From Farm to Fork? An Empirical Investigation of the Challenges Faced by North Carolina s Small Meatpackers

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1 FromFarmtoFork? AnEmpiricalInvestigationoftheChallengesFacedby NorthCarolina ssmallmeatpackers by TinaPrevatte AMaster sprojectsubmittedtothefaculty oftheuniversityofnorthcarolinaatchapelhill inpartialfulfillmentoftherequirements forthedegreeofmasterofcityandregionalplanning inthedepartmentofcityandregionalplanning. ChapelHill Spring2009 Approvedby: ADVISOR READER

2 TableofContents Chapter1:IntroductiontotheResearchQuestion 2 Chapter2:LiteratureReview..8 ConcentrationandConsolidationInU.S.Meatpacking...8 ChallengesFacingSmallMeatpackers Chapter3:OverviewofNorthCarolina smeatpackingsector..17 Chapter4:SurveyandInterviewFindings...27 WorkingWithSmalltoMid SizeFarmers OtherCustomers&Capacity Capabilities Challenges Workforce Regulation AccesstoCapital...36 Marketing&Sales...37 BusinessPlanning&Management..38 WasteDisposal...39 Opportunities CollaborativeSolutions Chapter5:RecommendationsandConclusion.43 KeyFindings AnalysisofFindings&Recommendations...44 CustomersandCapacity...44 CapabilitiesandWorkforce..45 Regulation...48 AccesstoCapitalandBusinessPlanning&Management 50 Marketing&SalesandCollaborativeSolutions..52 WasteDisposal..53 Conclusion References Appendices AppendixA:SurveytoDetermineChallengesandOpportunitiesforNC ssmallmeatpackers AppendixB:LocationsofSmallMeatpackersSurveyed ListofTables Table1:Four FirmConcentrationRatiosforMeatpackingIndustry9 Table2:ShareofIndustryValueofShipmentsinLargePlants10 Table3:NumberofFarmsandLandinFarmsinNC18 Table4:PlantCategories20 Table5:InstitutionsthatSupportNC smeatpackingsector24 ListofFigures Figure1:MarketValueofNCAgriculturalProducts17

3 Chapter1:IntroductiontotheResearchQuestion Risingconcernsabouttheeffectsofindustrializationandconcentrationwithinour globalizedfoodeconomyhaveresultedinincreasedconsumerdemandforlocally,sustainably producedfoods.thereisavocalandgrowingsubsetofconsumerswhoaretakingahardlook atthefoodtheyconsume,itsorigins,andhowtheirfoodchoicesreflecttheirpersonalvalues. FoodsafetyscaresandenvironmentalandhealthconcernshavemanyAmericansthinking criticallyaboutthesourcesoftheirfoodandhowitisproducedandprocessed.infact, accordingtorecentmarketresearch70%ofu.s.consumerswanttoknowwheretheirfood comesfromandwouldpaymoreforlocalfoodiftheycouldfindit(packagedfacts,2007). Developingalternativelocalfoodsystemstomeetthisgrowingdemandisapotential economicdevelopmentstrategy.localfoodisnowanestimated$5billionindustry,and expectedtogrowto$7billionby2011(packagedfacts,2007).communitiesthatpromoteand developmarketsforsustainablelocalfoodsnotonlyhavethepotentialtobenefitfrom improvednutritionandenvironmentalpractices,butalsotogenerateadditionaljobsthrough value addedproductdevelopment.knowingthis,plannersandsustainableagricultureactivists throughouttheu.s.areseekingwaystotapintoandsupporttheeconomicdevelopment potentialoftheirlocalfoodsystem.however,asthisworkisundertaken,anumberof challengesarise. Mostregionslackthepolicysupportsandinfrastructurenecessaryforlocalfoodsystems toflourish.evenwhenthesesupportsareinplaceandresourcesaresecured,competinginthe marketplaceagainstlargeandglobalizedfoodcompaniescanbeextremelydifficult.the industrializationandconcentrationthathashappenedwithinourfoodeconomyoverthelast 2

