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An air of unease over cattle empire;
Fresno county rancher John Harris, owner of the largest feedlot in the state,
is on guard against the threat that imported animal diseases could pose to his $150-million beef business.

April 22, 2001 Los Angeles Times by Melinda Fulmer

John Harris' cattle empire looks like small potatoes compared with meat giants IBP Inc. and Excel Corp., but here the rancher is a cattle baron, controlling almost a quarter of all cattle slaughtered in the state.

At any given time, his feedlot off Interstate 5 in Fresno County holds 100,000 Herefords and Black Angus, enough cows to send hamburger patties to McDonald's and his signature steaks to California Safeway stores and have enough left over for the precooked meat dishes such as pot roast he's now selling in supermarkets across the country.

While ranchers in many parts of the world are coping with foot-and-mouth and "mad cow" diseases and fighting to preserve the family farm, Harris' $ 150-million beef business is thriving, buoyed by rising demand and prices.

But Harris hasn't been able to savor the recent red meat renaissance. The threat that foot-and mouth disease might enter the country has cast a shadow over his feedlot, the largest in the state.

Moreover, prices for the fruit, vegetables and nuts he grows on much of his 18,000 acres in west Fresno County have plunged while energy and water costs have surged, giving his farming division its third straight annual loss.

"Right now cattle is about the only profitable area," Harris says while patrolling the fields in his Ford Explorer.

Because Harris' empire is diverse, encompassing everything from cattle to racehorses to row crops to livestock feed to a three-star hotel and restaurant, he--unlike many other farmers--can weather cyclical price drops.

Indeed, Harris is one of the lucky few who have been able to turn a profit in California's slumping agricultural sector. But even he is cutting back, letting 5,000 acres of his farm lie fallow this year because of the water shortage and miserable prices for most crops.

He also was forced to lay off about 20 of his farming company's longtime employees, a move he had been delaying for a year or more.

"It was pretty tough because some people had been here a number of years," Harris says. "You're always hoping prices are going to come back. But this is just something we had to do."

The pressure to sustain his huge empire weighs heavily on Harris, because he knows his is one of the few places local people can find a job.

In these parts, he is legend, and his businesses--the Mediterranean-style hotel, the fancy steakhouse, the feedlot and the slaughter plant--are a lifeline to the three nearby communities of Coalinga, Huron and Avenal, combined population 30,000. Aside from a state prison, he is the largest single employer, with 1,500 on his payrolls.

The Harris empire operates under several corporate entities: There is Harris Farms Inc., the farming company; Harris Feeding Co., which runs the feedlot; Harris Ranch Beef Co.; Harris Farms Horse Division; and Harris Ranch Inn & Restaurant.

But because so much of his business is tied up in his feedlot, an outbreak of foot-and-mouth would be devastating, both to Harris and to the community.

To guard against the disease, Harris has a team of 20 cowboys patrolling his pens each day, looking for signs of sickness, including telltale symptoms of foot-and-mouth such as blistering and lameness. Public tours of the feedlot have been canceled and a foot bath for disinfecting shoes has been put in front of the main gate.

Although the damage to the European beef industry from foot-and-mouth is helping to boost U.S. beef exports--by 5% to 10% according to some estimates--it's given only a small nudge to Harris' exports. Weak Asian currencies have cut into his Pacific business.

The domestic industry has a lot more to lose than to gain from the disease, he says. "I think it's negative for the business. If you have even 1% or 2% of the people say, 'Well, maybe we're going to eat less beef ,' it could have a fairly big impact nationwide."

Towns' Fortunes Grow With Ranch

Harris' 18,000-acre spread was developed by his father, Jack, in the 1930s as a grain, fruit and vegetable farm. In the ensuing decades, it grew to include the feedlot and a thoroughbred horse farm.

As the company's fortunes have grown, so have the economies of the neighboring towns. But the growth has come at a price.

"The smell from the cows can be overwhelming," Marilyn Gabriel, executive director of the Coalinga Chamber of Commerce and a 60-year resident of the town, says with a chuckle. "But it's something we just live with. It's just a part of our life."

Harris no longer lives near the feedlot. A decade ago he moved about 50 miles from the ranch his father started to a 6,000-acre expanse with a French chateau-style house along the Kings River east of Fresno.

