The local-meat dilemma

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“Locally produced” is one of the hottest terms in the food business today, and some consumers will pay premium prices for foods, including meat and dairy products, grown on local farms.

U.S. Map But developing reliable supply and marketing chains can present a challenge, particularly for the smaller producers and processors typically involved in local-foods efforts. That’s especially true in the case of meat products according to a new report from USDA’s Economic Research Service. The report, titled “Local Meat and Poultry Processing: The Importance of Business Commitments for Long-Term Viability,” outlines some of the challenges and potential solutions for building viable local markets.

For producers to market their meat locally of course, they need a local processor. But for a local processor to remain economically viable, they need steady, year-around business rather than dramatic seasonal swings in demand for slaughter and processing services.

The study draws on in-depth case studies of seven meat and poultry processors across the country, interviews with long-time observers and other experts on this topic and cost analyses developed using data from a financial analysis of small meat plants from 2009 through 2011.

The authors describe three types of local-meat supply chains, each with their own regulatory and logistic challenges.

  • Very local – farmers sell live animal directly to one or more household buyers, who buy by the whole, half, or quarter carcass. A mobile slaughterer2 may come to the farm, or the farmer may deliver the animal to a processing facility. For red meat, the household buyers place the cutting orders, pay the processor directly, and pick up their meat, typically frozen.
  • Local-independent – The farmer arranges and pays for processing and handles distribution and marketing through a variety of direct and local channels.
  • Regional-aggregated – Multiple farmers sell finished animals to a central brand entity that arranges for processing and distribution and handles marketing, largely to wholesale accounts.

The case studies included in the report generally fall in the local-independent or regional-aggregated categories.

Based on the case studies and other research, the authors conclude that improved relationships, communication and commitment between farmers and processors. They list the following observations:

  • Increased commitment on the part of both farmers and processors involves not only enhanced coordination and communication but “hard” commitments. Farmers commit, individually or in coordinated groups or brands, to providing the processor with sufficient, steady business. Processors commit to processing those livestock to farmer specifications, consistently and on time.
  • Strengthening commitments between processors and farmers, as well as along the entire supply chain, is essential to maintaining and expanding the processing infrastructure necessary for growth in local meats.
  • Having a few key “anchor” customers provides steady volume and consistent business. Some processors are their own anchor customers, providing the majority of the throughput.
  • When farmers aggregate into a single niche brand, that brand can be a valuable partner for processors because it can deliver steady throughput and coordinated communication that can often be difficult for farmers to deliver individually.
  • Processors can use tools like active scheduling systems and variable pricing to assure that throughput is steady, week by week and over the year. This is part of their commitment to farmers, who know they will have processing dates for their livestock.
  • Processors who help their farmer customers with business advice, marketing, and distribution, for free or for a fee, can build good working relationships and long-term loyalty.
  • Deeper commitment comes when farmers invest in their processors financially, for mutually beneficial development.
  • Investments in local processors by their downstream wholesale customers can also be important for success.
  • Ongoing communication underpins the entire relationship. Whether about scheduling or services, costs or prices, meat quality or market conditions, processors and farmers need to communicate effectively with each other to develop and maintain strong business relationships.

Read a summary or the full report from USDA/ERS.



Comments (13) Leave a comment 

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corrine wynne    
June, 26, 2013 at 09:19 AM

Your article is offensive. DoYOU really think small farms dont know how to conduct business? Small farms are and hVe been a staple in the industry throughout history. We know what you research and print before u research it. Its more llikely that smaller farmers have a broader spanse of knowledge and more likely to be higher educated than large farms.now. Managing sall operations takes more know how than large industry farms. Whats really offensive is we have more details on processing and profits than your dulldrum article inferring small farmers cant understand cutting cycles by demand of product nor do you allow that customers who want beef and educated in what they want. Small farmers and cattlemen have tge edge of not be controlled by the industry standards and we have the standards for great food as put forth by the usda headlines and we are being truthful to our customers, we know whats in our products, our cattle and so do our customers! You folks r fighting having to label, and you are fighting the standards, you are fighting activists, maybe instead of fighting you should treat animalsgood until slaughter, feed them right, and you dont have to worry about hiding the labels. See we r not part of big industry coverup on whats in our food, small farmers show their products. Go offendsomeone else.

Anthony    
Everywhere  |  June, 26, 2013 at 03:14 PM

Even when on the offensive, rather than the defensive, as it always is, Big Ag can't buy a break. . . .

Jenny    
montana  |  June, 26, 2013 at 05:35 PM

Small farmers can do business for themselves, and as Organic Valley says, "none of us are as smart as all of us". Working together is exciting, and working to raise food for our neighbors, as local food farmers, is extremely gratifying. When we can work with local processors and receive a living wage even for our excess livestock (over and above our direct-to-family sales), then the system works! Instead of complaining, let's use our collective, vertically integrated brains to recreate a viable, sustainable, non-toxic food system. We get what we pay for. Cheap food $ = cheap food quality.

