Interest money

Federal grant money could help meatpackers grow in tough market

Utah meat packers will compete for a share of the $1 billion slice of federal money made available to small and medium processors in a bid to increase competition, fairness and resilience in the notoriously concentrated meat market.

Utah agriculture experts say the money is urgently needed to bolster the state’s food system, whose overreliance on out-of-state processors has put local consumers at risk .

“When COVID hit, we realized the fragility and importance of our food supply chain. Food security in Utah depends on access to small and medium-sized meat plants,” said Linda Gilmore, director of economic development at the Utah Department of Food and Agriculture. “Fruits and vegetables are in season, but meat is available all year round. So in a high mountain desert having this meat during the winter is very important. We need to start processing our food more internally.

Yet even though the iron is hot for processors, many of the state’s small meatpacking businesses may lack the appetite to expand — discouraged by paperwork, labor challenges and a burden. already heavy work due to industry reshuffles that have sent rushes into new business.

Brett Behling, executive director of Farmers Feeding Utah and a member of the Utah Farm Bureau board of directors, worries that many independent processors in the state are missing out because most are mom-and-pop owners at the fall of their career and up to their ears at work.

“A lot of these guys have done it the same way their whole career. After 30 and 40 years, they don’t want to take on more debt or hurt their ass to go through the rigorous process of grant writing and grant tracking. Behling said.

“And why would they if they already have more work than they want to do? They don’t see the need to go the extra mile as they are booked for the next 18 months. It will be a very tough battle to qualify a lot of these guys.

the Biden Harris Map comes at a watershed moment for an industry facing pressure to reform following major supply chain disruptions and dramatic price increases. The scrutiny of the meat market has intensified in response to its growing dominance by a handful of mega-packers, which have undermined consumers, crowded out small agricultural businesses and damaged the resilience of the food supply, according to the White House Office.

“When dominant intermediaries control so much of the supply chain, they can increase their own profits at the expense of farmers – who earn less – and consumers – who pay more,” according to the White House press release.

Meat and poultry prices have become single largest contributor to the rising cost of food, according to economists at the White House Office. Price hikes have revived antitrust efforts in a sector where only four companies control 85% of the beef marketincluding the world’s largest meat packer by profitJBS, which operates a facility in Hyrum, Utah.

Utah Attorney General Sean Reyes has joined other state attorneys general in calling for federal action and support for the antitrust enforcement against meatpacking industries.

Meanwhile, as litigants tackle issues at the top of the food chain, federal leaders send in reinforcements to support the little guys.

Behling co-owns a meat processing plant in West Haven, Weber County. The facility processes cattle raised in Utah, with a majority of beef operations. However, the factory does not have the capacity to process entirely in-house; therefore, they contract with facilities in Idaho to kill and debon the cattle before bringing them back to West Haven for further processing and packing.

Behling hopes that with the federal subsidies, the West Haven plant can expand capacity and keep more of the processing line — and profits — in Utah. He is currently completing an application for a USDA expansion grant.

Lost economic opportunity

The financial incentive to keep processing in the state is evident in the beef industry, which accounts for about 78% of Utah’s cash receipts for meat animals, according to a 2020 UDAF reportthe latest and most comprehensive study of the state’s beef industry.

The report explains that because the majority of calves are taken out of state to be finished and processed, Utah loses much of the profit from the end product.

For example, steers are normally sold in Utah at about 550 pounds at a market price of $1.55 per pound, which translates to about $853 per head. The wholesale value of the meat was $2,275 per head and the retail value of the meat would be $2,844, which is more than three times the value of the veal, according to the USFD report.

“Beef is our best agricultural product. But we send most of it out of state, let someone else add value to it, and then we buy it back,” said UDAF’s Gilmore. “This grant is a great economic opportunity for our processors and our state.”

Work and paperwork

Although even if local packers decide to seek expansion funding, a major hurdle remains, as the biggest challenge to cultivating a viable processing industry may come down to manpower.

“Work is a major crisis. It is a colossal concern. Not everyone will do this job because it’s not really glamorous work,” Behling said. “You have the sounds, the smells and the environment. And it’s so physically demanding that people won’t say, “I would love to do this for 30 years.”

The difficulty has increased alongside a tightening labor market and historically low unemployment, which has favored workers now empowered to be selective about employment.

It’s one of the reasons processors are looking to other countries to fill positions, leveraging the temporary H-2A agricultural program that enables agricultural employers facing labor shortages. work to bring foreign workers to the United States on a temporary or seasonal basis.

Although bringing in foreign workers comes with its own set of risks, including language barriers, transportation and housing costs, and the increasing likelihood of losing sponsored workers to other industries.

“If a construction company or a manufacturing company or one of the other competing industries wants them, they’ll offer a few extra bucks an hour and those workers are just gone, so you’re left with the bag,” said Behling.

In addition to difficulty finding workers, small processors are reluctant to continue expanding due to a cumbersome application process that often requires outside help, according to Behling, who hired consultants to help prepare its application. of subsidy, but is not certain that the small packers will make the same expenditure.

“If you want meat processors to fully benefit and grow, take their business to the next level, they are really going to need help. Because they’re really good at cutting meat, but they’re not good at paperwork and grant writing and environmental studies and all that stuff,” Behling said.

Small processors also have to deal with the local zoning ordinance, the navigation of which promises to become more complicated with the expansion due to the fact that many are only allowed to continue current operations from the rights clause acquired.

All of these administrative requirements, Behling worries, could be enough to dissuade smaller packers from applying for expansion grants.

Still, UDAF’s Linda Gilmore is hopeful and says there have been 40 independent processors who have expressed interest in applying for grants.

‘Chicken and egg’

Utah farm leaders hope the expansion grants are the first step in a broader overhaul of the state’s food system, which will require multiple institutions working together to design an ecosystem to promote food security. in the state.

“It’s not just about building factories. It’s about building the infrastructure necessary for plants to thrive. Sewer resources. Three-phase powers. Good roads and road access. And we have to figure out how to make it work with the current zoning. A lot of people love farming until you want to build a facility near them and they say, ‘That’s wonderful, but that’s not my backyard,’” Behling said.

“We need a long-term strategy, and it will probably take decades. It’s difficult because you have to solve these problems simultaneously — workforce training programs, infrastructure — it’s kind of a chicken and egg.