POLITICO: Small meat processors get little aid as demand grows

Small meat processors get little aid as demand grows

The pandemic gave small meat processors a new window of business as big meatpackers had to shut down or scale back operations amid outbreaks.

Butchers at Old Fashion Country Butcher in Santa Paula, Calif., process meat May 21 as they work to meet increased demand due to coronavirus related shortages. | Brent Stirton/Getty Images


06/15/2020 11:23 AM EDT

The widespread disruption in the meatpacking industry as a result of the pandemic has led to a boom in business for small, independently owned meat processors. But while the Trump administration threw its weight behind getting large meat plants back up and running, smaller companies have not enjoyed the same backing in terms of regulatory easing or financial aid.

That has led several lawmakers and small firms to call for help to fill in what’s expected to be a continuing need for their services.

“Before Covid, I think there was some demand from people wanting a relationship with where they buy their meat from,” said Andy Shaw, who was already beginning to see a rise in interest for locally and sustainably produced meat prior to the pandemic at his four Arkansas-based facilities. “I think with Covid, that has really been strengthened and a lot more people are cognizant of knowing where their meat comes from.”

Fueled by a cultural shift of buy local, the pandemic gave small meat processors a new window of business as big meatpackers had to shut down or scale back operations amid outbreaks. But small processors warn the boost in business does more harm than good if Congress and USDA don’t step up.

The increase in business is overwhelming the capacity of small plants like Shaw’s.

“Our backlog for processing was six to eight months out, and now that it has increased and we are out 24 months,” he said.

As a result, lawmakers on Capitol Hill are urging more help for small processors. A recent letter from Republicans asks the Agriculture Department to reduce regulatory burdens that ban small plants from entering the market and limit competition to major producers resulting in the current bottleneck.

While the members of the House Judiciary’s antitrust subcommittee are requesting certain regulations be revised, several Democrats and Republicans have introduced bills in the House and Senate to provide aid to small plants, something advocates hope will be included in the next coronavirus relief package.

Short term, making sure small plants have the financial support to still be able to support the farmers and ranchers that use them during the pandemic is the immediate need from USDA, said Kelly Nuckolls, policy specialist at the National Sustainable Agriculture Coalition.

“Long term, hopefully we can think through solutions whether it’s in relief packages, farm bills, or climate change legislation,” she added. “I think it’s important we think about how we can create a better meat and poultry sector in the future.”

In 2018, there were about 4,000 small and very small USDA-inspected plants in the U.S. (USDA defines “small” as fewer than 500 employees and “very small” as fewer than 10 employees or $2.5 million in sales.) Those figures don’t include state-inspected small plants and custom and poultry exempt small plants, according to Nuckolls.

During the early weeks of the pandemic, the Trump administration jumped in with an executive order and regulatory changes after the four largest meatpackers — Tyson Foods, JBS, National Beef and Cargill — began running at lower capacity or shut down plants as workers tested positive for Covid-19.

The four companies control approximately 85 percent of the U.S. market for slaughter and packaging for beef, 66 percent in pork and up to 50 percent in chicken, according to USDA data.

That level of concentration in the industry led to a surge in calls by both consumers to find new supplies of meat and by farmers to find ways to bring their animals to a new market.

“In part, everyone was thinking small plants could make up for closure of large plants and that’s not realistic based on how our current food system is structured,” Nuckolls said. “A lot of small food plants felt pressure to increase their volume and didn’t feel comfortable doing so.”

Even though USDA recently said that the large meat plants across the United States and Canada are back to near capacity, there is still a huge backlog at farms of animals waiting for slaughter and packaging.

Most small plants can only kill 10 to 20 animals a day; facilities that USDA considers large processors that employ hundreds and thousands can kill 6,000 to 20,000 a day, said Rebecca Thistlethwaite, director of Niche Meat Processor Assistance Network.

Small plants “can only process as many as they can to do so safely, humanely and not overwork their employees,” Thistlethwaite said. “Having a backlog is not harmful for the processors’ business because they are doing quite well in what is usually a slower time of year. But it is harmful to farmers who can’t get their animals processed.”

Among the smaller changes that could be made are cutting some fees USDA charges. The department’s Food Safety Inspection Service requires meatpacking plants to have an FSIS inspector on site. Inspections who work overtime to meet production goals are given extra pay.

Small processors are asking their fees to be waived or reduced to accommodate for the rising volumes and costs. In a statement to POLITICO, FSIS said such waivers wouldn’t be possible.

“Unlike a business, we cannot make adjustments or provide discounts to the rates that are charged,” the statement said.

States like Maine have stepped in by adding new processors with state food systems. In Montana, $2 million of assistance is being given to small and middle-size meat processing businesses. But advocates hope to see more from the federal level to support the sector.

“Before the pandemic, there have been a few USDA grant programs that are more focused on farms, which are not the majority of small plants,” Nuckolls said. “There was also a loan program that, again, is something they are usually denied because of thin margins and because of lack of collateral.”

Cody Hopkins, founding farmer and CEO of Grass Roots Farmers’ Cooperative, said he has seen a 300 percent increase in sales and has added 10,000 new customers buying their online product — an increase that has maintained through the last three months.

“Our processing plants process not just for Grassroots but for other farmers, so there is about an 18-month backlog right now at our processing facility,” Hopkins said. “There is a real need to expand the processing capacity that supports small scale farmers like the ones Grassroots works with,” he added.

Cost of expansion is a large barrier to entry for small farms. That doesn’t include the money needed to implement additional precautions needed against Covid-19, like personal protection equipment or accommodating a smaller workforce, Shaw, of Arkansas, explained.

Small plants also need to invest in bigger coolers, freezers, holding bins, and more just to keep up with the amount of product coming in.

The sector worries that without federal support, consumers who have been trying to buy local may give up and go back to less-expensive, mass-slaughtered meat.

“I am hoping consumers don’t rush back to buying their cheap commodity meat,” Thistlethwaite said. “They are going to put their dollars in a system that is failing us. It is not resilient; it is very risky as we are experiencing right now.”

With second and third waves of the virus potentially in the future, Thistlethwaite says small processors will not be able to accommodate more capacity if larger plants continue to see outbreaks.

Mike Callicrate, a small plant operator and rancher with operations in Colorado and Kansas, said the lack of change means no solutions for workers and operations to function safely and alleviate backlogs. That would mean the control over food security will remain in the hands of the large meatpackers who caused the backlog in the first place.

“I can’t think of a single thing we’ve done, or a single lesson we’ve learned from this disaster,” Callicrate said. “If Covid happens again, we will be no better off.”