Frank Stronach goes to Florida

In his riskiest venture yet, the former head of Magna International is becoming one of the state’s biggest cattle ranchers

The city of Ocala, Fla., was known as the Gateway to the Magic Kingdom until Disney closed its welcome centre six years ago. These days, the local newspaper has given it a new nickname: The Land of Stronach.

Since his exit from the helm of Aurora, Ont.-based auto parts giant Magna International, Frank Stronach has turned his attention away from the auto industry and toward the greener pastures of Florida cattle ranching. In the past two years, the 79-year-old has been on a buying spree, using nearly $80 million of the $856-million payout from selling his controlling stake in Magna to acquire huge swaths of land in the Sunshine State.

So far, Stronach has amassed about 70,000 acres—nearly three times the size of Disney World—making him Marion County’s largest private landowner. His plan is to open a massive grass-fed beef operation starting early next year, with as many as 30,000 cattle, a 61,000-sq.-foot abattoir that would slaughter up to 300 cows a day, and a biomass power plant that would extract methane from manure.

The project is driven by Stronach’s vision of a largely untapped market for what has traditionally been a niche product: hormone-free cattle left to forage for food in pastures, rather than housed in feedlots and fed mostly corn. It’s a market that, until now, has been confined mostly to small family farms. If Stronach succeeds, his venture would eclipse anything the U.S. grass-fed industry has ever seen. “I was awestruck with the scale of what they’re trying to do,” says Carrie Balkcom, executive director of the American Grassfed Association. “That’s a big operation. That’s huge.”

Stronach’s Adena Springs ranch plans to market its beef to Florida grocery stores for consumers keen on fresh local produce, as well as serve the meat at Stronach’s network of racetracks. There are plans for a restaurant chain that would serve Adena Meats, and Stronach hopes to expand the business across the United States and Canada. “Frank doesn’t do anything small,” says Mark Roberts, general manager of Adena Springs’s operations in Florida. “I can assure you he’s planning it and it won’t just be in Florida.” (Stronach himself declined an interview request.)

In doing so, Stronach is banking on the emerging trend of wholesome food, where even restaurants like McDonald’s are under pressure to move toward what is perceived to be ethically raised produce. Some see this as the future of agribusiness, with a massive market waiting to be unleashed. But it’s not without its risks, risks that may end up being among the biggest of Stronach’s storied career.

Grass-fed beef farms are a throwback to a production style not seen since the Second World War, when ranchers left their herds to graze on grass and then slaughtered them on-site or at a local abattoir. Contrast that with modern-day beef production, where cattle are shipped across the country to places like Texas to be fattened quickly on grain in feedlots, which are cheaper and easier to maintain than large fields of grass.

Proponents of grass-fed beef say it produces leaner and more nutritious meat, free of the hormones and antibiotics commonly given to grain-fed animals, and that it’s a more humane way to treat a cow. “Frank feels that the demand for food production is great and it’s going to continue to grow,” says Roberts. “But this grass-fed concept has just got a nicer feel to it than a feedlot. As Frank says, ‘[the cows] will have all good days and then one bad day.’ ”

But holistic beef is far from a guaranteed success. For all of its health and environmental benefits, grass-fed beef remains a tiny fraction of the market. The operations are land-intensive, the cows take longer to raise and produce less meat. All that puts about a 30 per cent premium on the price of the beef at a time when the economic downturn in the U.S. has put a damper on the demand for luxury foods. With $350 million in sales a year, grass-fed beef represents a mere one per cent of total retail beef sales in the U.S.

Stronach’s outsized ambitions also seem to be at odds with the image the industry has cultivated of small local farmers selling to nearby residents. “A lot of people don’t seem to want to get big. It’s the comfortable rural lifestyle that they’re trying to maintain,” says Balkcom. “Grass-fed production really hits home with the local movement. People want to buy from the guy down the dirt road. They don’t want their stuff flown in.”

Despite his image as an auto magnate partial to boardroom battles and European castles, Stronach has long professed a love of farming—and is not entirely out of his element. He is one of North America’s largest horse breeders and while at the helm of Magna, he oversaw a network of thoroughbred ranches, race tracks and prize-winning horses. It’s a passion he has said he developed as a boy growing up in Austria during the Second World War, after a Russian soldier rode up to his house on horseback, stole a car and left Stronach with the steed.