4 severaldecadesfacilitatesextremeeconomiesofscalethatallowcompaniestogetproductsto marketwithgreatefficiency.consumerexpectationsforwhatfoodscostaresetbythese companies.andthepowerofretailersanddistributorswithinfoodsupplychainsisenormous. Therefore,successfullyintroducinglocalandsustainablyproducedfoodstothemarketplace demandsinnovativenewbusinessmodelsandasophisticatedapproachtomarketingandsales. Inmanywaystheeconomicviabilityoflocalfoodsystemsremainsunproven.Whatisclearis thatdevelopingandexecutingentrepreneurialsolutionsthatallowsmalltomid scalefarmers practicingsustainableagriculturetoconsistentlyaccesstheirlocalmarketsinawaythatis financiallyviableforallinvolvedcanbeextremelychallenging. Forthosecommittedtothegrowthanddevelopmentoflocalfoodsystems,meat products 1 presentauniquesetofchallengesandopportunities.oneofthemostsignificant barrierstoexpandinggrowthinlocal,sustainablemeatproductionandmarketsislimited accesstoqualitymeatprocessing 2,particularlyvalue addedprocessing.asconsolidationhas occurredwithinthemeatpackingindustry,smallmeatpackers 3 havegraduallydisappeared. Thosethatcontinuetooperateoftenfacesignificantobstacles.Small scalemeatprocessingis thereforeamissingorweaklinkinlocalfoodvaluechainsacrossthecountry.withoutthislink, smalltomid sizefarmersareunabletoaccesslocalmarketssuchasrestaurantsandgrocery stores,andcannotoptimizetheirprofitsbyeliminatingwasteandutilizingentireanimalsrather thanjustselectparts. 1 Forthepurposeofthisproject,meatisdefinedasbeef,pork,andchicken. 2 Meatprocessingreferstotheentirespectrumofservicesfromslaughtertotheproductionofvalue addedproductssuchassmokedham, groundbeef,orsausage. 3 Smallmeatpacker referstobothverysmallandsmalllivestockpackingplants.theusda sfoodsafetyinspectionservicedefinesavery smallpackingplantasonewithfewerthan10employeesorlessthan$2.5millioninannualsales,andasmallpackingplantasonewith employees(fsis,1996). 3

5 Onemightexpectthatsmallmeatpackerswouldbewellpositionedtoservegrowing marketsforlocal,nichemeatproducts.however,thisisnotusuallythecase.therearea numberofpossibleexplanationswhy.conventionalwisdomsuggeststhattherearestructural characteristicswithinthemodernmeatindustrythatexplainthechallengesfacingsmall meatpackers,aswellasfederallawsandregulationsthatputsmallprocessorsata disadvantage(petersen,2005).inaddition,itiswidelyassumedthatfindingandretaining capablelaborandtrainingemployeescanbeverychallengingforsmallmeatpackers,andthat lackofaccesstocapitalandlimitedbusinessskillsarealsopervasiveproblemswithinthesector (NMPAN,2008).Still,verylittleempiricalworkhasbeendonetodeterminetheactual obstaclesandconstraintsfacingsmallmeatpackersacrossthecountry.researchisneededto bettermeasureandunderstandregionalchallengeswithinthesectorandtodeveloppolicy optionsforremovingbarrierstoalocalmeateconomy. NorthCarolinaisbetteroffthanmanystatesintermsoftheaccessthatsmalltomid size farmershavetosmallmeatpackers.staffofnorthcarolinacooperativeextensionandthe NorthCarolinaDepartmentofAgriculture&ConsumerServices(NCDA&CS)maintaina directoryofthesmallmeatpackersinthestatewhohaveexpressedawillingnesstoservesmall tomid sizefarmersseekingaccesstolocalmarkets. 4 Therearecurrentlytwentysmall meatpackerslistedinthisdirectory.however,inspiteoftheexistenceofthesewillingsmall meatpackers,small scalemeatpackingisstillviewedasabottleneckbythoseworkingto rebuildthestate slocalfoodeconomy. 4 The IndependentFarmers DirectoryofSlaughterFacilitiesinNorthCarolina isadocumentthatidentifiesthesmallmeatpackersinthestate willingandabletoservesmalltomid sizeindependentfarmersseekingaccesstolocalmarkets.itwasoriginallypublishedinnovember2004 bymikelanier,anccooperativeextensionagentbasedinorangecounty,andwasupdatedandpublishedagaininjuly2007.thedirectory wascompiledbyfirstworkingwithstaffofthenorthcarolinadepartmentofagricultureandconsumersservicestodeterminewhichslaughter andprocessingfacilitieswerecandidatesforservingindependentproducersseekingtoselltheirmeatproductsinlocalmarkets,andthen contactingeachofthesecandidatestodeterminetheirwillingnesstoworkwiththeseproducers. 4

