With a new, more business-centric administration coming on line in Washington, a cross-section survey of those who are part of and interface with the small, independent meat processor community yields discussion of elements that may portend some striking changes ahead in 2017.
For the past five years Mark and Gwen Croghan have operated Chalet Market of Montana in the community of Belgrade, not far from Yellowstone National Park. They describe their area as booming with growth and an unemployment rate of about 3 percent.
“While that’s a nice thing to see, it also means we have a tight labor market and have to compete with plenty of businesses who offer high-paying construction jobs,” Gwen explains. “We’ve had the business five years and specialize in elk and bison meats, but they are getting more difficult to find and more expensive. Bison went up about $3 a lb. in the past year, but some of our other meat products like beef and pork have leveled off more recently.
“We operate under federal inspection and that limits our sources of supply in this vast region. If we had state inspection, we would have less of a problem locating locally sourced meats, which are what customers want to buy.”
With only four other employees in their plant in addition to themselves, the Croghans also operate a deli and gift shop and a few satellite retail markets. At one point they were up to 28 employees and with the limited options of Obamacare, decided to discontinue that coverage and downsize a bit and offset the loss of a medical benefit by giving their workers higher wages.
“It’s a very tough labor market,” Gwen continues. “What we need are employees who know how to make sausage and they are a rare find. We would like to expand and add on, but the availability of knowledgeable workers is holding us back.”
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Product improvement
Improving shelf life of meat products, hanging carcass quality considerations and processing opportunities for livestock producers are significant issues that will be coming into greater focus this year according to Elizabeth Boyle, Ph.D., in the department of animal science at Kansas State Univ., Manhattan, Kansas.
“Smaller processors often have little or no information on how to determine the shelf life of products they make and sell to supermarkets or convenience stores,” Boyle says. “It is not always a safety issue, but rather can be based on quality factors of meat items they produce. Often, there is no shelf life information on the label and smaller processors have been seeking resources on how they can determine the shelf life on the products they produce.”
Boyle, who will be providing help on this topic at the American Association of Meat Processors (AAMP) annual convention in July 2017, says she has also been working with graduate students to study pork carcass shelf life and quality issues.
“Exactly how long can you hang a carcass in a cooler?” she asks. “Many times a carcass is used for multiple purposes depending on the production schedule for a processor or what a customer is asking for at the time. We are getting more requests for help in making quality and safety determinations for hanging carcasses.”
With the nationwide growth in private label meats for livestock producers, Boyle says she is getting more inquiries from the livestock raisers about what is needed for them to process their own products.
“This is a cyclical thing that seems to change with the economy,” she notes, “but more producers are looking for information on what it takes to start and operate their own processing operation, whether under state, federal or custom regulations. Some are driven by the need to supplement their income and others are motivated by friends who like the meat from their livestock and are encouraging them to explore it further.”
Changes in Washington
Chris Young, executive director of the American Association of Meat Processors (AAMP), expresses strong feelings that the local food movement will continue and remain a trend that bolsters small processors and the services they offer.
“Right or wrong, customers feel they get a higher quality of meat or protein from smaller processors and feel more comfortable buying from someone they can talk with about how their product is handled and its origin and raising,” he points out. “Members seem optimistic that the new administration will bring a more pro-business agenda to Washington. Lowering business taxes and regulations will allow them to grow and keep more of their profits to invest in new equipment and employee benefits.
“Changes in the Affordable Care Act could also have a huge effect on small business. The act has hardly been affordable and has pushed them to make hard choices about the benefits they can offer employees, both to attract and retain them.”
Young believes that the proposed estate tax changes under the Obama administration would have been disastrous for smaller operators and is concerned many would not have been able to pass on the family business without selling off parts of the enterprise or just closing the doors. Others would have been left with no cash to keep the plant going. He feels cutting business taxes sharply will improve the long-term growth potential for small companies.
On the regulatory front, Young is very interested in the new appointments within USDA and the impact they will make.
“Probably the most interesting appointment would be the undersecretary for food safety,” he says. “This position has been vacant for a while and Al Almanza has served both as FSIS Administrator and as interim undersecretary. Our hope is that the new undersecretary would work with FSIS to focus on regulations that affect food safety rather than regulations that have nothing to do with it.
“Humane handling enforcement in small plants has gotten out of hand and goes beyond the aims of the original directives. The amount of time and money to comply with a zero tolerance policy is costing tax payers and industry too much money and lacks common sense. More and more small slaughter facilities have closed their doors rather than deal with burdensome humane handling directives. Small slaughter plant owners have grown to feel that regulators look at them as more of a nuisance rather than an integral part of the farm-to-table cycle.”
In the supplier category, general manager Mark Thoennes of Daniels Food Equipment, Parkers Prairie, Minnesota, indicates a recent trend in his stainless steel industrial food processing and custom-made equipment sales is likely to continue.
“We’ve seen our largest growth in the chain stores,” he observes. “They want to manufacture their own sausages and specialty meat products to keep up with the larger box stores. Our sales to smaller, independent processors have been steady for the past few years. We are hopeful that changes in the business tax rate and estate inheritance laws could have the ability to power new demand from the small processor category. We’ve been very busy recently and see that trend continuing.”
Joe Leonard operates Farmers Place, a small processing company in South Edmeston, New York. He also serves as president of the New York Association of Meat Processors.
“There is great potential for the small processor,” he believes. “It’s just that too many want to do things the way they always have and don’t want to take the time to get out of the shop and see what others are doing to improve their products and their customer base. They need to see a bigger picture and learn from examples of others around them.
“For those who complain that things aren’t as good as they could be, I can only comment that ‘losers complain’ and ‘winners train.’ The opportunity for small processors to learn from each other is largely one that is too often untapped.”
