Can smaller processing plants described in the previous blog actually work? Can they make a profit?
The answer is yes.
Well how about all the concerns expressed by Jack, Jr. in his comments on that blog?
My answer is also yes.
Here's the deal. I do think that small processing plants were profitable before the whole re-working of the meat processing system back beginning in the 70's. And the ones that exist now are definitely profitable. Certainly, over the last 40 years has seen the great demise of the smaller processing plants. However, there are many variables that have reduced their numbers - profitability is only part of the bigger picture.
Right now, if you look at both the Custom Exempt and the State Inspected processing plants that exist in Texas, they are making a profit. If they weren't, they wouldn't be in business.
How have they done it?
Well, they've adapted. And, they have seen their boats rise along with the local/sustainable market. My processor recently told me that his sales are up 15% this year - and it's almost exclusivelydue to the private lines - like our's - that he is now processing.
So profitabliity is there - for the current plants.
How about new plants? Yes, but . . . .
There are two immediate problems facing new plants; skilled workers and financing. And the biggest elephant in this room is the financing. A new plant - state of the art - USDA certified - is going to run north of $1 million dollars to build. That's not including the property to build it on or all the equipment needed to run it well and efficiently. Then figure overhead cost and operating costs. So the barrier to more small processing plants is a fairly high financial investment.
Will that stop this idea moving forward? No, because as the revenue streams increase and become more dependable, and as the market grows for the local/sustainable meats, investors will come forward (and are coming forward) to build these plants.
What about some of the concerns that Jack, Jr. expresses about smaller getting bigger?
Sure. There is going to be growth in this industry as the market increases. There will be franchising. There will be people who build one plant and only want one plant. And there will be people who see this as an opportunity to do more; to grow bigger.
How do you make sure that we don't end up with bigger processing plants with all the current problems. Well, the first way would be to enforce strict inspection. If inspection of every animal and carcass were enforced now, the big plants that currently exist would have to slow down their processing lines - thus increasing the possibillity of humane killing, better work conditions and more hygienic handling of the meat. It would also, drive up the price of their subsidized meat, thus making the smaller producers (who already have stricter inspection in place) more cost competitive. While many people don't want to see more government regulation, these requirements are already on the books and should be enforced across the industry for the good of all.
The other governor on small processing plants progressing to larger plants is, you, the consumer. Reliable labeling, telling the consumer where the meat comes from, how it is processed and, a commitment by the regulatory authorities to enforce the laws, allows you to decide with your dollars to support better run, smaller plants.
That is the fuel that drives this hovercraft. If someone wants to build and run multiple processing plants, or just one, or if they want to franchise - let the consumer and the market decide.
Next: The ABCs of beef cuts and buying beef.
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