He commutes to work in a Cessna 210, landing on an airstrip between the rows of tomatoes, asparagus, onions and other vegetables.

There's another airstrip outside Harris' steakhouse so customers can fly in for one of his $ 40-a-plate Black Angus beef dinners and sample his extensive California wine list.

The pink stucco Harris Ranch Inn, buffered from neighboring pastures by columns of mature palm trees, initially was seen as a folly when Harris built it in 1986. Consultants had urged a Motel 6 for long-haul travelers rather than a $ 115-a-night pink palace with spas, lush landscaping and an Olympic-size pool.

But Harris insisted on a nicer hotel, not based on any economic analysis, just a gut feeling that it would fly. "I guess you'd call it instinct," he says. But "we proved that people will take the time to stop anywhere if you have a nice place."

Despite its remote location, Harris Ranch Inn's occupancy has hovered at 75% to 80%, and a 30-room addition was recently completed.

Belying his enormous wealth and powerful political connections--fund-raisers for such pols as Sen. Dianne Feinstein and Gov. Gray Davis have been held at his inn--the soft-spoken Harris comes off as down-to-earth. On most days he wears jeans and boots and drives his mud-caked Explorer to the feedlot or to the processing plant in Selma.

There, the profit center of his business, Harris slaughters more than 700 head of cattle a day, producing roasts, steaks and lesser cuts of meat that fast-food operators such as In-N-Out Burger grind into hamburger patties. Since 1999, the plant also has been marinating and cooking some of this meat and turning it into precooked main dishes from stroganoff to stew to pot roast.

These products were conceived by Harris and his original co-packer, Monrovia-based meat packer Burnett & Son Meat Co., as a way to sell roasts year-round. They are beginning to catch on with time-strapped consumers trying to serve the closest thing to a home-cooked meal.

And because the heat-and-serve products can sit on the shelf for a couple of months, they're attractive to retailers. Sales have grown 50% over the last year to $ 15 million as distribution has expanded to other parts of the country, such as the South.

"It's certainly unique for a regional company the size of Harris Ranch to go national with a product," says Bruce Berven of the California Beef Council.

Harris and others in the beef industry expect these products to begin edging out some raw cuts of meat in the butcher case as fewer consumers take the time to cook. Harris is trying to persuade supermarkets to set up special Harris Ranch sections in the butcher case.

Surviving in a High-End Niche

High-end, grain-fed beef is Harris' niche, one he has been forced into to survive in the business. The industry now is controlled by huge, vertically integrated companies such as IBP, ConAgra Foods Inc. and Excel with plants around the country that can produce massive amounts of beef and sell it cheap. Others, such as Manning Meat Packing in Pico Rivera, have gone organic.

"There's no money to be made on the commodity side," says Fred Stein, manager of Shamrock Beef Processors in Vernon. "So what they're doing makes a whole lot of sense."

So far there are no heirs apparent poised to take over the dynasty. The 57-year-old Harris and his wife, Carole, have no children. Many of his top managers are near retirement age, having worked for him for 20 or 30 years.

He hopes the lack of an heir will work in his favor over the next few years by helping him attract bright young talent to carry on the enterprise--agribusiness graduates who might not otherwise consider such a remote location.

"Sometimes it's hard to attract and maintain good managers if they know John Jr. is going to be the CEO," Harris says. "I think it's a little bit of a plus that they know there's no family structure here."

As for his own future, Harris says that if he were "footloose" he'd pass along more of the responsibility for the farming businesses to key managers and concentrate on his passion, the horse farm.

It's not a wildly profitable business, employing 40 people to look after a horse population that rarely reaches 100. But it is the most picturesque corner of Harris Ranch and is where Harris spends a good part of his day.

"There are some who say I spend a disproportionate amount of my time here," Harris says with a laugh. "It's sort of my vocation-avocation thing. I like the cattle business, but having the horses nearby has been more of a magnet for my interest."

He hastens to add that he likes farming too, because it's such a big part of his roots in the San Joaquin Valley. But he admits it's hard to get excited about it in these difficult times.

"I tend to like things better when they're making money."


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