6 Thispaperprovidesacriticalexaminationofthecurrentbarriersandchallengesto integratingthissetofsmallmeatpackerswhoarewillingandabletoworkwithsmalltomidsizefarmersasmoreviablelinksinnorthcarolina slocalmeatsvaluechain.itservesasa regionallyspecifictestofconventionalwisdomregardingthechallengesfacedbysmall meatpackers,andshedslightonhowthesechallengescancauseeventhemostcommitted smallmeatpackerstofunctionasbottleneckswithintheirlocalfoodsystem. Inadditiontoidentifyingthemostsignificantchallengesfacedbythissetofsmall meatpackers,thispaperrevealswhattheyviewastheirgreatestopportunities,andoffersaset ofspecificrecommendationsforpotentialinstitutionalandothersolutionstoaddressthese challengesandopportunities.itismyhopethatthismaster sprojectwillserveasaguideto anypolicychangesorothernextstepsnecessarytodevelopnorthcarolina ssmallscalemeat processinginfrastructureintoamoreviableanddynamicaspectofthestate slocalfood economy,andasasortofrealitycheckonwhetherornotthisisarealisticordesirablegoal.in contributinganempiricalstudyoftheregionalneedsofasetofsmallmeatpackersitismy intentionthatmyfindingsandrecommendationswilloffertransferableinsightstoplannersand sustainableagricultureactivistsseekingtobuildviablelocalmeatsvaluechainsinotherregions throughoutthecountry. Thefindingspresentedinthispaperaredrawnfromtheresultsofasurveyadministered tothetwentysmallmeatpackersinnorthcarolinaidentifiedinthe IndependentFarmers DirectoryofSlaughterFacilitiesinNorthCarolina.Thesepackerswereselectedasthefocusof thisresearchprojectbecausetheirexpressedinterestinworkingwithsmalltomid sizefarmers 5

7 makestheirperspectiveaspotentiallinksinadynamiclocalmeatsvaluechainparticularly valuable.thesurveydistributedtothemhasbeendesignedtoidentifythechallengesfacedby NorthCarolina ssmallmeatpackersandtoassesslocalattitudesandinterestswithinthe sector. 5 AcopyofthissurveycanbefoundinAppendixA. Inpersoninterviewswerealsoconductedwithasubsetoftheidentifiedpackers,during whichthesurveyquestionswereasked,toursofmeatpackingfacilitiesweregiven,andindepth discussionswerehadwithfacilityownersinregardtothehistoryandoperationsoftheir business.thissubsetwasselectedasarepresentativesampleofthediversityofsmall meatpackersinthestatethatarecurrentlyworkingwithsmalltomid sizefarmerstoaccess localmarkets. Interviewswerealsoconductedwithasetofinstitutionalandindustry stakeholderswhohaveregularinteractionswithnorthcarolina ssmallmeatpackers. Further detailsonsurveyandinterviewmethodologyareprovidedinchapter4. Theremainderofthispaperisorganizedintofourchapters.Chapter2providesa reviewoftheliteraturethatthisresearchprojectisinformedbyandinconversationwith.it outlinesthehistoryandtrajectoryofconsolidationinthemeatpackingsector,andprovidesa summaryofconventionalwisdomregardingthechallengescurrentlyfacedbysmall meatpackers.chapter3providesanoverviewofthemeatpackingsectorinnorthcarolina, revealingwhythestateisaparticularlyinterestingplaceinwhichtoexaminethechallenges andopportunitiesofsmallmeatpackers.thefindingsofthisresearchprojectaredetailedin Chapter4,whereIdivideandrankthechallengesfacingNorthCarolina ssmallmeatpackers 5 IreceivedassistancewithmysurveydesignfromArionThiboumeryandLaurenGwin,ProjectCoordinatorsfortheNicheMeatProcessor AssistanceNetwork,anationalnetworkofpeopleandorganizationsassistingnichemeatprocessorsandthelivestockproducersandniche meatbuyerswhodependonthem. 6

