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Small Farmer, Big Beef

Small Farmer, Big Beef

Beating the USDA at its own game

"Government is not reason, it is not eloquence—it is force."

George Washington

Ask a local farmer and you’ll find things are getting especially difficult on the small to midsize American farm. Rising costs in every direction, scarce labor, and corporate price fixing have made it more and more difficult to run a profitable operation. But above all, a glaring incongruity exists in the USDA’s health and safety requirements which treat slaughtering on small farms exactly the same as mass slaughtering in a factory packing plant. This has effectively divorced slaughter from the farm and left farmers with fewer options for getting their livestock processed.

The current bottleneck in the beef chain is summed up well by the following statistics. The first three are from the 2012 US agriculture census and the final from a 2021 IPSUS poll.

  • 913,246 farms with cattle
  • 26,568 livestock feedlots
  • 867 livestock processors
  • Around 300M Americans consume red meat

With over 1,000 farms with an average herd size of 41, each processor was responsible for an average collective herd size of 41,000 in 2012. The Big Four meat packing companies (Tyson, Cargill, JBS, and National Beef) own 80% of the processing market selling mostly to grocery stores and restaurants. The other 20% is made up of small farms and independent processors selling directly to consumers or small, natural grocers. The number of cattle farms, feedlots, and processors has only declined since the 2012 census due in part to price pressures arising from the centralization of the meat packing industry.

The Big Four now buy a majority of the cattle and sell a majority of the beef, giving them two opportunities to set prices. Since 2014, the price of live beef cattle has dropped 19% while the price of beef has risen 41%. The difference in margins between ranchers and the Big Four is massive. In a May 2021 video, Kansas cattleman, Steve Stratford, broke it down, showing that the Big Four make around ten times as much per cow as the independent cattle producer.

On the local level, processors are closing their doors at a steady rate due to a lack of labor, high operating costs, and slim margins. Yoder Brothers, a large processing plant in Paris, TN, closed during the pandemic, forcing its former customers to search far and wide for a new processor. In some cases, the waitlist to work with a new processor was as long as two years.

The White House directly controls one variable in the equation: USDA restrictions. By relaxing restrictions, they would allow small farmers to process on their land using existing infrastructure and independent processors would find it easier to reopen or respond more dynamically to increasing demand. Instead, they chose to allocate $1.4B to independent processors to keep them afloat.

Before jumping into some of the solutions, some explanation of the processing system is in order. Generally, there are two ways to process beef.

Under Federal Inspection, the USDA has strict requirements for the processing facility and a USDA inspector must be on-site, inspecting each carcass before it’s butchered. The producer can then sell the livestock in individual cuts to the public. Processors under this designation can expect at least $200,000 to $300,000 in start-up costs.

Under custom-exempt Inspection, the facility requirements are minimal, and the USDA inspects the facility periodically like a restaurant, but, in Tennessee, the producer can only sell his beef as a whole cow or as proportions of a whole. Other states only allow the sale of a whole, half, or quarter. Technically, only the owners of the cow can consume custom-exempt meat, so an individual would buy their portion of the animal before the slaughter.

As far as decentralizing solutions go, an amalgam of states, statesmen-farmers, and independent organizations have been seeking to enliven local meat supply by loosening restrictions. For example, Frank Niceley, a farmer and senator from TN’s 8th district, requested an opinion in 2017 from the state AG Herbert Slatery on whether there was a “limit on the number of owners for whom a custom slaughterer may legally slaughter and process an animal or animals.” Slatery responded that "there is no limit," ensuring that any number of people can split a custom-exempt cow, not just a minimum of four like in other states.

The most ambitious attempt to empower the small farmer is the PRIME Act sponsored by Congressman Thomas Massie of Kentucky. The bill gives states the power to allow the sale of individual cuts of beef to the public under the custom-exempt designation. If passed, farmers could process livestock on their land with a few tweaks to their existing infrastructure. Honest producers nationwide are in support of this legislation, but it’s the dishonest ones who longtime cattleman Steve Anderson is worried about.

Anderson, who was working on a feedlot by age twelve, has served as the TN Cattlemen’s Association president for two years and board member for eleven. He’s seen enough bad practices in the industry to know that unqualified producers will take advantage of the relaxed inspection procedure and potentially spread illness. He noted the many labeling scams and custom-exempt processors that produce meat he “wouldn’t feed to [his] dog.” A death from a foodborne illness coming from an independent processor would give the industry a “black eye” at a time when red meat is under much scrutiny from the climate crisis crowd. No doubt, the PRIME Act will provide an opportunity for grifters, but health concerns about the efficacy of custom-exempt processors may be overblown.

Harmful bacteria, like Salmonella and E. Coli, originate in the intestine of the infected animal, are transferred to hoof and hide, and then to meat during processing. The spread can be stopped by adequate sunlight and space. An Australian study tested cattle from four feedlots and four pastured farms and found that 58% of the feedlot cattle and 0% of the pastured cattle shed the human pathogen campylobacter—which can cause food poisoning in humans.

Though studies of the effectiveness of grain and corn versus grass diets in preventing the spread of E. Coli are varied and sometimes conflicting, a 2009 review of a decade of said studies found that “populations [of] E. coli O157:H7 are generally lower in cattle fed [grass] diets.”

Joel Salatin, author, regenerative farmer, and owner of a small processing facility, advocates for agricultural decentralization to heal many societal and environmental sores. His conclusion is that the only way to prevent foodborne illness is by decentralizing farming and processing. When you spread out the processes, ideally when one farm processes one or two cows a month, the pathogen’s spread is severely limited. Salatin aptly points out that the government understood this fact during Covid when they targeted urban areas for lockdown. The message just never made it to the USDA.

Salatin recounts in a 2020 essay:

Twenty years ago after a spate of food borne pathogens, congress commissioned the General Accountability Office (GAO) to study the problem. The bi-partisan report came back with four primary risk factors in the American food system:

• Centralized production.
• Centralized processing.
• Subtherapeutic antibiotic use creating superbugs.
• Long distance transportation.

Possibly the most significant study out there was done by Consumer Reports in 2015. It tested a wide selection of store-bought, USDA-inspected beef. The study stands out from the many other myopic studies out there because it’s simple and it includes the entire chain of events from rearing to packaging. The study found that pastured and antibiotic-free beef is safer to eat than “conventionally” raised beef.

The authors tested 300 different packages of USDA-inspected ground beef from 103 different stores in 26 cities for pathogens like E. coli and Salmonella. They found that beef from large operations that had been given antibiotics and were raised on grain and soy contained more varied and numerous pathogens than pasture-raised, antibiotic-free beef. Some of the bacteria in the “conventionally” raised beef had even become antibiotic-resistant.

USDA inspections were developed in response to the conditions of industrialized livestock agriculture, yet the process has been applied universally to all farming operations regardless of size. We have the ability to change this dynamic to some extent by buying custom-exempt beef directly from local farmers.

To help you get started, here are a few Middle Tennessee farms that provide it: