What's Next?!

The Future of Local Meat Marketing as I See It

As some of my readers (two or three at most, I suspect) will recall, we started in the sheep business with a focus on local marketing, more than 20 years ago. After a disastrous (and humorous) attempt to raise and market lamb from a handful of Barbados sheep in 2005, we started raising our own lambs and marketing the meat locally in 2006 (through farmers markets, locally-focused retailers, and restaurants). And through it all (at least since the wreck we experienced in 2005), we’ve worked with Superior Farms, a large-scale lamb processor just down the road here in California. As we were building our business, Superior Farms was embracing the small-scale, locally-driven lamb processing. They were (and are) great to work with – they are an employee-owned business that shares our commitment to quality, animal welfare, and economic viability. But last week, I received a letter from Superior Farms indicating that they would no longer be able to custom-process (cut-and-wrap) small lots – beginning in January, they will only custom-process lots of 50 head or more. Even at the peak of our locally-focused meat marketing efforts, when we had more than 300 ewes, we seldom processed more than 15 lambs at a time. This shift in policy, I think, may be a watershed moment in the effort to build a more local meat marketing system.

I should start by saying that I have learned a tremendous amount about lamb during my association with Superior Farms. We no longer market very many of our lambs directly as meat, but I continue to be impressed by the quality of work that Superior has provided. We still sell a few lambs to friends and family, and they always (ALWAYS) prefer meat that Superior processes. The cuts are more uniform, the packaging holds up longer – everything about it is, in fact, superior.

And I would be remiss if I didn’t address the discord between packers and producers. As a rancher, I find that my relationship with the company that processes (and in many cases, purchases) my product can be challenging. As the biggest (and sometimes, only) game in town, Superior can be perceived as wielding a disproportionate amount of market power. Cynics might think this latest move is simply an expression of this market power. Others might think it is a way to bring larger niche marketers back into the fold, so to speak. But it’s not, I suspect.

Since I became focused on local food systems and local meat marketing – and probably long before – I’ve heard ranchers talk about the need for local meat processing. More processors, the story goes, means more competition – and higher prices for ranchers. In most cases, I think, the expectation is that these higher prices won’t require anything of the rancher beyond simply delivering livestock to the plant (in other words, the rancher won’t need to market meat). I’ve been part of several efforts to examine the economics of meat processing. In Northern California alone, there have been at least three projects assessing the feasibility of establishing a locally-focused, small-scale, full-service packing house. In each case, it was deemed feasible. In each case, nothing has been built - yet.

While I haven’t spoken with my friends at Superior Farms, I suspect their new policy is reflective (at least in part) of the true economics of meat processing. They have found, after 15 years (or more) that processing my handful of lambs according to my specifications, as well as the several hundred other individual specifications of other individual producers, is not economically feasible. Running my 5 lambs through the plant, followed by John Doe’s 3 lambs and Jane Doe’s 15 lambs, is incredibly inefficient – from a labor perspective as well as from an economic perspective. And this is for a company with highly skilled workers, sufficient capital, and excess capacity. How would a start-up with less experienced workers and more expensive capital cope? I find the answer in the lack of investment in new, locally-focused processing. The folks who would write checks to support this sort of endeavor are not certain of its financial success or the adequacy of its projected return on investment.

The conventional model of meat processing is built from a manufacturing perspective. The processor buys raw product (live animals), transforms this into meat, and sells that product to distributors and wholesalers. Profitability, in this model, varies – when live animal supplies are tight, producers profit. When we produce more than the market demands, other sectors profit. This new model, however, is based on a service model. The processor is providing a service; ownership of the meat stays with the producer, who must also market his/her product. A service model is more problematic – can the processor charge enough for the expert labor that converts livestock into meat, and still earn a return on its investment?

Don’t get me wrong - I’m still supportive of local food systems. I would still like to market lamb to my own community. But I don’t think the service model upon which local direct marketing depends can be profitable for everyone involved. How, then, can we do this?

I believe that the most significant barrier to this system is our regulatory system. For me to sell you a rack of lamb, I need to have that lamb slaughtered and fabricated (cut-and-wrapped) at a USDA-inspected facility. This system grew out of the abuses of the late 19^th Century and early 20^th Century. Unwholesome meat can make people sick – or worse. And the lack of standardized inspection before the creation of the Food Safety Inspection Service was reprehensible (and deadly, at times).

But…

But today, we have county and state health standards that apply to all food establishments. We have exemptions for other meat (beef and poultry) that allows producers to sell directly to consumers without federal inspection. In California, we now have a law that allows cattle producers to market up to 5 head per month directly from the ranch. This exemption allows cattle ranchers to hire a rancher butcher and a local cut-and-wrap facility to process beef – and then to sell that beef to directly consumers. Similarly, poultry producers can raise as many as 20,000 birds per year, if they sell that poultry directly to the end users. Neither exemption exists currently for lamb, goat, or pork producers.

I’ve often compared the USDA inspection requirement to kidnapping. There is an expectation, if you’re processing meat, that you’ll ship it across state lines – just like kidnapping is a federal crime because of similar expectations. But what if I want to ship my lamb chops to Colfax, California? What if I want to sell stew meat in Sonora, California? Perhaps this regulatory change deserves more attention!

In the meantime, I’m sad that Superior has realized that processing my lambs – and returning the meat to me for marketing – isn’t economically viable for them. But perhaps this is a critical moment in the local meat movement. Perhaps we’ll finally figure out that we need to approach this from a different direction.