Journal of the NACAA
Volume 6, Issue 1 - May, 2013
Increasing Maine's Livestock Processing Capacity: Challenges and Opportunities
- Jackson, T.L., County Educator, Agriculture And Natural Resources, University Of Maine Cooperative Extension
The number of slaughterhouses and processing facilities in Maine is on the decline, just as the demand for locally raised meat is on the rise. Farmers often must book appointments for slaughter nine to twelve months in advance, which leaves no room for allowing the farmer to decide when an animal is ready to market. There are some entrepreneurs interested in meeting this need and there are plans in various stages to open new, multi-species slaughter and processing facilities in some areas of the state. With the help of county based Cooperative Extension educators, there is also at least one new consulting business already working with producers wishing to open on-farm facilities, and one processing facility scheduled to open in 2013.
Maine currently has a total of twenty-eight state, USDA and custom slaughter establishments (State, USDA and Custom Slaughter Establishments in Maine, 2013). Of these, only five are USDA inspected, severely restricting the amount of Maine meat that may be sold across state lines. There are eight state inspected facilities, six of which are located in southern Maine.
Maine’s largest beef producer is currently shipping its animals to Pennsylvania for processing. Despite the great distance, it is more cost effective to do this than to keep them in Maine for slaughter and processing. Smaller farms do not produce the volume (typically a tractor trailer load) required to ship to these large, out of state facilities. Additionally, the local meat market prefers a locally raised and processed product, and Certified Humane (The Certified Humane Program, 2012) meat may not travel more than eight hours on a truck from farm to slaughter. Producers wishing to sell their meat as “local” to grocery stores, restaurants and directly to consumers, must use an in state facility, of which there are few. Farmers often must book appointments for slaughter nine to twelve months in advance (for beef or pork), which leaves no room for allowing the farmer to decide when an animal is ready to market. This is a problem primarily for smaller producers who harvest once each year. Producers with small herds (Fig.1) may have the capacity to produce more, but hesitate given the difficulty scheduling the slaughter and processing of their animals.
Poultry producers currently have no USDA or state inspected facility to take their birds to. The last remaining state inspected facility, a cooperative owned “mobile” slaughterhouse was recently sold and has yet to re-open. While it was operational, they struggled with costs and eventually became too expensive for many producers to consider. Maine state inspection standards are equal to (if not more stringent) than federal standards, so an effort is underway to allow state inspected poultry to enter interstate commerce.
Seeing an opportunity, a entrepreneur with a background in butchering began working with UMaine Extension in 2010, initially for help writing a business plan. The resulting 3-year relationship with a county extension educator helped see him through difficulties in zoning, several failed partnerships, and ultimately to his current situation: a new processing facility, near completion in central Maine.
Figure 1. Hereford cattle on a small farm in Wayne, ME.
A June 2012 USDA Economic Research Service (ERS) report titled Slaughter and Processing Options and Issues for Locally Sourced Meat outlines the current situation in the small-scale slaughter industry around the country. Maine is like much of rural America and is experiencing the same challenges as most states in New England. One suggestion for areas like Maine where small producers are geographically spread across the state is mobile slaughter units or MSUs. The cost to build an MSU would be less than a traditional facility, but the additional costs of transportation and byproduct disposal would probably make this cost prohibitive for both the operator and the producer who would end up paying the higher fees. So far, the only MSU attempted in Maine never became mobile and is no longer operating. The distance between producers, as well as the current seasonality of livestock production has made this an unattractive option for those looking to get into the processing industry. This leaves traditional, “bricks and mortar” facilities as the likely solution to increase capacity.
Since 2010, entrepreneurs with a special interest in local food have been exploring the feasibility of opening new, USDA inspected, multi-species slaughter and processing facilities. At least two wished to specialized in Halal slaughter facilities, to supply the growing immigrant Somali populations in Lewiston and Portland. A number of issues have arisen for these different groups, including zoning and the very high initial investment to build and outfit a state of the art facility. The largest project, planned for the south central region of Maine is nearing completion. It has taken number of years to secure the funding. In an economic downturn, it has proven difficult to find investors willing to put so much capital into a start-up.
Producer groups in several parts of Maine are considering facilities as well. For a farmer, adding a slaughter and processing enterprise can present a huge learning curve in terms of food safety and inspection laws, and present biosecurity and financial concerns they may not be equipped to deal with on their farms. Some abandoned former slaughter facilities are on the market, but tend to be located too far “off the beaten path” to make economic sense.
Troy Haines, a meat cutter in Mapleton, is very interested in seeing growth in the meat production and processing industries in Aroostook County, the northernmost and largest county in Maine. “Aroostook has more open agricultural land then the rest of New England (including the rest of Maine) combined. Because of changes to the food system, Aroostook will be feeding the Northeast in the coming decades,” says Haines (personal communication, August 28, 2012). Currently, he says there is a “lack of infrastructure in this industry. We need to build processing capacity.” The cost for a new facility is about “$1.2 million for processing, and $800,000 for finishing facilities. The talent pool is there, the institutional knowledge is there, the plans have been made, now all we need is the support,” he says.
