranchers were the bottom rung on the beef production ladder. Because raising market calves took about a year and a half, ranchers couldn’t move quickly to take advantage of a strong market, or to protect themselves against a weak market. Cattle and beef were a billion-dollar-a-year industry, but the handful of giant corporations that dominated the beef business made most of the profits.

One day in 1979, Mel and Polly had dinner with their son Greg and his wife, Nancy, who had driven to the ranch from their home in Boulder. With foreclosure on the Coleman Ranch drawing near, the dinner conversation naturally revolved around cattle and beef. Nancy mentioned that good-tasting, quality beef simply wasn’t available, not even at Alfalfa’s Market in Boulder, then Colorado’s biggest natural foods store.

“If my friends and I could find beef that tasted good, wasn’t full of chemicals, and was raised naturally, we’d buy it.” Then Nancy looked straight at Mel and continued, “That’s just what you raise. Why don’t you sell natural beef?”

“I’ll never forget the day Nancy said that,” Mel remembers. “A tingle went right down my spine.”

RANCHERS AND FEEDLOT OPERATORS had begun using large quantities of synthetic hormones and antibiotics to accelerate weight gain in cattle in the 1950s. Synthetic hormones function as anabolic steroids, while repeated subtherapeutic doses of antibiotics repress intestinal bacteria to reduce or eliminate subclinical disease. When administered continuously from ranch to feedlot, hormones and antibiotics, together with high-energy grain feeds in the feedlots that are often supplemented with synthetic additives, cut months off the time needed to fatten cattle to market weight.

Despite reports of adverse human health effects, the growth-promoting drugs proved a financial godsend for cattlemen and feedlot operators. But in the late 1970s, the Food and Drug Administration belatedly banned the popular bovine growth-promoting hormone diethylstilbestrol (DES), a proven carcinogen, forcing cattlemen to switch to other synthetic hormones.

Antibiotics were another concern. Cattle consumed most of the antibiotics manufactured in the U.S., and some researchers suspected that the massive use of antibiotic bovine growth-promotants contributed to the rise of antibiotic-resistant bacteria.

“I felt consumers might be interested in natural beef that had been raised without all the chemicals,” Mel says. “But to get started in natural beef, we’d have to borrow more money. So we would literally be betting the ranch on natural beef. If it worked, we’d save the ranch. If it didn’t, we’d lose everything.”

Natural beef production demanded a vertically-integrated system to control cattle from birth to slaughter, and beef from packing to retailing, a concept entirely new to the beef industry. Natural beef would cost more to produce, because of custom feedlot, slaughter and packing procedures, and the fact that cattle would take longer to reach market weight.

But as a branded product, natural beef would command a premium price. Furthermore, a vertically-integrated production and marketing system would eliminate the middleman. If everything worked, and that was a big “if,” the Coleman Ranch could sell naturally-raised cattle to Coleman Natural Beef, Inc., for prices well above those of the generic cattle market.

Natural beef would also give Mel Coleman a chance to put some of his own ideas about cattle to work. His naturally-raised cattle would spend less time finishing on expensive grain in crowded feedlots, and more time on open rangeland eating what they had evolved to eat — grass. That would provide the animals with a less stressful and more humane existence.

“Everything about natural beef sounded right.” Mel says. “We decided to try it.”

THE FIRST COLEMAN NATURAL BEEF office was a spare room in the Coleman ranch house in Saguache. Mel was the president, salesman, and operations manager, while Polly worked nights as the company bookkeeper. Mel’s brother Jim took over as ranch manager.

Mel contracted with a small feedlot in La Junta, Colorado, to finish his cattle without hormones or antibiotics, then began collecting affidavits from veterinarians and feed suppliers certifying that Coleman cattle never received growth-promoting drugs.

Mel Coleman received his first big lesson about the meat business when he slaughtered his first naturally-raised steer and tried to label it “natural.”

“What the hell are you talking about, Coleman?” a United States Department of Agriculture (USDA) inspector demanded. “Cattle are natural — all cattle are natural!”

Mel soon learned that the USDA had never considered the term “natural beef.” Convincing the USDA to approve a natural beef label would take eighteen months. But Mel didn’t have eighteen months to wait. He found an old refrigerator in the Saguache dump, cleaned it up, filled it with natural beef, put in it the back of his pickup, and hit the road for natural foods stores in Pueblo and Colorado Springs.

His reception was disappointing. Some store owners questioned his prices. “If you don’t have to buy antibiotics and hormones,” they asked “shouldn’t natural beef cost less than regular beef?”

