Business

After fire and the ‘drought of the century,’ things are looking up for Hearst Ranch

Why Hearst Ranch is unlike any other working ranch

Hearst Ranch is famous for producing grass-fed beef, but the beautiful, sprawling property means more to the Central Coast than what ends up on our plates.
Up Next
Hearst Ranch is famous for producing grass-fed beef, but the beautiful, sprawling property means more to the Central Coast than what ends up on our plates.

Ben Higgins’ office sits in the same clapboard-sided cottage where William Randolph Hearst’s ranch staff was once stationed. He works in an environment where wide-open spaces are still abundant, cattle roam free and “cowboy” is an actual job title.

As director of agricultural operations for Hearst Corp., Higgins is at the helm of a business enterprise that is deeply rooted in the past, yet strives to innovate.

At its core is its grass-fed beef operation at the two Hearst Corp. ranches. The historic 82,000-acre Hearst Ranch in San Simeon is the original Rancho Piedra Blanca acquired by George Hearst in 1865. It is a vast 128 square miles of mountainous terrain that wraps around Hearst Castle, the monument gifted by the Hearst family to the state of California in 1957. In 1966, the Hearst Corp. acquired the 73,000-acre Jack Ranch in Cholame, which spans San Luis Obispo and Monterey counties.

Read Next

The Hearst ranches are the largest single-source producer of grass-fed beef in the country, producing more than 1,000 head of cattle annually, Higgins said. Most of that beef is sold in Southern California Whole Foods Markets.

Higgins’ responsibilities include overseeing the ranches’ 21 employees and contract workers, as well as a host of legal, financial and regulatory issues. He helps to coordinate visits from members of the Hearst family and fundraisers that take place at Hearst Ranch.

He reports directly to Steve Hearst, vice president and general manager of the Hearst Corp.’s Western Properties Division and great-grandson of William Randolph Hearst. Cattle ranching is just one of the Hearst Corp.’s many enterprises that include media and information companies, real estate, internet and marketing services.

An evolving Hearst brand

The years leading up to Higgins’ hire were the beginning of an era of change and diversification for the Hearst Ranch brand, the primary change being the transition to a grass-fed beef operation.

Although cattle have been part of the Hearst story since the days of George Hearst, it was previously a more conventional beef operation where animals were grass-fed when young, then sold after weaning to be finished elsewhere, often on grain. Transitioning to wholly grass-fed cattle began in the late 1990s, and by 2005, the cattle were 100 percent grass-fed.

Today, the cattle, a cross-breed of Angus with some Hereford and Shorthorn influence, spend their entire lives on one of the two ranches, allowing Higgins and his staff to “oversee every last detail of raising that animal before it carries the Hearst name,” he said.

Calves are born in the fall, then nursed and tended to by their mothers. They are branded in the winter, weaned in early summer and finished at the Jack Ranch, where irrigated pastures allow them to reach the desired weight of 1,200 pounds by the time they are sold at 18 to 24 months.

Finishing cattle on grass is slower and more labor-intensive than finishing on grain — and therefore more expensive.

“Ranching is always capital-intensive and return-deficient,” Higgins said. “We could not keep the ranches in the black with the cows alone.”

Financial pressures once forced the company to contemplate selling or developing portions of the two ranches. The San Simeon ranch avoided this fate when Steve Hearst arranged a perpetual conservation easement in 2005 that would ensure the entire 82,000 acres would remain agricultural land indefinitely. The agreement also granted 13 of the Hearst Corp.’s 18 miles of coastline to the state. In exchange, the company received $95 million, including tax breaks, and retained the right to develop a 100-room inn at Old San Simeon Village and build as many as 27 homes in the ranch’s hills. The company has said it has no plans to build any of this in the near future.

Once the solar project comes online and if you look at both ranches together, we will be significantly in the black.

Steve Hearst

At Jack Ranch, the answer was a different form of conservation.

Last year, Arizona-based First Solar began building a 280-megawatt California Flats solar farm at the Jack Ranch. It will eventually cover about 3,000 acres of the property. The first phase of 130 megawatts is slated to be in service early this year, with the remaining 150 megawatts to be completed in early 2018. Like the conservation agreement, California Flats provides an “alternative source of revenue that subsidizes the cattle operation in lean years,” Higgins said.

Although Steve Hearst declined to provide any financial information for either ranch, he said, “Once the solar project comes online and if you look at both ranches together, we will be significantly in the black.”

The company has diversified in other ways. In 2009, it partnered with Saunders Vineyard of Paso Robles to produce Hearst-branded wine, which has been “a good complement to the beef and the region,” Higgins said.

Steve Hearst is involved in the blending of Hearst Ranch-branded wines. Between 10,000 and 12,000 cases a year are distributed nationwide through several wholesalers and at Hearst Ranch tasting rooms in San Simeon and Cholame. Hearst said the company is working on increasing both production and distribution.

Drought, fire among challenges

In his 3 1/2 years with the Hearst Corp., Higgins has wrestled with numerous challenges, the most significant being what he calls “the drought of the century,” so severe that it devastated cattle ranches nationwide. Between 2011 and 2014, natural and man-made water sources that sustain the cattle at the Hearst Ranches began to dry up. Grass was scant, so cattle were given supplemental feed of hay and alfalfa. The cost was considerable. At the peak of the drought in early 2014, the ranches were spending more than $80,000 per month on supplemental feed.

The company was forced to sell a total of 1,000 breeding cows between 2013 and 2014 and ceased purchasing cows and heifers between 2012 and 2014.

Now, though, things are looking up. Last year’s rainfall was particularly well-timed, Higgins said, helping to replenish springs and wells and regrow grasses.

Last year, Higgins said, the company began “rebuilding our cowherds more aggressively than most other ranches.” Reducing a herd happens quickly, but replacing it is a time-consuming and expensive process, Higgins said. Ranch managers have to be careful to source breeding cows or heifers that are able to thrive in the ranch’s unique landscapes, have immunities to diseases common in the area, and can produce calves ideal for the grass-fed program. Once purchased, a heifer may not produce a calf for as long as two years.

Recently, the cow herd was up to 970 at Jack Ranch. At San Simeon, there were 1,160, roughly twice as many cattle as there were in 2014.

As for this year’s rainfall, “it’s too early to tell,” Higgins said. However, he is optimistic. “We are making a bet that the drought is behind us,” he said.

As a company liaison to First Solar, Higgins has been responsible for integrating the California Flats project into the Jack Ranch cattle operation.

“Considerable amounts of our internal fencing has been removed, and livestock water systems have been rendered unusable around the project areas,” he said. Higgins has been working with First Solar to mitigate these impacts. “Once the system is finished and operating, we do not foresee any meaningful impact to the (cattle) operation.”

Yet another test for Higgins and his staff was the Chimney Fire, which burned 17,700 acres on the eastern portion of the San Simeon ranch over 10 days in August. Hearst said that Higgins’ collaboration with Cal Fire to avert what could have been a disaster for the ranch has been “by far the most impressive” achievement for Higgins so far.

There’s a lot of trust involved in managing an operation across an area 10 times the size of Manhattan.

Ben Higgins

Higgins and his team worked closely with Cal Fire, providing access to the entire ranch, including its airstrip, sharing their knowledge of the roads and terrain and even providing water for aircraft drops. Cattle near burn areas were evacuated by helicopter, and no livestock was injured.

Higgins and his staff are still in the process of rebuilding after the fire. With the help of Cal Fire, they have re-graded roads, replaced culverts and reseeded slope areas where firebreaks were created. They have been working to prevent soil erosion that could impact the ranch’s sensitive watersheds. Although no historic buildings on the property were lost, some livestock facilities were destroyed and will need to be replaced. This year, they will also tackle the monumental task of rebuilding more than 20 miles of fence.

Nature is lending a hand in fire restoration. Early rains have begun regenerating native grasses across the burn area.

Higgins is quick to credit his staff with the way the ranches have emerged relatively unscathed from the adversity and challenges of recent years.