In Maine, we also have a demographic issue. Even if some of the proposed smaller businesses are successful, there remains the need for more large-scale, traditional processing facilities to handle any increased production in Maine. Gray Harris, Director of Sustainable Agriculture programs at Coastal Enterprises, Inc in Wiscasset, Maine has worked with meat processing entrepreneurs for years. Harris says “Skilled professionals are critical. While there are a few entrepreneurs in the Maine exploring the options, there are far more butchers and slaughterhouse professionals who are approaching retirement age and are exiting the industry. Since the replacement rate is not 1:1, we will potentially have even more of a bottleneck unless we bring new people on board” (personal communication, August 24, 2012).
Craig Linke, a highly-skilled career butcher, has perservered despite all of the setbacks. Mr. Linke plans to open a new, multi-species processing facility in 2013. First approaching University of Maine Cooperative Extension in early 2010, Mr. Linke was looking for help writing a business plan. Extension has ended up supporting this effort on a number of levels, researching and encouraging this effort for three years. His tenacity and partnership with Extension have put him ahead of his competitors. The building that will house his new processing facility, Northeast Meats, is under contruction (Fig. 2) and will open later on this year.
Figure 2. The future home of a new, USDA Inspected processing faciilty in southern Maine.
Financing Challenges for a New Operation
In 2011, a Maine bond funded program administered by the finance authority of Maine (FAME) offered competitive grants for processors of food products. The total amount of funds available for all projects was $975,000. One small meat processor was awarded a grant. While this was a step in the right direction, the start-up capital needed for a mid-sized, multi-species slaughterhouse is in excess of one million dollars. Without some substantial personal capital, it has proven difficult for a new businss to get started in this industry.
The website for USDA’s Know Your Farmer, Know Your Food (2012) initiative, also known as KYF2, indicates that their mission is “…to strengthen local and regional food systems”, although “…there is no office, staff, or budget dedicated to KYF2.” Certainly there are positive measurable outcomes of KYF2 for local food systems, though local slaughter and processing of livestock does not seem to be one of them so far in Maine.
Some entrepreneurs would like to develop more of a niche business, offering a local butchering or abattoir business that serves farmers as well as local customers. Gray Harris notes, “not everyone wants to work in or operate a slaughterhouse due to the nature of the work as well as the slim profit margins.” For these people, an abattoir offers a more attractive lifestyle and business model. Having a higher end, retail segment of a start-up offers a revenue stream that a traditional processor does not have.“Entrepreneurial strength will also go a long way to raising investment capital to finance the businesses,” says Harris (personal communication, August 24, 2012). “There are financial institutions and investors who are quite keen on investing in increased slaughter capacity in Maine, but need to be assured that the business model is viable, and that the principals (operator, butchers, etc.) are investment-worthy—that is, up to the challenging task of running the business successfully, for the duration of the investment.”
Troy Haines is also concerned about financing a new operation, but believes the money doesn’t need to come from away. “As far as financing goes, the challenge is convincing southern Maine that it's time to invest in northern Maine," he says.
Finding a way to reduce the initial cost has been the key to Craig Linke's success so far. He has eliminated the slaughterhouse portion of his initial business plan, believing that the slaughter capacity in the central part of the state is adequate for the short-term. He plans to focus on processing at the launch of Northeast Meats. His second major cost-saving measure was finding an industrial builder to partner with. "Not having to shell out all of the money for the building before we start processing is a huge help," says Linke.
The announcement on August 9, 2012 by Agriculture Deputy Secretary Kathleen Merrigan that some of Ohio’s state inspected meat processing facilities will now be allowed to ship across state lines under an agreement known as the Cooperative Interstate Shipment Program indicates that the lack of slaughter capacity is not a Maine-specific phenomenon (New Opportunities for Small Meat and Poultry Processors, 2012). States throughout New England and in many other parts of the country have too few USDA inspected facilities, and those that do exist are too far from the farms where animals are raised. The Cooperative Interstate Shipment Program will be an option for other states as well. While certainly helpful to some producers in Maine, this would not address the bottleneck that exists for locally raised, processed and marketed meat. Further, in order to participate in the program, Maine’s rules would need to be identical to the USDA rules, which would require a re-write. There is energy behind an effort to allow states to enter into memoranda of understanding (MOUs) with each other in order to market across state lines. This may be a more timely solution than what Ohio is now doing.
