The grain fed to feed-lot cattle is generally corn, which is a crop heavily subsidized by the US government and thus artificially extremely cheap. It is also easier to manage, move and store than hay & alfalfa.
“Corn is a mainstay of livestock diets because there is no other feed quite as cheap or plentiful : thanks to federal subsidies and ever-growing surpluses, the price of corn ($2.25 a bushel) is 50 cents less than the cost of growing it.” (Pollan, 2002)
In New Zealand, where Silver Fern grass-fed beef is produced, they do not have the massive corn surpluses, subsidies and production found in the US. What they do have is a mild, agreeable climate and beautiful pasture land, so raising free range, grass-fed beef is more economically viable (and attractive) than producing grain-fed beef.
Pollan, M. (2002, March 31). Power Steer. Retrieved October 31, 2011, from Michael Pollan.com (previously published in NY Times Magazine): http://michaelpollan.com/articles-archive/power-steer/