Meat shortages reopen costly path to small US slaughterhouses
Jen Skerritt, Deena Shanker and Michael Hirtzer, Bloomberg
via San Antonio Express-News (TX) - June 26, 2020
When coronavirus outbreaks forced shutdowns at America's giant meat plants, it quickly created a bottleneck: Farmers had nowhere to sell their animals, while consumers faced shortages and surging prices. New, smaller slaughterhouses could be the antidote to industry concentration, but it's no quick fix.
Opening a slaughterhouse has plenty of hurdles. The facilities -- where animals are killed, butchered and meat is packaged into consumer-friendly cuts -- aren't always welcomed by locals. And there can be other challenges to finding the right location.
There needs to be enough livestock produced nearby and easy access to trucking routes, said Jeremy Robinson, who in March opened one of the country's newest beef plants in Lone Jack, Missouri. He also had a hard time finding workers in an area where few had prior experience.
Then there are local, state and federal regulatory requirements for zoning and building. Even buying a defunct plant with a plan to revive it comes with a set of headaches. Old slaughterhouses have usually been out of commission for years, so updated permits are required. And the building has to be refurbished and outfitted with new equipment.
The whole process can take years, and it's expensive, said Robinson, a managing partner of Republic Foods.
"In a normal market, starting a plant for 300 to 400 cattle a day, you need to be able to lose $4 million to get to profitability," he said.
The pandemic laid bare how America's system of churning out cheap meat is vulnerable to failure. Covid-19 outbreaks sickened thousands of workers, while plant shutdowns left grocery store shelves empty. Federal regulators and legislators have opened up probes to investigate industry concentration. But it remains to be seen how quickly the supply chain can change -- and whether consumers are willing to pay more for protein that's produced under smaller economies of scale.
The meat sector is dominated by a handful of titans-- Tyson Foods and its top two rivals, JBS and Cargill, control about two-thirds of America's beef. The picture is similar for pork and poultry.
Most meat is produced in large, federally inspected plants. In January, there were 835 of those facilities, down 52% from 1,741 in 1976, according to the U.S. Department of Agriculture. Meanwhile, red meat production surged almost 40% in that period to 55.1 billion pounds.
The drop in facilities doesn't tell the whole story because...