But until now, his most high-profile venture into agriculture was Magnaville, the utopian community in rural Louisiana that Stronach built in 2005 to house evacuees from New Orleans displaced by hurricane Katrina. In exchange for free rent in three-bedroom accommodations, residents of the community—which was quickly dubbed “Canadaville”—were expected to raise poultry and grow organic vegetables in what Stronach has hoped would be the largest organic farming project in North America. With a population more accustomed to inner-city life than rural farming, Canadaville’s experiment was a bust and the community shut its doors in 2010, although it opened last year to house victims of flooding in Mississippi.

But Stronach’s gamble in American beef far exceeds Canadaville on the scale of agricultural ambition. Florida legislators and the local cattle industry are eyeing the plans closely. The state senate recently amended a bill that exempts fruit packers from paying taxes on electricity to include slaughterhouses in a bid to encourage Stronach to expand his business.

Stronach himself has been busy doling out money to the local community, where he has maintained a thoroughbred horse farm and training centre since the early 1990s. He recently donated nearly $30,000 to a local elementary school and spent another $1.5 million on a plant research centre at the University of Florida.

Ocala is no stranger to billionaire farmers. George Steinbrenner once operated a thoroughbred ranch in the area, and Campbell’s soup heiress Charlotte Weber has run a horse farm here since 1995. But Stronach’s plans go beyond the typical playground ranches of the rich and famous and have driven a wedge between local residents. On one hand are those who eagerly support the 150 jobs Stronach’s operation expects to create, which could help put a dent in the region’s 12 per cent unemployment rate. On the other are the residents concerned with the sheer size of Stronach’s landholdings and the magnitude of his planned operation.

Adena Springs has asked the local water authority for permission to drill 130 wells into the property and pump out 13 million gallons of water a day from the aquifer that lies underground. It’s more water than the entire city of Ocala uses in a day.

Environmentalists have sounded the alarm on the request, saying the community is already in the midst of a prolonged drought. Stronach, says local activist Guy Marwick, is asking for “a well for every man he hires.” “While the rest of us are on water restrictions where you can only water your lawn once a week, it’s very hard for people to see how one man can come into a place and ask for more than the entire community has ever used,” he adds.

Ocala’s water supply, which is a bubble of fresh water that sits atop a bed of limestone insulating it from the surrounding salt water, is particularly sensitive to over-pumping, Marwick says. The community’s main water source and tourist attraction is Silver Springs, a crystal-clear river that bubbles up from beneath the ground. It once pumped 550 million gallons a day, but the volume has fallen by nearly half in recent years. “If we lose that, it’s like losing a national monument,” Marwick says. “Water is a precious commodity here in Florida. I guess we’ll have to pipe it in from Canada.”

Still, local politicians would rather see Stronach’s vast landholdings go toward a cattle ranch than yet another real estate development, which, until Florida’s real estate market collapsed, was one of the main drivers of Ocala’s economy. “It actually makes it easier for us to deal with, because if there is an issue we don’t have to deal with multiple landowners, just the one,” says Marion County Commission chairman Charlie Stone.

The community’s cattle ranchers are particularly keen to see Stronach’s venture succeed. Florida is among the top cattle-producing states, but the cost of real estate has forced most ranchers to ship their herds to West Texas to feed.

The industry is banking on Adena Springs becoming a game changer for Florida farmers by creating a new market for ranchers to sell their herds to Stronach to meet his demand for livestock.

“He’s the start of it. We’re all going to fall in behind him and supplement his needs,” says Sam Albritton, past president of the Marion County Cattelmen’s Association. “He’s the brain trust behind it and we’re all going to hopefully make some money by helping him.”

But despite Stronach’s ambitious plans, Roberts says Adena will start out small, with only about 50 to 60 cattle, a number he hopes will grow to 3,000 by the end of next year. The company will use its own herd to start and then buy from other farmers as the market for grass-fed beef grows. “If the demand for our product is there, that’s what will drive it,” Roberts says.

It’s a big “if,” both for Stronach and for the Florida community playing host to the Canadian businessman’s next big adventure.

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