Sunday, May 01, 2005
The beef of small meat processors
Small processing plants have dwindled in number, but the demand for their services is on the upswing.
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Rebecca Hubbard and her husband, Mike, show up every Saturday to sell their "natural" meat products at the Roanoke Farmers Market. Their Garden Mountain Farm in scenic Burke's Garden offers pasture-raised, grass-finished, hormone- and antibiotic-free poultry and eggs, lamb, pork and beef.
The Hubbards and the other 30 or so growers in Virginia who sell meat and poultry from grass-fed animals say their products provide a healthy alternative to commercially produced, factory farmed meat and poultry products.
Although consumers can also find the Hubbards' meat at Food City, the Hubbards say more local meat processors are needed, and would like to see existing processors expand so they can offer "value-added products," such as quick-cooking, prepared foods.
Demand is building, they say, for their kind of products.
But it is not as simple as growing more grass-fed livestock and putting more cuts of natural meat in grocery stores.
A bottleneck suppressing possible growth of this emerging industry involves the scarcity of small meat-processing plants.
The number of small processing plants, mostly family owned and operated, has dwindled, according to the American Association of Meat Processors. The number is down 10 percent from the 12,000 plants, nationally, in 1995.
The reasons given by plant owners and others vary:
• Children of plant owners want no part of a business that's labor intensive, some owners said;
• Overlapping rules and regulations from the state and federal government complicate the business;
• Regulators hold the small processors up to the same standards as the big guys;
• Some processors are unwilling to change with the times; and
• Some sources of revenue have now become expenses.
But the demand for their services is on the upswing. Processors take a slaughtered animal and cut it into portions that can be packaged and sold to consumers.
In September 2003, Central Virginia livestock producers identified the lack of local meat processing plants as the "major" impediment to entering emerging high value markets for high-end and specialty meat products.
The group came up with an idea to either build or convert an existing building into a processing plant.
One model, based on processing 25 cattle a day, would cost $1.4 million.
The average cost for each cow is estimated to be $30 for slaughter and $228 for processing. This is about 18 cents a pound above the estimated break-even sales cost.
Karl Keller, a grower of chemical- and hormone-free beef and hogs in White Hall, said he'd like the government to build the plant. But "the lobbyists in the beef industry won't allow it; they do not want the feed lots in Kansas threatened."
Nationally, the demand for natural and organic meat is up, too, even though it's typically more expensive than traditional cuts of meat found in grocery stores.
Jo Robinson, author of "Pasture Perfect" and "The Omega Diet," lists more than 800 alternative growers on her Web site, Eatwild.com. She said some growers have to travel 300 miles to find a federally inspected plant. And when they do find a plant they beg and plead to get space.
Challenges in the plants
"People just don't want to work anymore. It's hard work, standing on concrete at tables all day long, pulling knives all day long," said Dale Smith, owner of Smith Valley Meats in Rich Creek.
Typically, a small processing plant that employs between 25 to 35 people and operates five days a week processes between 100 to 300 animals a day. A plant that employs fewer than 25 may operate one to two days a week for slaughter activity, and then spend the remaining days further processing the animal to produce value-added products, for example grinding the pork for sausage.
The plants are also saddled with voluminous rules and regulations. What annoys operators the most is that regulators impose a one-size-fits-all philosophy.
Almost all of the rules that come out of the U.S. Department of Agriculture have been as a result of problems with big processors, Mike Hubbard said. Unlike the small processors, the larger ones have the money to hire hygienists and all the other experts to address the problems.
"The regulatory requirements do not differentiate based on scale and so, as a result, small processors doing 10 beefs a week have the same paperwork requirements as the processors doing 1,000 beefs a week," said Joel Salatin, a grower of pasture poultry, eggs, broilers and turkeys in Augusta County.
A beef refers to a single steer or heifer.
It costs a large processor in the Midwest, for example, $32 a beef, and a small processor $400 to do the same thing - break down and box the carcass.
Many processors work for individuals who take home the cow and freeze the meat. They are unaccustomed to producing a consistent product for resale, said Martha Mewbourne, a grower and president of the Scott County Hair Sheep Association.
Also, what were once sources of revenue for the processors are now expenses.
The beef hide market for leather products slid and the extinction of canneries contributed to losses. Processors also used to get paid by renderers, those who picked up the guts from the plants. Now, processors have to pay someone to get rid of the waste, said Smith.
"Bones got 2 to 3 cents a pound, and fat got 8 cents a pound. Now, we get paid nothing. Right now it's costing us $50 a stock."
Still, Smith said he spends about three times the amount of time on an animal that's spent by any other plant on the Eastern seaboard. "We zero trim cut to any perfection."
Responding to demand
A newcomer to the small processing plant business is Bev Eggleston, a former grower of poultry and other products. He recalled when he traveled along a 300-mile stretch of Interstate 81 from Harrisonburg to Greenville, Tenn., in the early '90s, looking for small processing plants and not one did poultry.
He has since given up on producing animal products, and has turned his attention to his federally inspected processing plant in Moneta. The plant processes and markets poultry and red meat.
"I come from a need," Eggleston said. He secured a loan from Valley Bank - about $450,000 - and is looking to secure additional funds from private investors to make his business a success.
