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Ecotrust in the News

The Register-Guard
March 19, 2006
By Susan Palmer

Meaty Bottleneck: Constrained by limited options for processing, small farmers struggle to wrangle any market growth

Keith Cooper's hog farm — 30 acres off Spencer Creek Road west of Eugene — doesn't hold a candle to the big operators. With about 100 animals in various stages of growth — from newborn piglets to breeding size adults — Cooper's one-man operation is dwarfed by growers in other states where 1,000 to 10,000 animals is the norm.

His size means that Cooper has been caught in a processing bottleneck, one that threatens the growth of his business.

Once a week, he runs two or three animals to a local federally inspected slaughterhouse, Bartels Packing in west Eugene. But the meat is processed to "primal cuts," much larger than the port ions sold in grocery stores, and Bartels doesn't smoke or cure the meet. So Cooper has to seek out another meat packer to finish the job.

Cooper has plans to grow, but until he solves his meat-packing problem, he's stuck. "I can't expand my markets," he said.

He isn't the only small farmer facing the problem of how to get his meat processed and ready for customers.

John Neumeister, a Junction City sheep farmer hauls his lambs to Marks Meat in Canby, a 190 mile round trip, in order to get the specialty cuts his restaurant clients want.

And Eugene farmer Paul Atkinson, of Laughing Stock Farm takes his hogs to Dayton Meat Co., a 200-mile round trip. Atkinson supplies high-end restaurants who make their own meat products, such as prosciutto, which requires him to deliver the meat with the skin on.

There are two federally inspected slaughterhouses in Eugene, but neither can meet all of Cooper's, Atkinson's and Neumeister's needs. It's a statewide problem that plagues both large and small growers. The number of federally inspected kill and processing facilities here has declined dramatically in the last 17 years. According to Oregon Department of Agriculture records, the state had 29 licenced slaughterhouses in 1989. By 2003, the number had dwindled to 13.

The reduction mirrors a national trend with fewer slaughterhouses processing more of the nation's meat. According to USDA researchers, just four companies now slaughter 80 percent of all U.S. beef. It is particularly hard for the smaller farmers to find companies to handle their meat in the way they want, because the amounts are so small .

So, at a time when community interest in locally produced foods is on the rise, the options for getting local meats into local markets are shrinking, Atkinson said.

"In order to do that, you have to have a processor locally that can handle your product on a scale that's appropriate," he said. "The problem is, there isn't the profit for the processors to exist. The question is how do we change that?"

State Rep. Jeff Kropf tried to legislate some changes during the 2003 session, with two bills that would have helped processors and farmers. One declared a state of emergency for farmers and called for a $10 million infusion to help the processors update equipment so that they could better compete with larger out-of-state meat packers. The other created economic incentives. But neither bill made it out of committee. "Not having adequate commercial capacity for slaughtering here in Oregon puts our farmers and ranchers at a competitive disadvantage," he said. "The transportation costs were substantial back then in 2003, and we didn't have the gas prices and diesel prices that we do now."

While beef prices also have gone up since 2003, it's still a problem for both farmers and processors, he said.

Dave Harris, owner of Mohawk Valley Meats in Springfield, feels trapped by the same bottleneck. He'd like to install the equipment that would let him process Atkinson's hogs with the skin on, but it wouldn't be economically feasible for him, he said. Fortunately, Harris has a regular supply of meat to process from Brownsville sheep farmer Reed Anderson, who moves between 100 and 200 sheep a week under a private label sold in local stores, such as Market of Choice and Long's Meats.

Harris also has buttressed himself against lean times by buying his own cattle, about 90 head, and by seeking third-party recognition as a facility that humanely kills, a designation he shares with Anderson Ranches.

But Anderson runs a much bigger operation than the majority of Lane County's meat growers. According to USDA records, most farms here are small.

Of 236 sheep farms in 2002, 94 percent had an inventory of less than 100 animals, and 62 percent had fewer than 25.

