Niche Meat Processor Assistance Network
May 2021 Impact Assessment II
Compared to pre-COVID normal, are there dimensions of your sector that have experienced a sustained increase or reduction in activity? What aspects of Pandemic disruptions or adaptations were temporary, and which appear to be longer lasting? Do any appear to be permanent?
Most processors saw a marked increase in demand for their services. Some processors who sell value-added, further processed meats saw a dip in their demand however, due to restaurants, tourist venues, and other specialty markets experiencing a large hit in sales, particularly during the early phases of the pandemic. Processors who only focus on “cut and wrap” or value-added products do not have a slaughter floor and noted a common inability of their farmer suppliers to get their animals slaughtered. Thus, their businesses farther down the supply chain suffered as well. Some noted they had to resort to boxed meat to cut and further process. As has been reported in the USDA project’s earlier impact assessments and consumer survey, processors and meat businesses (including butcher shops) that sell direct to consumers saw a huge uptick in demand, especially for online sales and home delivery.
Looking back on your past year, what aspects of pandemic-related s disruptions or adaptations were temporary, and which appear to be longer lasting? Do any appear to be permanent?
The spike in consumer demand has leveled off — but there are still long wait times in being able to secure slaughter slots as there was a significant backlog in scheduling that is still being felt in the sector. Farmers booked out farther in advance based on 2020 demand, although much of that demand is expected to subside and there is some chance farmers may not keep their bookings and deliver on the initially planned numbers. Still, currently the pandemic has worsened the slaughter bottleneck in many regions that already had constraints pre-pandemic. Not many processors believe this increased demand for local and regional processing will be permanent, suggesting demand for their services will go back to how it was before, with certain seasons being booked full and other seasons with ample availability. Access to kill floors will always be limited and there is less interest among new processors who want to add kill floors, due to various local and federal regulatory constraints (as well as the tighter economics of running kill floors and lack of kill floor employees).
What disruptions or pivots did you feel your farm/the farms you work with were able to navigate well? What about your farm/the farms you support allowed for successful pivots?
Processors considered adding more staff (when they could find qualified workers) or moving seasonal staff to year-round. In addition to staffing, many processors added new equipment this last year to improve efficiency, reduce labor costs, and be able to process more volume. To ease facility constraints, some considered adding more hours and Saturday shifts when possible, while trying to balance that with the need to maintain morale (avoiding burnout) and keep their employees safe. Processors and farmers pointed out the priority they placed on being honest with customers and updating them regularly about both product and processing availability.
Some farmers shifted to doing more custom exempt slaughter and selling the live animal to people when they could not get access to or schedule USDA inspected processing (even if their preference and usual model is to sell meat by the cut).
A lot of processors that focused on wholesale previously or farmers that sold to restaurants or at farmers markets shifted to direct to consumer sales by setting up local delivery routes or shipping frozen meat. As a result, there was an explosion in online DTC meat sales over this time period (consistent with survey findings from this project).
Were there any specific issues, disruptions, or challenges caused by pandemic-disruptions that caught your farm / the farms you work with off-guard, or that were especially challenging to address?
The complete inability to schedule or gain access to facilities to process their animals was unexpected — and it created stress for hundreds of ranchers — as well as financial hardship. Many farmers and processors lost key market channels and pivoting to others was not always easy, cost effective or feasible. For example, one processor lost 85% of his business due to restaurants shuttering. Switching from selling sub-primals to retail-ready meat to consumers was not entirely feasible due to lacking specific equipment and labor. Also, many farmers ran out of product and lost access to markets as a result. For example, if you were selling to a regional grocery chain and stocked out of product (because you couldn’t get your animals slaughtered and processed), the chain found it necessary to fill your shelf space with another brand, with possible long-term implications to the marketing relationship.
Other meat processors were challenged to keep up with the increased demand simply due to staff being out for COVID (because either themselves or their families being exposed to or contracting COVID-19). When someone was exposed to COVID, other staff exposed would have to quarantine too based on local health department requirements, sometimes for up to a couple weeks. This was extremely challenging to the few remaining staff. Even if processors wanted to hire new staff, there are still very few people who are qualified and want to work in meat processing, and even less when millions of unemployed people are receiving enough financial support that they are not compelled to look for work (especially in the physically-challenging world of meat processing).
Based on your experience of the past year, what would you say are the important factors within your farm / the farms you work with that helped you to navigate the year’s challenges? What expertise, resources, infrastructure, management philosophy or other aspects of your farm / the farms you work with were of the greatest help?
There were several philosophies and strategies this sector shared as a way to successfully navigate this year. These included staying loyal to one’s best customers, being honest and transparent, cooperating and collaborating with other producers and processors, and staying flexible to process under different forms of inspection or test out new market channels. Processors or farmers that had only developed one or a limited scope of market channels found themselves in the most notable bind. Ones that had already diversified markets were much better positioned.
Small and mid-scale meat processors and brands were able to be more nimble and pivot easier than large meat packers. The pandemic has highlighted the resilience of having a diversity of meat processors and producers at different scales and geographically dispersed to the livestock and meat sector.
It was also mentioned that the PPE loan helped out many processors and some producers. Providing for extra pay, benefits, sick time, and ample supply of PPE to employees was important for employee health, safety, and loyalty, and perhaps the PPE loans (that were forgivable) helped to justify such investments in workers. Processors mentioned that having hard working, dedicated employees going above and beyond expectations made a notable difference. For the processors, they noted good time management, scheduling, and regular communication were their strategies to maintain business during difficult times.
