Austin’s Vital Farms is carving a niche in the pasture-raised egg industry – Austin American

Five years ago, entrepreneur Matt O’Hayer purchased 27 acres along Onion Creek in Southeast Austin in hopes of creating an organic egg farm using pasture-raised chickens.

“The idea was to produce the best quality eggs while creating a place where hens can flap their wings, stretch their legs, move around and act like chickens,” O’Hayer said. “There are farmers all over the country doing it right on a very small scale, but I wanted to see if we could do it on a national level.”

The result is Vital Farms, which has grown from a single operation to a network of 17 family-owned farms in four states. The company had sales last year of $4.9 million, and is the largest supplier of pasture-raised eggs to Whole Foods Market, which sells them in nearly every U.S. store.

In Austin, in addition to Whole Foods, the eggs are available at the Barton Creek Farmers’ Market, Wheatsville Food Co-op and through the Greenling local delivery service. Local restaurants including Snack Bar and Tacodeli also use the eggs.

Vital Farms’ rapid growth — revenue is up 4,522 percent from three years ago — earned it the No. 51 spot on this year’s Inc. 500 list of the fastest growing privately held companies in the United States.

Jason Jones, Vital Farms co-owner and president, says the growth is being driven by “a burgeoning wave of people who want to know where their food comes from, and they want it to be free of pesticides and chemicals. We’re probably the most expensive egg in the country, but people are willing to pay more for an egg that is better for you, and has a richer yolk and fluffier white when you cook with it.”

Organic eggs currently make up a sliver of the U.S. market, accounting for about 3 percent of the 80 billion eggs produced annually. But that’s up from 0.7 percent in 2005, and the number is expected to continue to grow as producers increasingly market their brands for taste and nutritional qualities.

“You never hear a TV cooking show host or a restaurant say where they get their flour, but they tell you when they’re using Vital Farm eggs,” said Scot Vidrine, a vice president at Capital Farm Credit, Texas’ largest rural lender, which recently extended financing to the company. “They are creating a brand for their product that people are going to know and ask for.”

That’s been the case at Whole Foods, where Vital Farms has built a following, said Natasha Calvert, a Texas local buyer for the natural grocery chain.

“They’ve developed a name for themselves as somebody who is very careful with their product and is producing the highest quality possible,” Calvert said. “We like to work with people who are on the forefront of creating organic, very high quality and delicious food, and that’s what Vital Farms is doing.”

Jones says Vital Farms eggs cost more — as much as $8 a dozen at Whole Foods versus about $2 for commercially produced eggs — because of the labor intensive process of caring for the chickens, which involves frequently moving hen houses and protecting them from predators.

At conventional egg-laying farms, hens usually are kept in small cages that can give each one less space than a standard sheet of printer paper, Jones says. Cage-free birds, he says, don’t necessarily have a better quality of life either, he says.

Even at some cage-free and organic egg farms, “the birds are often kept in warehouses and get very little access to the outdoors,” Jones said. “Our birds genuinely have a life outside on meaningful green pasture. We like to say that our girls live outdoors with indoor access.”

In Austin, Vital Farms’ 2,000 hens spend most of their time outside, where they receive organic feed and have space to roam and peck for bugs. The pasture method requires workers to relocate the pens every few weeks to provide fresh foraging. Each bird gets 108 square feet of outdoor space and access to a mobile hen house, where they stay at night or when they are laying eggs. Vital Farms uses no chemicals in the chickens’ food or on their pasture.

Thomas Reeh, executive chef at Snack Bar on South Congress Avenue, said the organic process makes a difference. The restaurant began using Vital Farm eggs a year ago.

“The yolk itself is a very bright beautiful color, while factory farm eggs are a really pale yellow, and there’s a richer flavor,” he said. “People actually ask if our eggs are organic and where they’re coming from. We can tell them now that we’re getting the best we can.”

Vital Farms was initially self-funded by O’Hayer, who founded Barter Exchange, an Austin-based bartering business that was acquired by ITEX of Bellevue, Wa., in 1995.

O’Hayer, who is CEO of Vital Farms, said his interest in egg farming goes back to the late 1960s, when as an teenager he sold them door-to-door on the Brown University campus in Rhode Island.

“Since then I’ve always stopped at roadside stands and tried the eggs,” he said. “Some are great, and some aren’t, and I realized that it really matters how you treat the hens. There’s a humane way to do it, which is the reason we started Vital Farms.”

The 25-person company started out by selling at farmers markets and restaurants, and became a supplier to Whole Foods in 2009. It began expanding by partnering with family-based farms, and today has suppliers in Texas, Arkansas, Oklahoma and Georgia.

Vital Farms doesn’t have ownership in the farms, but they are required to operate under specific guidelines and use similar methods as the flagship Austin site.

Last year its farms in Arkansas and Oklahoma began raising pasture-raised broiler chickens, which the company sells to Whole Foods and local restaurants. It also sells eggs under brand names Pasture Verde and Alfresco Farms at Central Market and H-E-B stores, as well as Natural Grocers and other natural food chains and co-ops across the country.

Now Vital Farms wants to add more farms to its network, but transforming a conventional operation to an organic farm can be cost-prohibitive, Jones said. In addition to significantly higher labor costs, startup expenses include mobile fencing, upgrading housing and new water and feed structures. That puts the cost of converting a family farm at about $25 a hen.

To help with the expense, Vital Farms recently began a crowdfunding effort on the site When You Wish. It hopes to raise $80,000 to put toward the costs of shifting a farm to pasture-raised chickens.

“A lot of small farmers are realizing that organic is where the industry is heading, and we want to help them make the shift,” O’Hayer said.

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