MAXWELL, Iowa (AP) – Last year, a sudden shortage of meat due to a coronavirus led to millions of dollars in federal grants to help small meat processors help the country ease its dependence on giant slaughterhouses to supply grocery stores and restaurants.
For health care workers, hospital equipment, and even toilet paper, the reality of empty meat shocked many Americans who were not accustomed to scarcity. But where most of the other supply gaps are being addressed by changing how the United States acquires basic goods, the money flowing into small slaughterhouses shows no sign of solving the meat problem.
The meat industry has been consolidating for decades, with 80% or more of the meat being slaughtered by just a few companies whose activities were distorted last year when the virus began to spread among workers.
“Even a significant increase in processing power in those small to medium-sized processors is a small amount of money in a large inventory,” said Mike Nigg, Iowa’s secretary of agriculture. “Yes, it provided some relief, but no, it is not at a level where it will compete with large processors.”
Or, as Terry Hauser, a meat processing expert at Iowa State University, puts it. “Small plants can not replace large plants when they fall.”
The problem is the difficulty of creating more sources of supply in a reverse industry.
There is no doubt that the grants will help small processors, in turn, provide much-needed rural work, but the meat economy is now focused on large, highly productive slaughterhouses rather than smaller plants, the number of which is declining sharply.
The number of smaller operations meeting local demand fell by 42% between 1990 and 2016, to 1,910, according to the US Department of Agriculture.
When the coronavirus infected thousands of workers in large slaughterhouses, forcing some to be temporarily shut down, production fell below 60% of normal. Many producers suddenly did not go anywhere to slaughter their animals, and the other small processors, who mainly supplied meat to local food and farmers’ markets, could not be slow.
Iowa was one of at least 16 states that used billions of dollars in federal COVID assistance to provide grants to small meat processors, allowing them to replace and expand equipment. In Iowa, the state has provided $ 4 million to increase production to help 109 small meat and poultry crops, with some of the funding going to marketing and education.
Similarly, Arkansas provided $ 5 million in federal grants, Indiana distributed $ 4 million, and Montana used $ 2 million to fund up to $ 150,000 in grants.
Most of the money went to small-town businesses, which dried up when larger plants opened that could process thousands of livestock each day, up to 20,000 pigs. Small processors usually kill only 10 or 20 animals a week.
When the larger plants closed last spring, some pig farmers eventually killed and buried thousands of animals.
Owa ef Hodges, who owns a small processor in the small town of Minden, Iowa, said he was overwhelmed with business last spring and plans for another year in the future as demand for local meat continues to grow.
“At first it was a huge nightmare,” Hodges said. “Now you are used to the norm of your maximum size, you pray that everyone comes to work.”
Hodges received a $ 33,000 grant to purchase a jigsaw, mill, and other equipment, but more than $ 750,000 is needed to significantly increase production. That’s a big investment for the business he bought in the mid-1990s for $ 90,000.
The key to reducing the reliance on large processors is to make larger grants and loans more accessible to medium-sized processors, says Rebecca Thistletwight, ores and CEO of Oregon-based Niche Meat Processor Assistance Network. It is an expensive offer for which such plants cost $ 20 million.
“Even if the government offers more money, expansion in low-profit industries can be slow,” he said.
“Many people think that by changing the policy, suddenly a number of new entrepreneurs will enter the area, it will not happen,” he said. “You do not have a bunch of people sitting around saying, ‘Oh, I just can’t wait to start a meat processing plant.’
Some farmers, such as the owners of Vaughn Farms in Maxwell, a small town in central Iowa, say that their ability to build their own livestock may depend on the expansion of small processors.
As processors order next year, farmers will have to make room for unborn animals.
“It’s difficult because animals grow at different rates as humans do,” said Ala Alan Won. “Trying to estimate when something will be 1,200 pounds or the optimal weight for a crop has been a struggle.”
Co-owner Jerilyn Hergenreder said she hoped the government’s sudden interest in building smaller processors would make a difference.
“I’m glad that small processors are back in business, they are definitely trying to regulate demand,” said Hergenreder.
Follow Scott McFatridge on Twitter: https://twitter.com/smcfetridge