By Mike Estadt, Ohio State University Extension Educator
Temple Grandin, Professor at Colorado State University and world renown animal welfare specialist and contributor to Forbes Magazine recently authored an article “Alternative business models that farmers should consider.” The full article can be found at: https://www.forbes.com/sites/templegrandin/?utm_source=newsletter&utm_medium=email&utm_campaign=follow&cdlcid=5eb5ad3af414222e4126b169&sh=cebb10433a73.
First and foremost, small processing plants will never, let me repeat that, never compete with the large plants on cost efficiency. But a series of smaller plants will be less susceptible to the disruptions that happened in the spring of 2020. Grandin offers the following points that have been synthesized into a few sentences.
Use the craft beer industry as a model: Go niche
During the restrictions placed upon restaurants and bars, craft brewers innovated and moved their dining outside so they could still sell their draft beers. More importantly craft brewers have been able to coexist with the Anheuser-Busch InBevs because they offer beers that the large brewers do not. That is the definition of a niche. And you must have one to justify the higher prices you charge to cover your production costs. “Locally raised by farm families”is your niche.
Keep start up cost low
Avoid the high overhead of a brick and mortar plants. Grandin’s suggests purchasing portable slaughter units that are self-contained systems capable of processing 8 to 15 head of cattle and 20 to 40 sheep or pigs per day.
Dealing with inspection
Getting federal inspectors to staff smaller units and facilities is a hurdle. When meat is sold across state lines federal inspection is mandatory. State inspections vary from state to state. Custom-exempt is an option but limits the scope and reach of your sales.
Could a cooperative work?
Should a group of ranchers or livestock producers band together to get some efficiency of scale, especially important to maintain constant and consistent supply to a smaller plant. Three challenges exist from her experiences when she designed plants for this type of business structure. First, there will be disagreements between producer board members on how the operation should be run. Second, one big member of the co-op sells out their shares and the cooperative gets taken over by a bigger company. Thirdly and most importantly, you must have a sufficient supply of product to meet demand. If your brand is “grass-fed,” it ALL must be grass-fed. It is always better to be a small, honest business. This sets you apart from the Anheuser-Busch InBevs of the meat packing industry.