Small meat processors have to stand out with value-added or specialty type products, said Steve Krut, executive director of the American Association of Meat Processors, which represents the small- to medium-size plants.
Another problem for small processors is the fees some have to pay federal inspectors who conduct surprise inspections after regular working hours, Krut said. At times, some processors have paid unionized inspectors $50 an hour.
"That's extortion," Krut said.
Small processors question why inspectors check on plant operations after regular working hours, especially when inspectors were already at the plant the same day, overseeing all the products and documentation.
"Not all inspectors are bad," Krut said. "But some take a heavy-handed approach."
The USDA said it pays its inspectors up to two shifts up to 80 hours a week, and if a company operates beyond those shifts then the processor has to pay the agency. The USDA said it does not conduct surprise inspections.
Defining consumer interest
Growers said they believe they could sell plenty more of the products.
But Mike Hubbard said the precise overall demand in Virginia for natural and organic meats remains a mystery.
U.S. sales of organic meat products reached about $75 million in 2003, the bulk of sales coming from poultry, according to the Organic Trade Association in Massachusetts. That's less than 1 percent of meat products sold.
Virginia does not track the natural meat industry. Cash receipts in 2003 for all types of meat and poultry produced in the state totaled $1 billion.
"We want the state to help define the demand for free-range poultry, grass-fed meat and pasture-raised pork," Hubbard said. They do not send their livestock to out-of-state processors. "When we get the meat back, we don't know if it's our meat," Rebecca Hubbard said.
Sales have increased by about 20 percent a year for the last several years for the Hubbards. Their gross income last year was $85,000 and they want to hit $100,000 in sales by year-end. In addition to pork, lamb and poultry, the Hubbards' own or manage 95 head of cattle, and will process 30 steer and heifers this year.
"We're seeing an incredible amount of interest from throughout the state; grass-fed, organic and nonorganic growers want to get closer to the retail dollar," said Spencer Neale, with the commodity/marketing department of the Virginia Farm Bureau.
Growers worry, though, that their processors who are getting older could face a health problem or some other crisis in their families, forcing growers to scramble to find another. Growers in Central Virginia often travel three to four hours to a processing plant, and could go to more than one so their needs could be met.
"If the mom-and-pop outfits go under, suddenly, we can't sell our meat," said Keller, whose hogs feed on grain and whose cattle feed on grass. The grower would need new labels, would have to interview the processor and find out if they can cut to the growers' specifications.
Keller travels three hours to one processor in Rich Creek in Giles County, and four hours to another. The processor in Rich Creek does not have a smoker or a linker and can't make link sausages.
Salatin, the Augusta grower, blames the state and federal government for running small processors out of business.
"Our culture loves everything industrial and quit patronizing local, and when industrial became outmoded, and started looking at local, again, the regulations became too prohibitive," Salatin said.
Regulations that came out in response to mad-cow disease have increased, said Dale Smith of Smith Valley Meats.
"It's 10 times more paperwork."
"Years ago, when something went wrong with an animal, the inspector made sure the beef was handled properly in a safe manner. Now, that responsibility is on the processor," Smith said.
The regulations have nothing to do with processing clean and safe meat, said Salatin. He drew a comparison between recreational deer hunting and selling meat from pasture-fed animals on his farm.
"The state encourages you to go out on a 70 degree November day, gut shoot a deer, drag it a mile through the squirrel dung, sticks and rocks and then strap it to the hood of your Blazer, and parade it around town for a couple of hours in the afternoon sun and then bring it home, string it up in a tree in the backyard, where birds roost at night, and then skin it the following week and feed it to your children and all their friends."
Yet, "You can't take a coddled steer or hog and wait until appropriate temperature days and dress it in the backyard and sell one pound to your neighbor without a quintuple-permitted, agricultural zone-prohibited, multi-million dollar, government approved facility.
"That is the kind of thing that makes you realize that all of the government concerns of safety and clean are nothing but a smokescreen to deny market access to local community-based food systems."
Matt Baun, spokesman for the USDA Food Safety and Inspection Service, said the agency's "responsibility to consumers is that products are federally inspected."
Mewbourne, the Scott County grower, supports on-farm slaughtering.
Several states, on a small scale, have been experimenting with mobile units. The USDA-approved units go to the farm and slaughter the animals. It's less stress on the animals because they are not loaded onto a truck, driven two to three hours, waiting in a pen, smelling the odor of death, Mewbourne said.
Mobile units are a lot more common for poultry operations than for beef because of USDA rules. A farmer can sell up to 1,000 birds without federal inspections in some states.
Usually, poultry is slaughtered and processed on the farm.
A federally certified mobile unit can slaughter cattle on the farm. Beef, though, must be processed by either state or federally inspected plants before it is sold to consumers. Either the farmers or the mobile unit delivers the carcass to the processing plants.
Neale said a lot of issues arise with on-farm slaughter. "It's very challenging from an inspection point of view; [how do you make it] profitable to process animals, and you can only fit so many animals in trailers."
He said it may work better for sheep because it's a lot easier to deal with smaller animals.
The advantages are: less transportation costs; growers get another step closer to consumers with their products; and they own the livestock from birth to slaughter to retail.