05.14.20

Meatpacker struggle exposes challenges for Montana consumers, ranchers

It wasn’t long after grocers began running low on meat that a little processing shop in Shepherd saw a surge in customer demand.

Customers who never before graced the parking lot of Project Meats were stopping beneath the reader board. In all caps, the sign along U.S, Highway 12 read, “Never out of beef. Gotta Love Montana.” The 23-pound, “Home Sweet Home” packages were selling fast during Montana's stay-home order.

Then, the state order was lifted. Restaurants closed by the pandemic started opening back up. Those unable to get meat from their usual vendors also came calling on the local processor.

 “They just opened back up, and all of a sudden they’re, ‘Hey, I need 80 pounds of burger on Friday.’ The salesman is going crazy trying to tell them what we have and what we don’t have,” said Daman Kehler of Project Meats. “I’ve never done this before in my life. We cut for a chain restaurant yesterday because they couldn’t get meat from their truck.”

Small meat processing businesses, particularly state-regulated ones, are taking a prime cut of the retail market as the nation’s largest meatpacking companies, Tyson Foods, JBS, Cargill Meat Solutions and National Beef, struggle with COVID-19 outbreaks at roughly two dozen processing plants.

The nation’s four big meatpackers control 80% of slaughtered U.S. beef. Weekly beef production at packing plants inspected by the U.S. Department of Agriculture was down 31% the week of May 8, compared to the same period a year earlier. On the scale, that's 165.4 million pounds less for a single week, according to USDA Agricultural Marketing Service.

The total weekly production decline for beef, pork and lamb combined was down 27.5%, or 285 million pounds less, than the same week in the previous year.

Consider this: At least 20 meatpacking plant workers nationally have died from the virus, and 5,000 have been directly affected, according to the United Food and Commercial Workers. The federal regulators who inspect those meatpacking plants are also sickened. More than 145 federal meat inspectors were absent from work at the end of April, according CBS News, reporting numbers provided by the U.S. Food Safety and Inspection Service on May 5. Three meat inspectors have died from COVID-19.

President Donald Trump on April 30 ordered meatpacking plants to remain open in an attempt to ease a national meat supply shortage, but with sickened workers the problems at large meatpacking plants persist.

Farm state lawmakers see a meatpacking crisis that cuts two ways. Upstream from the sickened packing plants, supermarket refrigerated cases once full of beef, pork and poultry are nearly empty. Retail prices are rising due to off-kilter supply and demand. Downstream, prices offered to ranchers for livestock are crashing as the meatpacking plants, shuttered or no longer operating at full steam, pull back. The price for slaughter cattle is about $.60 per pound, too low for ranchers to turn a profit.

And prices are sticky, both at the supermarket and at the livestock sale: adverse changes in price per pound, both for consumers and ranchers, are likely to linger, which is what happened last fall after a meatpacking plant in Kansas caught fire. The kink in the supply chain drove up grocery store beef prices and lowered the rancher’s paycheck for fat cattle.

The COVID-19 crisis has exposed the vulnerability in the nation’s monopoly meatpacking industry, Montana U.S. Sen. Jon Tester said Tuesday.

“There’s so much consolidation right now, the four guys who run the meat industry go out and play a round of golf and determine how much the feeders are going to get for their cattle, and that is what I’m concerned is happening,” Tester said. “And then anytime you have a fire, or COVID crisis, they take that kink in the hose and use it to their advantage.”

There is a core group of U.S. senators, Tester among them, who have focused on the problems of the monopoly meatpacking industry for years. But others have gotten religion on meatpacking since the pandemic.

There are three new bills aimed at changing the meatpacking industry. Tester, a Democrat, and Montana Republican Sen. Steve Daines are co-sponsors of each.

One would make it possible for state-inspected meat processors like Project Meats to sell product across state lines, something that’s always been prohibited. Although the meat inspection rules enforced by states are the same as the federal rules, state-inspected plants have been stuck on the porch.

At Project Meats, Kehler said there’s been demand for his bacon and sausages in nearby Wyoming, but selling into the state under current rules has required the business to open a second processing plant in Wyoming. It's either that, or become federally regulated.

“We get a lot of people from Cody and Sheridan. People come up and buy our bacon and stuff. They want their restaurants to have the same bacon as we make,” Kehler said. “It would be great if we could do that, but we can’t.”

Project Meats has a storefront retail shop in Billings called Ranch House Meat Co., at 3203 Henesta Drive.

Likewise, meat sticks and jerky made by Montana’s state-regulated meat processors have been shut off from Yellowstone National Park.

Since the pandemic hit, there’s been new interest in state-regulated meat processing and sales, said Gary Hamel, inspection chief of the Montana Department of Livestock Meat and Poultry Inspection Bureau.

“Just since COVID started, it’s been quite a whirlwind with folks wanting to get into this industry, because there’s definitely a need there,” Hamel said.

There has been interest in full-blown processing businesses, but also more moderate developments, like “meat depots.” A meat depot usually involves a rancher wanting to sell processed beef stored in a freezer located in a building other than a residence.

There's also a sense that small state-regulated meat processors are maxed out. Readers tell The Gazette the wait for a custom cut can be months long.

At a time when the conventional path to market is offering unprofitable prices for cattle, ranchers are becoming more interested in selling their product locally. However, there’s also growing interest, outside the pandemic economy, in the locally-sourced food movement.

A second Senate bill would require major meatpackers to make half their livestock purchases through auction yards.

The requirement addresses a long-time concern that major cattle buyers have driven down the price of livestock by avoiding the competitive bidding process of public auction yards. Privately negotiated contracts between buyers and individual ranchers keep others from knowing if the price in the auction yard is competitive.

“In light of the significant disruptions taking place in the cattle markets, it is critical that the market is as transparent as possible,” Daines said in a press release. “As fewer cattle are sold on a negotiated cash basis, this bill will help support price discovery and increase transparency in the cattle markets and help ensure that Montana ranchers are treated fairly in the marketplace.”

A new resolution takes another run at country-of-origin labeling, something that ranch-state lawmakers briefly secured in a decade ago. COOL, as the labeling program is called, requires that labels be placed on meat identifying from where it came.

COOL has been popular with ranchers, but not meatpackers who want the ability to run cattle from Canada and Mexico through U.S. packing plants without disclosing the meat is from out of country. The labeling requirement was put to use in 2008 on produce and meat, but soon ran into trouble.

To avoid problems with the North American Free Trade Agreement, which required products between the trade partners move freely, COOL labels on meat read “product of U.S., Canada or Mexico.” The broad-brush approach to appease Canada and Mexico frustrated ranchers.

Canada and Mexico then threatened to impose tariffs on U.S. products. The World Trade Organization backed the tariffs, after which the meat labels were abandoned. But COOL advocates have argued that the United States should have fought the WTO ruling. Lawmakers argue resurrecting COOL meat labels would be worth that fight.


By:  Tom Lutey
Source: Billings Gazette