“There’s a lot of trust involved in managing an operation across an area 10 times the size of Manhattan,” he said. “(They) make me look good every day.”

Partnership with Whole Foods

Seven years ago, Steve Hearst was having coffee with a tenant in a Hearst-owned building in San Francisco when the tenant revealed her sister was the buyer of proteins for Whole Foods.

“She was kind enough to introduce me to her sister,” Hearst said.

Not long after, a team of buyers from Whole Foods toured Hearst Ranch. A deal was quickly reached.

“It has been and continues to be a wonderful relationship,” Hearst said.

That relationship has been key to the expansion of the Hearst Ranch brand and holds the potential for more growth.

Hearst Ranch beef is sold seasonally, between June and August, at 23 Southern California Whole Foods locations. The ranches are only able to produce a limited quantity of beef year-round — it’s just enough to supply the San Luis Obispo and Santa Barbara stores. Hearst Ranch beef is also available at the Hearst Castle Visitor Center and at both Hearst Ranch Winery tasting rooms.

Beef that is 100 percent grass-fed is “definitely a trend and especially in San Luis Obispo and Santa Barbara counties,” said Mark Martinez, meat coordinator for the Whole Foods Market Southern Pacific Region. Martinez declined to offer specific sales figures but noted that stores regularly sell out of the product.

Customers pay a premium for it. Recently, at the San Luis Obispo Whole Foods, Hearst Ranch ground beef was selling for $7.99 per pound and Hearst Ranch beef loin New York Steak for $23.99 per pound. People buy for a variety of reasons, Martinez said. Gourmands value the singular flavor and texture of grass-fed beef. The health-conscious appreciate the lack of added hormones and antibiotics, as well as purported nutritional benefits such as higher levels of omega-3 fatty acids. Some value the idea that the product is produced by a ranch that “practice(s) sustainable agriculture,” he said.

The product has been especially popular in San Luis Obispo and Santa Barbara because “customers are passionate about supporting local suppliers,” said Miguel Thomas, associate store team leader of the San Luis Obispo Whole Foods. Thomas said customers commonly drive from as far away as Santa Maria to buy the meat.

Humane treatment of animals is another top selling point for Hearst Ranch beef.

We have a head start on a lot of the competition, so you see that in the quality, consistency and flavor of the product.

Ben Higgins

Hearst Ranch was given a Step 4 animal welfare rating by the Global Animal Partnership, which Higgins called “the highest rating that a sizeable cattle operation can reasonably achieve.” The organization bases its ratings on the living conditions of farm animals. Hearst Ranch cattle live a “very natural, almost wild existence,” Higgins said. With so much room to roam, it can take cowboys on horseback a week or longer to track down a specific herd.

Although Higgins doesn’t rule out eventually adding more retail partners, he said that “our immediate focus is to meet and exceed our goals with Whole Foods. Demand is far greater than supply, so there is potential for growth within that relationship.”

Hearst Ranch is one of two suppliers of grass-fed beef to Whole Foods. The other is Eel River Organic Beef of Humboldt County.

Higgins is not overly worried about competition. For one thing, since a grass-fed beef operation is a costly enterprise, few ranches can accomplish it profitably on such a large scale. Also, Hearst Ranch has the advantage of experience.

“We have a decade in grass-fed beef and have learned an enormous amount,” he said. “We have a head start on a lot of the competition, so you see that in the quality, consistency and flavor of the product.”

Although the ranch is old school in many ways, Higgins and his staff have implemented new technologies. They use specialized breeding and selection techniques to improve the genetic quality of the cowherds. Ranch staff uses GPS to navigate the ranch and RFID (radio frequency identification) to manage cattle. And when they cull herds, ultrasound allows them to evaluate each cow’s reproductive health, a technique that was “unheard of a few years ago,” Higgins said.

At the same time, Higgins is aware that the Hearst Ranch brand is about more than beef and wine, encompassing intangibles such as history, conservation and tradition. “There’s a saying on the ranch — go slow and get there fast,” he said. “We’re going to maintain a very traditional way of doing things, but always with an eye on continual improvement and maintaining the Hearst legacy of quality.”

  Comments