Others were concerned that stocking Coleman Natural Beef would imply that the rest of their beef was laced with chemicals.

“I was never comparing natural beef with regular beef,” Mel insists. “I told them I was offering natural beef only as an alternative product. If consumers wanted natural beef, they could buy it”

In 1981, Mel Coleman slaughtered just ten head of naturally-raised cattle, dumping 190 on the regular beef market at a loss. On the brighter side, the Colorado Springs Gazette gave Coleman Natural Beef its first media exposure. And the USDA finally approved a natural beef label for Coleman natural Beef, the first ever issued. Coleman Natural Beef also designed its first package label–a drawing of a bull, similar to the storybook-bull Ferdinand, which leaned against a tree in an anthropomorphized reclining position while sniffing a bouquet of wildflowers. “It was corny, ” Mel says. “But we liked it.”

After another big financial loss in 1982, Mel’s son Greg suggested that he try to market natural beef in California, the leader in natural foods trends. So Mel flew to San Francisco, rented a small car–which he sometimes slept in–and canvassed natural foods stores.

FINDING NO INTEREST, he moved on to Los Angeles, where he struck pay dirt at Mrs. Gooch’s Ranch Markets, a small natural foods chain. The owner placed a substantial order and, much more importantly, passed Mel Coleman’s name along to a national network of natural foods stores.

“A few days later I started getting telephone orders from stores in California, Texas, and Massachusetts,” Mel remembers. “All I had ever planned was to sell natural beef to a few Colorado stores. Now all of a sudden we were selling it nationally.”

Doubting that he could meet the sudden demand, Mel thought about turning down some orders, but Polly advised, “Mel, just take the orders, and we’ll worry about all that later.”

Coleman Natural Beef slaughtered 1,000 head of naturally-raised cattle in 1983, then doubled that number the following year. Because Coleman Natural Beef was worth $1.25 per pound in carcass form, about one-third more than regular beef, the Coleman Ranch earned its first profit in ten years.

As Coleman Natural Beef began attracting praise from health-conscious consumers and criticism from the regular beef industry, free publicity came in bundles. The media loved Mel Coleman, the Saguache rancher with the Stetson, faded Levis, and big grin, portraying him as a rugged individual and likable renegade who wasn’t afraid to take on the big beef producers.

The big breakthrough for Coleman Natural Beef came in 1985 at a California natural foods exposition, when Mel and Polly met an executive from the New York-based Grand Union supermarket chain. Confident that supermarket shoppers were ready for natural beef, Grand Union wanted to put Coleman Natural Beef in 130 New York-area stores, along with 40 other stores in Atlanta. And Grand Union would need 500 cattle — per week.

“We were floored,” Mel remembers. “At the time, we were slaughtering forty cattle per week — our most ever. Five hundred cattle per week was far more than our ranch could provide. But I knew a lot of other ranchers who could help out.”

Mel formed Coleman Certified Ranchers, Inc., a group of ranchers who agreed by contract to raise cattle without antibiotics and hormones, provide affidavits from vets and feed suppliers certifying that their feed and cattle were “clean,” and permit random drug tests on their herds. In return, they received 13£ per pound — roughly $100 per animal — above market price. Within the first year, the Coleman Certified Ranchers program helped two ranchers avoid foreclosure.

EVEN AFTER the multi-million-dollar Grand Union order, Coleman Natural Beef consisted only of Mel and Polly, their daughter Dianne and her husband, and a Denver marketing representative. Seeking additional office space, Coleman Natural Beef moved into a room in Saguache’s little Hillside Motel, then into a small, 100-year-old, vacated law office a half-block off Main Street.

After Grand Union promoted natural beef with television commercials and full-page ads in major eastern newspapers, Mel Coleman appeared on NBC’s Nightly News and the front page of The Wall Street Journal, as well as in Newsweek, Business Week, and The New York Times. Mel also scheduled a national round of radio talk shows, TV appearances, and panel discussions.

“That gave me a chance to talk about agriculture,” Mel says. “I told people that our future doesn’t rest in more chemicals or in continued loss of rural land to suburban sprawl. Our future rests in less chemicals, environmental protection, a strong agricultural economy, preservation of the rural way of life, humane treatment of animals, and in better utilization of the nation’s renewable grass resource.”

BY 1986, more than fifty aspiring competitors in the natural beef market had failed. That year, Coleman Natural Beef moved into a new office in Denver. “I wanted to keep the office in Saguache,” Mel says. “But we were growing, and it wasn’t easy doing business on a Saguache party line and with twice-a-week express service.”

