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Have a look at what could become your next steak

The Department of Agriculture is preparing to do its first survey of the nation's commercial bison herd, assessing its size, health and production issues, and marking a validation of sorts for the small but growing industry.

The number of bison processed for consumption in the U.S. annually equals just half of one day's beef production. But as beef prices rise, bison—which is even more expensive—looks less prohibitive. It's even being sold in Costco.

The meat, which is also much leaner than beef, has become popular for its health benefits and for those on the so-called Paleo diet, which emphasizes pasture-raised meat.

"I think there's nothing but room for expansion," said Jeff Miller, who runs Diamond Mountain Ranch in Northern California.

"Our demand is going through the roof," said his partner, Chris Silver, president of Gold Coast Bison.

(Read more: California: Water doesn't flow, but profits might)

Miller and Silver came to the industry from different paths.

"I was a general contractor in Southern California and looking for a greener place," Miller said.

He ended up in Greenville, Calif., where he eventually bought a rundown ranch with fewer than 60 head of bison. He thought of turning it into a subdivision but said he then decided, "This is utopia."

After the housing market collapsed, Miller moved from raising bison to selling bison meat. Now he has close to 250 head.

"The contracting business built the ranch, and now the ranch is actually carrying the contracting business," he said.

Grazing bison
Eric Raptosh Photography | Blend Images | Getty Images
Grazing bison

Silver, an airline pilot, was casting about for ways to diversify his income and better prepare for retirement.Three years ago, he got an idea.

"I had come home from a trip, sitting on my couch watching CNBC, and I look up and see Jane Wells in the middle of a snowstorm in Wyoming, surrounded by bison." That was February 2011. "I seem to remember the claim was 20 percent growth year over year, over the past five years," he recalled, "I said, 'This is a dubious claim.' "

But Silver was intrigued enough to begin researching.

"I found out it was a true claim," he said, "and it was actually probably a little closer to 25 percent rather than 20."

He met Miller at a meeting of the Diamond Mountain Ranch, and their partnership was born.

"I had no experience with large animals," Silver said. "I don't own any equipment; I don't own any land. So I knew I had to find somebody that was willing to take on a novice rancher and show me the ropes."

(Read more: Where's the beef? Industry at crossroads)

The two wish they had more than their 250 head. That's not enough to meet demand, as they sell to Southern California restaurants such as Green2Go and Pedalers Fork.

Silver and his family spend weekends selling at local farmers markets in wealthy neighborhoods, including Beverly Hills and Calabasas. He said he hadn't planned to become a salesman in addition to ranching and flying, but "then I realized it could be lucrative and help us grow faster."

Growth is hampered by two issues.

First, it costs more to raise bison—especially grass-fed, all-natural bison—than beef cattle. Silver estimates it costs him almost $1,000 a year to raise one animal, or up to $3,000 before it's processed. He sells certain cuts for $25 to $32.50 a pound, however, and profit margins are between 30 and 50 percent.

"Our normal customer is someone who is looking for a healthy product that has a unique flavor, and they are willing to pay a little bit more in order to get that healthy product," he said.

The second obstacle is that there are not enough supply to create a market large enough to affordably put bison on menus nationwide.

The USDA considers bison a "nonamenable species," meaning it does not mandate the meat be inspected before sale. Producers such as Miller and Silver seeking USDA approval have to pay inspectors overtime to get a voluntary stamp (in the shape of a triangle).

(Read more: Hot Pockets recalled on meat 'unfit' for humans)

The USDA's upcoming survey may help move the industry into the mainstream and encourage more ranchers to add bison to their herds, though Silver is wary.

"Any time the government is looking at you, you have to be careful," he said.

Regardless, he expects to finally recoup his investment this year, as revenue has quadrupled.

"With my profession, you could literally be one flight away from your last flight," he said of being an airline pilot. "You could have health issues, or if an underwear bomber shows up and tries doing that again, it could ruin the industry."

He sees bison as a profitable and enjoyable hedge, though his wife laid down one rule: "No belt buckles and no hats."

—By CNBC's Jane Wells. Follow her on Twitter: @janewells.

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