Hometown processors try to expand in rural Kansas
As the United States’ meat supply chain wavered during COVID-19, cattle prices came down and feed lots swelled to capacity. Ranchers looked to small- and medium-sized processors to harvest their animals, but across the country, these businesses were in short supply.
Many who had a two- to three-month wait before the pandemic, now have more than an eight-month wait. In some locations nationwide, including in western Kansas and Alabama, the wait to process an animal is more than one year.
Some state agencies and legislators in Washington are trying to figure out how to help the supply chain.
“No state has enough slaughter and processing plants for what the current market demands are,” said Christopher Young, executive director of the American Association of Meat Processors. “It’s an ongoing situation we need to rectify.”
The AAMP has more than 1,500 members, with most of them falling into the small- to medium-sized category. Many, like Krehbiels Specialty Meats in McPherson, Kan., are having to turn customers away because their calendars are full and the ranchers waited too long to make a reservation.
Krehbiels, a fixture in central Kansas, started in 1978. With 14,000 square feet, this USDA inspected slaughterhouse and attached retail store harvests and sells buffalo, cattle, elk, goats and poultry. Because they have a USDA inspector on premises, the meat from the harvested animals that independent ranchers bring to the facility can be sold retail nationwide by the rancher.
Ranchers who sell meat over state lines must bring their animals to a USDA-inspected facility. In Kansas, other than the large plants like Cargill and Tyson, there are not many plants for ranchers to choose from. Often the animals must ride several hours to the meat processing plant, and the rancher must travel back that many hours to pick up their packaged meat.
According to Young, in more evenly populated states, like Missouri and Wisconsin, there are more processing plants, and they are spread out more evenly than in Kansas.
Many of the slaughterhouses sprinkled throughout Kansas and 25 other states are state-inspected facilities. When a rancher has their meat slaughtered and processed at one of these plants, the meat must remain within state lines. There are also custom-exempt facilities where farmers can bring their animal, but once the meat is processed, it has to be consumed by the rancher or hunter and marked not for resale.
Need to Expand
Krehbiels is expanding this fall, adding approximately 3,000 square feet. This mom-and-pop business took out loans to increase its size and buy new equipment.
“We’re trying to increase capacity by 40 percent,” said Jeff Krehbiels, the owner of Krehbiels Specialty Meats. “We’ve experienced a 2 to 300 percent increase in business.”
Sometimes increasing square footage causes other issues, like a lack of labor, including a shortage of inspectors.
“I get calls all the time from livestock producers that can’t find a place to go,” said Carol Klema, the executive director of Kansas Meat Processors Association. “It’s hard to invest that much capitol and not know if the trend will continue.”
State, federal help for meatpackers
In Missouri, plants like Krehbiels are able to obtain a special loan. Agricultural businesses in Missouri’s smaller towns can receive funds from the Missouri Agribusiness Revolving Loan Fund, which can be used to start, acquire, operate or expand an agribusiness. Due to COVID-19, MASBDA is offering a fixed interest rate of 4%.
The Meat Processing Facility Investment Tax Credit Program in Missouri is also available to qualifying meat processors interested in modernizing or expanding their facilities. The program is designed to stimulate investment in the meat processing industry in Missouri. Some of these incentives existed prior to COVID-19.
“We are a huge livestock state. It’s important we have processors of all sizes,” said Sami Freeman, a spokesperson for the Missouri Department of Agriculture. “A meat processor is going to be beneficial to farmers and ranchers and the community.”
The Processing Revival and Intrastate Meat Exemption Act, which would make it easier for custom-exempt facilities to process non-USDA and non-state inspected meat, was introduced to Congress. Young, and many inspected facilities do not think this is a good idea.
“The CDC estimated that one in six Americans become ill with a food-borne illness each year,” James Dillon, the director of the Texas State Meat and Poultry Inspection Program said at The Organization for Competitive Markets’ workshop in late June. “This source of action (the PRIME Act) would be a course of action that would present a significant risk to food safety.”
Dillon and Young believe increased state and federally inspected small and medium processing plants are what are needed.
“Many consumers are interested in obtaining locally sourced products,” Dillon said. “COVID-19 has certainly taught us we have some vulnerability in our meat industry.”
Recently, several members of the agriculture committee in Congress introduced the Requiring Assistance to Meat Processors for Upgrading Plants Act. This bill provides federal incentives to improve beef processing capacity and would help more businesses be able to expand and meet the needs of the facility’s clients in a more timely fashion.
The RAMP UP Act would provide existing meat and poultry processors grants of up to $100,000 to help them become a federally inspected facility.
“Right now, America’s meat producers and processors are facing unprecedented market challenges. At a time when producers are experiencing increased demand for high-quality meat, meat processors across the United States are racing to increase their capacity to meet the demands of consumers and producers,” said Rep. Frank Lucas, R-OK, in a release. “The RAMP-UP Act gives processors the tools to become federally inspected facilities, which widens their customer base while maintaining strong inspection standards.”
For Jon Daniels and Tim Zerr, who started their slaughterhouse and retail shop, ZD’s Meatz, two and a half years ago in Oakley, this legislation would be a welcome reality.
But for facilities that already do federal inspection, like Krehbiels, this legislation would not help, even though this smaller slaughterhouse and packager needs to double in size to accommodate its customer base.
According to Young, AAMP is speaking with legislators to expand legislation. Although RAMP-UP is important, AAMP believes more help is needed for USDA inspected small- and medium-sized facilities nationwide.
“Right now, this is a crisis situation,” Young said. “It’s an ongoing situation we need to rectify.”
ZD’s Meatz slaughters approximately 60 to 70 animals – bison, cattle, goats, lambs, pigs and sheep – per month and wants to expand more than double – to approximately 250 animals per month. Krehbiels, which currently slaughters 3-4,000 large animals per year – including bison, cattle, elk, goat, lamb, pigs and sheep, would also like to double in size, but due to cost, that action is not feasible. Krehbiels also harvests more than 3,000 fowl a year; many other Kansas meat processors do not slaughter these animals. Both Krehbiels and Daniels know the need is there. But the cost of expansion is huge.
“There’s a lot of room for expansion,” Daniels said. “We need to expand by more than 100%.”
Daniels has accomplished most of the USDA-required paperwork, but he has not yet switched over from state to federal inspection. AAMP’s membership has grown in recent years, after a long period of decline.
“We’ve definitely seen a new influx of meat packing facilities,” Young said. “People want to know where their food is coming from. We’ve seen a resurgence of farm-to-table.”