Most hog and beef cattle operations are on a similarly small scale, with 94 percent of the county's 88 hog farms showing an inventory of 24 or less animals and 85 percent of the 795 beef cattle growers with an inventory of under 20 head.

And the small famers and processors say they can't compete pricewise with the big growers.

Many small farms avoid the meat-packing problem entirely by selling whole and half animals to private customers who then get them cut up into manageable portions at non-federally inspected facilities. But not many customers have storage for that much meat..

The problem has caught the attention of Ecotrust, a Pacific Northwest environmental group that seeks economically viable solutions.

Ecotrust surveyed Oregon and Washington farmers and meat packers last year to better understand the scale of the bottleneck. While the number of people responding to the survey was small — just 24 percent of 351 growers and 13 percent of 137 processors — it confirmed what local farmers are experiencing.

More than a quarter of the 84 growers who responded said they transported their livestock more than 90 miles to be slaughtered; 16 percent traveled more than 120 miles. And 42 percent said they would consider raising more animals if they had improved access to meat-processing facilities.

One enterprising group of Oregon ranchers has found a way out of the bind, but they had to go out of state to do it.

Oregon Country Beef, a cooperative of 90 cattle ranchers, gets economies of scale at packing plants by negotiating as a single entity. The ranch members of the 20-year-old organization raise animals in an environmentally sustainable way, then sell directly to grocery stores from Seattle to San Francisco. They negotiate a fair price ahead of time, and so aren't subject to the vagaries of the commodities market.

It took several years of slow growth for the cooperative to get where it is today, said rancher Connie Hatfield of Brothers, who with her husband Doc Hatfield was a founding member.

When they started, they were shipping three to 10 head a week to a Portland slaughterhouse, Hatfield said. A few years later, they were shipping 30 to 40 head a week and found a bigger facility in Carlton.

Now they ship 800 cows a week and have outgrown Oregon's slaughterhouses. Their animals are processed in Toppenish, a town between Yakima and Pasco.

Going to the larger facility saved the cooperative about $100 per animal, Hatfield said, because of the economies of scale provided by the larger meat packer. Growers also get credits back for the bones and hide — the portion of the animals that isn't food. The small meat packers have to pay to have that material hauled off.

Aaron Silverman is asked about Oregon Country Beef all the time. For five years, Silverman partnered with other growers and operated Greener Pastures Poultry in Noti, processing 20,000 chickens and turkeys. Under a USDA exemption, the plant was able to sell poultry only within the state, but couldn't expand its operation without becoming a USDA federally inspected site, he said.

But at that level, Greener Pastures was operating at a loss, Silverman said. In order to be sustainably profitable, his plant would have needed to process between 120,000 and 140,000 birds a year.

By comparison's Foster Farms, which runs a USDA-inspected plant in Creswell, kills 40,000 birds a day, Silverman said.

Greener Pastures planned to grow, but couldn't find people with the skills to run a larger plant and has suspended operations, Silverman said.

"Oregon Country Beef's success relies 100 percent on the fact that they have a processor that they contract with. If they didn't have that they would not be in existence today," he said.

Other models for success are springing up around the country, Atkinson said.

He knows a Vermont entrepreneur who has founded a diner chain that only serves food grown within a 50-mile radius. He has worked with microprocessors to handle the meat, Atkinson said.

Meanwhile the issue is still on Rep. Kropf's agenda. When the 2007 legislature convenes, he plans to call for support for combination meat processors and biofuels production facilities.

Biofuels — ethanol and diesel based on vegetable fat — are gaining widespread attention as the cost of petroleum goes up, Kropf said. And biodiesel also can be made from animal fat as well as vegetable oil, he said.

"What I envision is the building of a lot of smaller to medium-size commercial slaughterhouses for the livestock industry and putting incentives into place to couple them with biodiesel production facilities. It's a perfect marriage," he said.

"New technology and new processing will be the key to keeping farming and ranching profitable," he said.

Such incentives can't come too soon for Cooper, who struggles to make ends meat on his small farm.

"We pay the least amount of disposable income for food of anybody in the world," he said. "It's nice for the country but doesn't help the small farmer."

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