A large stakeholder group including producers, processors, educators and financers has been convened by the Maine Sustainable Agriculture Society to identify the issues that impede this sector. At a meeting in July 2012, increasing slaughter and processing capacity was at the top of the list of priorities identified by the group. It is not yet clear how the More Maine Meat initiative will impact the overall landscape for livestock producers, but it is clear that there is considerable need and energy behind making progress on this issue. The group met again in January 2013, and is currently strategizing about how they can make the biggest impact. So far, the groups research has been useful in putting together business plans for several entrepreneurs hoping to meet the needs of both producers and consumers.
In response to the need for more facilities of all kinds, a small business start-up called Dirigo Quality Meats has begun working with producers who are interested in processing, but lack the time and or skills to develop a Hazard Analysis & Critical Control Points (HACCP) plan for their on-farm facilities. The owner and operator of this new consulting business, Dr. Michele Pfannenstiel, is both a veterinarian and a U.S. Army Veteran with extensive training in food safety regulations and animal welfare. Dr. Pfannenstiel is hopeful that offering her services to producers to "get them over the hump" will result in multiple new facilities opening in the next few years. "So far business has been good!" says Dr. Pfanennstiel. "My goal, and the goal of the producers I work with is to create a culture of food safety and ensure a safe Maine food system." Dr. Pfannenstiel has also been working with Extension to publicize her first HACCP training sessions.
Options for Small-Scale Poultry Producers
In response to the lack of poultry processing facilities, the Maine Meat and Poultry Inspection Program adopted national regulatory changes in 2010 that allow small-scale producers to do some on-farm processing. The Chapter 348 “under 1,000 bird” Grower/Producer Exemption allows producers to construct an inspected slaughter facility on the farm to process their own birds. There is a limit of 1,000 birds in one year, and only whole birds may be marketed directly to consumers. While not an option for larger producers, this exemption has provided an option for smaller farms to market their poultry locally. Extension Educators have written a fact sheet to help farmers understand the regulation, in hopes that it will encourage more producers to take advantage of this option (Jackson and Gilbert, 2012).
The Chapter 343 grower/producer exemption allows for processing of up to 20,000 birds each year in an on-farm facility that meets very specific and detailed requirements. Whole birds, cut-up birds, and other poultry products may be sold in-state, directly to consumers as well as wholesale, with the proper licenses.
One small-scale producer in northern Maine who has taken advantage of the Chapter 348 Exemption found it relatively simple to construct their poultry processing facility (Fig. 3). Justin Jamison and Eliza Currie of Martin Kilby Farm in Benedicta used off-the-shelf products to create their processing shed (Fig. 4), which allows them to market Thanksgiving turkeys directly to their customers. (Their beef still must travel quite a distance to an inspected facility, however.) Jamison worked with Extension during the initial phase of constructing their small facility, working through production budgets and labeling challenges.
Figure 3. A simple, plastic shed houses all the necessary equipment for small-scale, on-farm poultry processing.
Figure 4. This simple facility allows Martin Kilby Farm to process their own birds on the farm each fall.
While much attention has been paid recently to the lack of slaughter and processing capacity in Maine and throughout New England, there are currently few economical solutions. Small producers may be able to use regulatory exemptions to construct and operate on-farm processing facilities in order to market directly to consumers for poultry. Others may construct larger processing facilities with the help of consulting firms such as Dirigo Quality Meats. There is still a lingering problem of how to get larger-scale, USDA inspected facilities up and running at a profit, and within driving distance for all Maine producers. Financing a new facility remains the biggest challenge for entrepreneurs. With entrepreneurs like Craig Linke leading the way, perhaps others will seek the assistance of Extension to get their businesses off the ground. Throughout the entire process, it is his partnership with Extension that has remained constant and ultimately led to success. If Extension can act in a mentorship role, offering assistance at all stages, from business planning to facility construction to operating and marketing, more successes may be achieved in an industry that can be very challenging to get started in.
The Humane Farm Animal Care Certified Humane Program website outlines the standards and practices required for livestock producers and processors to obtain the Certified Humane label (www.certifiedhumane.org).
Maine Department of Agriculture. (2012). State, USDA and Custom Slaughter Establishments in Maine. Retrieved from http://www.maine.gov/agriculture/qar/meatplants.html
United States Department of Agriculture. (2012). Know Your Farmer, Know Your Food. Retrieved from http://www.usda.gov/wps/portal/usda/usdahome?navid=KNOWYOURFARMER
USDA Release No. 0268.12. (2012). Agriculture Deputy Secretary Merrigan Announces New Opportunities for Small Meat and Poultry Processors. Retrieved from www.usda.gov
Jackson, T. L., Gilbert, S. (2012). University of Maine Cooperative Extension Bulletin #2235. On-Farm Poultry Processing for Small Flocks in Maine. Retrieved from http://umaine.edu/publications/2235e/
United States Department of Agriculture Economic Research Service Report. (2012). Retrieved from http://www.ers.usda.gov/publications/ldpm-livestock,-dairy,-and-poultry-outlook/ldpm216-01.aspx