8 intosixcategories:workforce,regulation,accesstocapital,marketingandsales,business planningandmanagement,andwastedisposal.thefinalchapteroffersasetof recommendationsandaconclusionbasedacriticalanalysisofthesefindings,suggestingthat whiletherearecurrentlyanumberofresourcesavailabletosupportnorthcarolina ssmall meatpackers,moreproactivestrategiesareneededtofullyleveragetheseresources.the conclusiontothispaperalsoassertsthat,inconversationwithotherfindings,theexistenceof excesscapacityamongstthepackerssurveyedforthisresearchprojectsuggeststhataddressing keychallengeswithinthesectorcouldresultinamoreviableanddynamiclocalmeatsvalue chain. 7

9 Chapter2:LiteratureReview Thischapterprovidesbackgroundinformationcriticaltounderstandingthehistoricand currentcontextinwhichsmallmeatpackersoperate.itengageswithabodyofliteraturethat providesanindepthandcriticalviewofconcentrationandconsolidationwithintheu.s. meatpackingindustry,anditseffects.forthepurposesofthisresearchproject,themost notableoftheseeffectsisreducedaccesstomarketsforsmalltomid sizefarmersproducing livestock,andstrongcompetitivepressuresforsmallmeatpackers.thesetwoeffectsare deeplyintertwined,assmalltomid sizefarmersrelyonsmallmeatpackerstoaccesslocal markets.sustainableagricultureactivistsandothersinterestedinremovingbarrierstothe growthanddevelopmentoflocalfoodsystemsarethereforebeginningtoexaminethe challengesfacedbysmallmeatpackers,andthewaysinwhichtheymightsupportandrebuild thesector.thischapteralsoprovidesasummaryoftheconventionalwisdomandinitial researchfindingsthathaveemergedfromthiswork.inchapter5,iputthesemoregeneral findingsaboutthechallengesfacingsmallmeatpackersintoconversationwithmyownresearch findings,whichprovideamorefocusedexaminationofspecificregionalchallengesforasetof smallmeatpackerswithanexpressedinterestinworkingwithsmalltomid sizefarmers. ConcentrationandConsolidationInU.S.Meatpacking ThemeatpackingindustryintheU.S.isintensivelyconcentrated,withjustfourlarge packingcompaniescontrolling81%ofthebeefmarket,59%oftheporkmarket,and50%ofthe poultrymarket(stull&broadway,2004).thisisacontemporarydevelopmenthowever,and historicallywasnotalwaysthecase.u.s.meatpackinghasdramaticallytransformedoverthe 8