But things quickly turned sour in 1987, when Grand Union suddenly slashed its natural beef orders. With sharply-reduced demand for naturally-raised cattle, the Coleman Ranch was unable to meet obligations on its big Federal Land Bank loan, the collateral for which was a large part of the ranch itself.

Less than a year later, without advance personal notice, the Federal Land Bank foreclosed. The Coleman Ranch lost 9,600 deeded acres, three federal grazing allotments totaling 100,000 acres, and six houses.

“I first read about the foreclosure in the Saguache Crescent,” Mel remembers. “Our name appeared in a full-page list of other delinquent ranchers and farmers. I can’t describe how I felt. We were an old ranch and a respected family with press coverage all over the country — and there we are in the public foreclosure notices.”

Losing the land and the houses was a traumatic experience. “I’d pack and Dianne would cry,” Polly recalls. “Then Dianne would pack and I’d cry, but together we got the job done.”

Foreclosure demanded many personal and business adjustments. Accepting the loss of the land on an emotional level would take years, but business demanded more immediate action. Thanks solely to the success of Coleman Natural Beef, only part of the ranch had been lost to foreclosure. Enough of a base remained for rebuilding. Jim Coleman immediately reduced his herd size to fit available pasture and rangeland, then quickly negotiated to lease additional pasture and grazing allotments.

Coleman Natural Beef annual sales had reached an impressive $20 million, but the sudden reduction in Grand Union orders in 1987 had stalled company growth. “I had built the company that far myself,” Mel says. “But I was a rancher, not a CEO, and I didn’t know how to take it further. We needed capital, executive expertise, and new marketing ideas.”

When a consortium of venture capital firms provided the necessary capital, it received in return corporate equity and seats on the board of directors. As part of the deal, Mel Coleman stepped down from president to the position of chairman.

“I effectively lost control of the company right there,” Mel says. “The entire deal was a trade-off. I lost control, but I no longer had to worry about day-to-day decisions and dollars-and-cents headaches. That gave me time for the things that really interested me, like talking about new directions in agriculture. Besides, my greatest value to the company was not as an executive — it was in public relations.”

In 1990, the restructured company hired a Madison Avenue advertising executive to produce a series of television commercials. Fred Schuler, the director who filmed Chevrolet’s long-running “Heartbeat of America” ad series, brought his crew to Saguache to tape the Coleman Ranch, cowboys, the Sangre de Cristos, cattle, and steaks grilling over beds of glowing coals.

THE TV COMMERCIALS and full-page newspaper ads supported a major promotion targeting 260 Boston-area supermarkets. But the results were disappointing. The company developed a more conservative growth plan in 1991, opening an export market to Japan and introducing organic beef.

Coleman Organic Beef came from cattle which were not only free of antibiotics and hormones, but which had also consumed only grass and feeds that had not been treated with pesticides or artificial fertilizers.

Today, Coleman Natural Products, Inc., slaughters about 1,000 cattle each week and distributes natural beef to all fifty states and two foreign countries. Coleman Certified Ranchers includes 350 ranches covering millions of acres of range land in seven western states.

At any given time, Coleman Certified Ranchers are raising nearly a quarter-million cattle without using antibiotics or growth-promoting hormones, and with modern management methods that are steadily improving range quality.

Despite the Coleman success story, natural beef still generates controversy. Some regular beef industry representatives claim that not a bit of difference exists between “regular” and “natural” beef.

But a lot of consumers who pay nearly $100 million retail each year to buy Coleman Natural Beef obviously think otherwise.

Things have changed a lot for Mel and Polly Coleman since they began marketing natural beef eighteen years ago. Then, a sales trip meant loading an old refrigerator into the pickup and driving to Pueblo. Today, it often means flying to Tokyo.

Coleman Natural Beef, that desperate gamble to save a ranch, proved to be a winning bet. The ranch is now back up to 240,000 acres and running solidly in the black, thanks to above-market prices for naturally-raised cattle. The huge ranch debt — once $2 million — has already been cut in half.

That leaves Mel Coleman with one remaining goal.

“Before I die,” he says confidently, “I expect to see that ranch free and clear.”

Just like Coleman Natural Beef was eighteen years ago, that’s also a good bet.

Steve Voynick enjoys eating Coleman steaks when he’s not writing at his home near Leadville. He is the author of many books about mining history and mineral collecting. His most recent book, though, is Riding the Higher Range: The Story of Colorado’s Coleman Ranch and Coleman Natural Beef. This article is abridged from that book.