What relationships, resources, infrastructure, programs or other factor outside of your enterprise or organization helped support your operations resilience in the past year? Were there any community, tribal, or state sponsored programs initiatives that provided targeted support to your enterprise or sector?
There were a number of organizations mentioned by members that allowed them to navigate the year more successfully. Some of the groups that were mentioned include:
- Niche Meat Processor Assistance Network (NMPAN)
- American Association of Meat Processors (AAMP)
- Pennsylvania Association of Meat Processors (PAMP)
- One Montana
- Montana Dept. of Livestock
- Montana Governor (who authorized two pools of grant funds to small meat processors in 2020)
- Colorado State University (especially their latest webinar for producers)
- SBA PPE loans
- the local Farmers Market association was flexible and got a market up and running with safe measures to salvage that market channel
One processor has this to say, “We are very grateful for organizations like NMPAN, AAMP, and PAMP, through whom we received invaluable support and advice in dealing with issues like the sudden influx of business, keeping employees safe, and making improvements to increase our production. Also, working with our competitors/friends to keep abreast on who can take what, when we’re all full. Helping each other out is key.” In short, having the established NMPAN network served this sector well at a time of disruption.
Were there any pivots, updates, or opportunities your farm / the farms you work with were unable to take advantage of due to insufficient financial resources, technical assistance, or other forms of support?
The inability to process animals meant many opportunities were left on the table. Producers would have liked to have more inventory to sell when potential sales growth may have been possible.
Although there were approximately 16 states that offered grant funds to small meat processors in 2020 (mostly targeting CARES ACT dollars to this sector), there were many more states that offered no financial assistance to processors, despite their willingness to expand and increase capacity. Also, due to the intense demand and work pressures, many processors simply lacked the time to research, apply, and pursue outside funding opportunities since this disruption was so unexpected and immediately increased demand on their time. We suspect that will continue to be the case for 2021 as well.
What changes did you see in year over year in sales/the sales of farms you work with? And/or overall profitability in 2020 compared to 2019?
All respondents indicated sales were up significantly, ranging from 10-50%. Profitability was mostly up, although many saw operating costs also increase, especially the cost of retaining labor and keeping workers safe. One processor said they made efforts for the first time in 2020 to donate meat to community food distribution centers.
Data from an NMPAN network survey, with 63 responding to this question, revealed the following data when asked this question: In the past year, has your business experienced any revenue growth, retraction, or holding steady financially?
From this survey and the NMPAN data, it would appear that the majority of niche meat processing businesses experienced revenue growth, but between uncertain demand going forward and increased costs, it is not clear these increased revenues will be sufficient to encourage the investments needed for expansion and diversification in the processing sector.
Given the innovations and adaptations you’ve seen, how would you say your stakeholders and/or your sector demonstrate resilience in during the pandemic?
Below are some of the quotes we kept as is, instead of summarizing.
Resilience was framed somewhat differently across members, but there were some common themes, including the need to stay committed to the community of suppliers and buyers these processors have relationships with. Some of the quotes that bring these themes to life include:
“Resilience is the ability to run our business normally and have it function — selling meat, getting animals processed, and then getting our customers their meat. The lack of processing caused us big problems — so having reliable processing going forward would really help make us more resilient.”
“Resilience to us means having more than one fall back plan. That is easier when there is support for local processors and their facilities.”
“Adjusting to the full ‘stay at home’ order and coming back in a way that supports and feeds our local community with healthy protein.”
“Resilience for the meat industry is being able to adapt to changes in consumer habits /expectations, as well as changing mentality of the average employee. In our case, we would be benefited by smoother systems so we can be more accurate in cutting and invoicing. We also need to be able to provide fair, competitive wages for our staff as well as thorough training. We are looking specifically for bespoke tracking/invoicing systems for small butcher shops as well as support in training employees.”
“We are a very small business, 3 of us full time including my husband and myself. We absorbed the immediate crisis, responded by opening our schedule to accommodate as many as we physically could, and adapted to an intrusive work schedule. With the closing of several nearby slaughterhouses, we are looking to get support on expanding to a mobile slaughter unit (most cost-effective solution) and the logistics behind that.”
Are there any recommendations (programs, funding, policy, etc.) you would make to local, state, tribal, or federal agencies or policy makers for how to support the recovery and resilience of local and regional food systems moving forward?
With such an open-ended question, one would expect a wide range of responses, but the common themes about “pain points” that policy, programs and funding could support show there is some shared vision for how this sector can move forward.
It seems it may be time to consider whether the regulatory environment is creating a bias (intended or not) against smaller and/or more locally focused processors. A common pain point small processors mentioned is the complex regulatory system that governs meat processors. Many need more support in navigating the system and many are looking for increased flexibilities for small operations.
As a specific strategy related to rethinking the regulatory environment, one processor shared, “Advocate around the Strengthening Local Processing Act H.R. 1258/S.370. Provide greater support/ funding for improving old processing facilities. We have very few channels of support for this. Also, provide greater support for navigating HACCP and government regulations.”
Some of the responses related to regulations also aligned with another common theme, which is how support for those in processing focused on being part of their local food system could be refined. One shared,
“Help the very small and mid-size processors to expand this growing demand. COVID has brought a new light to consumers regarding Farm to Table options. The components between the Producer, the Processor and the Consumer are crucial to keep the cycle flowing.”
And another added, “We need additional capacity for processing and we need to work at removing restrictions on selling direct to consumer on everything from raw milk products to processed meat.”