10 courseofthelastthirtyyears.farfewermeatpackersnowslaughterlivestockthanwasthe caseinthelateseventies,andtheirplantsaremuchlarger. 6 Firmconcentrationratiosareawayofmeasuringtheshareofanindustry soutputheld bythefourlargestproducersinthatindustry.changesintheseratiosarewidelyusedas summaryindicatorsofstructuralchange.usingcensusbureaudata,thetablebelowreports firmconcentrationratiosovertimefortheslaughterofcattle,hogs,andchickens. Table1:Four FirmConcentrationRatiosforMeatpackingIndustry Year Cattle Hogs Chickens Source:LongitudinalResearchDatabase,U.S.BureauoftheCensus(MacDonaldetal,2000) Firmconcentrationincattleslaughterremainedfairlystablefrom1963through1977,but thenrosesharplyfrom25%in1977to71%in1992.suchachangeinconcentrationisquite unique.accordingtocensusbureaudatanootherindustryhasshownsuchadramatic increaseinanyfifteen yearperiod(macdonaldetal,2000).concentrationinhogslaughter remainedstableuntil1987,butthenincreasedsignificantlybetween1987and1992.aftera sharpriseinconcentrationbetween1977and1987chickenslaughterhasremainedstable. Asthesechangesinconcentrationwereoccurring,thenumberoftotalmeatpacking plantsintheu.s.wasshrinkingwhiletheplantsthemselveswereincreasinginsize.from1976 to1996,thenumberoffederallyinspectedcattleplantsfellbymorethanhalf,from1655to 812.Thenumberoffederallyinspectedhogplantsfellfrom1322in1976to770in1996(Levy, 6 Forthepurposesofthispaper,consolidationisdefinedastheshifttowardsproductioninafewlargefacilities,andconcentrationisdefinedas themovetowardsfewercompaniesbeinginownershipofthesefacilities. 9

11 2001).Duringthissameperiodthepercentofanimalsbeingslaughteredinlargeplants increaseddramatically.whilenotionsof large havechangedovertime,thelargestcattle plantsslaughtermorethanhalfamillioncattleinayearandlargehogplantsslaughtermore thanamillion.thecensusbureaudefineslargeplantsasthosewithatleast400employees. Table2:ShareofIndustryValueofShipmentsinLargePlants Year Cattle Hogs Chicken ND Source:LongitudinalResearchDatabase,U.S.BureauoftheCensus(MacDonaldetal,2000) Theemergenceoflargeplantsdemonstratedinthetableaboveisquitestriking.In1963,only 31%ofallcattleslaughteroccurredinlargeplants.Butby1992plantsinthatcategory slaughtered72%ofcattle.inhogslaughter,largeplantshandled66%ofallslaughterin1963, but86%by1992.andinchickenslaughterlargeplantswentfromhandling29%ofallslaughter in1967to88%in1992.consolidationsonsuchadramaticandrapidscalearequiterareinu.s. manufacturing(macdonaldetal,2000). Oneparticularlyinterestingpatternstandsoutwhenconsideringtheconcentrationand consolidationdatapresentedabove.allthreeslaughterindustriesexperienceddramatic consolidation.however,itwasonlyincattleslaughterthatthisconsolidationledtodramatic concentration.patternsofmeatconsumptionlikelyplayedarolehere.percapitapoultry consumptionhasgrownsharplyintheunitedstatesoverthelastfewdecades,whilepercapita porkconsumptionhasgrownmodestlyandbeefconsumptionhasdeclined(macdonaldetal, 10

12 2000). 7 Thesedynamicsremindusthatmeatpackingplantsdonotoperateinavacuum,butin conjunctionwithbothmeatbuyersandlivestocksuppliers. Indeed,thelocationandoperationsoflivestocksuppliersaffecttheoptimallocation, scale,andoperationsofslaughterplants.concentrationandconsolidationinmeatpackingis intimatelylinkedtosimilartrendsintheproductionoflivestock.largecattlefeedlotsandhog andchickenfarmsaccountforhighandgrowingsharesoflivestocksales.therehasbeenashift towardlargerproductionestablishmentsandtowardlong termcontractualarrangements betweenthesesuppliersandslaughter(macdonaldetal,2000).toachievetheeconomiesof scaletheypromise,largeplantsneedlargesuppliers.bybuildingalargeslaughterplantamong anetworkoflargefarmsorfeedlots,andforminglong termrelationshipswiththosesuppliers, plantmanagerscanensureasteadysupplyofanimalsandexercisetightcontroloveron farm decisions.theyarethereforeabletomaintainhighcapacityutilizationthroughouttheyear, andmitigatetherisksassociatedwithbuildingandoperatinglargefacilities. Giventhatjustfourlargepackingcompaniescontrolthevastmajorityofbeef,pork,and poultrymarkets,itisnotsurprisingthatmanysmalltomid sizefarmersfeelshutoutofthe marketplacebythepreferencethattheselargepackershaveforworkingwithlargesuppliers. Thecurrentimbalanceofpowerandinfluenceinmeatprocessinghasbeencomparedtoan hourglass,inwhichasmallgroupofpowerfulcorporationsactastheconduitbetween thousandsoflivestocksuppliersandmillionsofconsumers(harperetal,2003).thismetaphor attemptstoprovideavisualimageofthecontrolthesefirmshave.however,itignoresthe currentpushtowardsabifurcatedsystem. 7 Percapitabeefconsumptiondroppedfrom84.7poundsperpersonin1975to66.3poundsperpersonby