Earl T.    
GA  |  June, 27, 2013 at 10:29 AM

What is all the whining about? The whole point of marketing anything as "local" is to differentiate it in the market and drive up the price. It costs more to use little local slaughterhouses, so what? That just adds more delicious cost to enhance our proud conspicuous consumption escapades. The whole point is for local stuff to be sooo deliciously exclusive and soooo prohibitively expensive, requiring loads and loads of special attention and limitless cost. So build the d@mned slaughterhouses and charge out the cost to your customers who obviously have more money than brains. They will slurp it up! Stop whining and get with the spirit of capitalism.

Earl T.    
GA  |  June, 27, 2013 at 10:29 AM

What is all the whining about? The whole point of marketing anything as "local" is to differentiate it in the market and drive up the price. It costs more to use little local slaughterhouses, so what? That just adds more delicious cost to enhance our proud conspicuous consumption escapades. The whole point is for local stuff to be sooo deliciously exclusive and soooo prohibitively expensive, requiring loads and loads of special attention and limitless cost. So build the d@mned slaughterhouses and charge out the cost to your customers who obviously have more money than brains. They will slurp it up! Stop whining and get with the spirit of capitalism.

Thom Katt    
Midwest  |  June, 27, 2013 at 10:43 AM

Corrine Wynne, if you are going to advocate for small farmers and a local food system by claiming how intelligent and superiour you are to "Big Ag: you might want to improve your grammar, syntax, choice of phrases and proof read your typograpy. In other words, when you are making a claim of superior intelligence, you don't want to belie that by making stupid mistakes. On your discussion about labeling, I find you point of view a bit odd since small operatons and direct sales are exempt from a lot of labeling regulations.

jmcv02    
manhattan, ks  |  June, 27, 2013 at 07:20 PM

Corrine wynne- What exactly is a small farm to you? Where I grew up a dryland farm less then 5000 acres was small. How exactly does managing a small farm take more "know how" then an "industrial farm"? As far as I can tell all farms are governed by industry standards even small farms. If you manage as well as you write I don't have the slightest clue who youre still in business. If you have so much pride in what you produce and how you should be ashamed at how you present yourself to the public.

jmcv02    
manhattan ks  |  June, 27, 2013 at 07:27 PM

Jenny-Does economies of scale ring a bell? Cheap food doesn't equal cheap quality, you should have paid more attention in economics and business class...

Randy    
California  |  June, 28, 2013 at 12:16 AM

This article leads people to believe that there is not enough processing facilities. That is incorrect. I have to haul my cattle past a dozen or more processors to get to one that is USDA inspected. There are plenty of state inspected facilities that are just as clean and sanitary as the USDA inspected ones, but I cannot use them because of federal rules. These federal requirements are the problem. The hauling and then shipping the frozen meat a long distance is a big part of the extra cost that my customers have to pay. If I was allowed to use local processors, my customers would be able to pay more reasonable prices.

Anna Phylaxis    
Eastern Side  |  June, 30, 2013 at 01:36 AM

I am not aware of any label requirements that we (small beef producers) are exempt from. Last year's Executive Order resulted in our having to chose between paying $1k per primal section in lab fees to have our meat analyzed, or lying to our customers. It was claimed that that measure wasn't supposed to cost us any money, because we could just go to the USDA web site and download nutrition facts from them - except that we aren't selling the aggregate of US feedlot beef, we're selling 100% grass fed. We opted for the lab fees over the lies; we're glad we did. We have to use the same labeling system as the big boys, complete with nutrition facts (handling instructions encouraged), only we have to wait longer for approval before they can be applied to packages, because, well... we're small & can't raise so much fuss. We have to use only USDA inspected plants in order to be allowed to participate in interstate commerce. Most of the small plants don't want to deal with all the regulations of USDA (including providing the inspector a free office in their building) so they go with state inspectors only - that gives the plant access to enough clients to keep them busy, but seriously reduces producer access to larger markets. Now, poultry processing regulations are MUCH different, and small poultry producers are exempt from many of the labeling requirements as well. Which is rather ironic, considering the percentage of food-borne illnesses with a poultry vector as opposed to a beef vector. I suppose that would be because there aren't many, if ANY, independent poultry processing plants. There are none around here; if you want to direct-market poultry you have to process it yourself.

R.C.    
Washington  |  July, 01, 2013 at 11:33 PM

I second what Randy said...I struggle with the exact same problem here!

Dale spencer    
Nebraska  |  July, 02, 2013 at 07:04 PM

Interesting comments and a good article. The only thing I do is sell halves, etc to friends, their friends, etc. I know several people that do the same. Live 4 hrs from Omaha and Lincoln so don't do farmer's markets and have no interest in doing so. Customers are no different than my own family. Steaks and hamburger are always the first gone. When I was a kid, we also ate the tongue, liver, and heart. My children don't even know about these items. Thank God for packers that utilize every part of the carcass in foreign markets, etc. Scratch my head when I see restaurants brag about local products, and the only products on the menu are hamburgers and steaks. Who utilizes the rest of the carcass? Is it truly local? Where's the accountability. There is none. The wait staff never knows.

Nebaska 2    
Nebraska  |  December, 23, 2013 at 11:47 AM

Heard it said last week that each differentiation in the market (organic, NTHC, grass-fed, etc) leads to overall a smaller market in which to sell. I guess the customer says if there are those kinds of distinctions, "I don't know them all", I'll buy tofu.


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