13 Itistruethatsmalltomid sizefarmersoftenhaveveryfewoptionsforaccessingmarkets, andthatconsumershavelimitedoptionsintermsofthequalityandoriginsofthemeatsthey purchase.however,smallmeatpackerscananddoplayanimportantroleinhelpingsmallto mid sizefarmerstoaccesslocalandnichemarketsformeatproducts.oftenthisisachieved through co packing agreements,wherefarmersworkwithprocessorsonafee for service basistocutandpackagetheirlivestock,thensellthemeatdirectlytoconsumers.whenasmall meatpackerisavailableinreasonableproximitytotheiroperationsandwillingtoworkwith them,smalltomid sizefarmersmaybeabletoparticipateindirectmarketssuchasfarmer s marketsormeatbuyingclubs.alternatively,thesefarmerscansometimesselltheiranimals directlytosmallmeatpackerswhothenprocessandpackagemeatproductsfortheirown wholesaleanddistributionbusiness. Thefollowingsectionprovidesanexaminationofobstaclesandconstraintsfacingsmall meatpackersacrossthecountry.itshedslightonhowthesechallengescanlimittheirabilityto servefarmersandtootherwiseremaincompetitiveinthemarketplace.ihavefocusedthis researchprojectonasetofsmallmeatpackerswhohaveanexpressedinterestinworkingwith smalltomid sizefarmers.indoingso,iattempttomakeaspecificcontributiontothebodyof workreferencedbelow.iaimtoprovideinsightintohowthechallengesfacingsmall meatpackerscancauseeventhosecommittedtoactingaslinksbetweenfamilyfarmsandlocal marketstofunctionasbottleneckswithintheirlocalfoodsystem.bysheddinglightonsomeof thechallengesfacedbythesepackersihopetoassistinstitutionsindevelopingprogramsthat supportthesepackers,andthatdemonstratethemarketopportunityforlocal,nichemeat productstosmallmeatpackersnotyetcommittedtoworkingwithsmalltomid sizefarmers. 12

14 ChallengesFacingSmallMeatpackers Becauseofthepotentialrolethatsmallmeatpackersplayinprovidingsmalltomid size farmersaccesstomarkets,avarietyofstakeholdershavebeguntoexaminethesector.asa resultoftheseexaminationsabodyofconventionalwisdomhasemergedinregardto challengesfacingsmallmeatpackers.anecdotalaccountsfromsmalltomid sizefarmers suggestdifficultyinfindingandworkingwiththesepackers.anddatagatheredduringrecent empiricalinvestigationsbynon profitandindustrygroupsindicatesthatthefewsmall meatpackerswhocontinuetooperatefacesignificantobstacles.belowiprovideasummaryof theinitialresearchfindingsregardingthechallengesfacedbysmallmeatpackers,andoutline someofthecompetitivepressurestheyfaceasaresultofthestructuralchangesoutlined above. TheNicheMeatProcessorAssistanceNetwork(NMPAN)isonegroupthathasbeen workingtoidentifyandaddressthechallengesfacedbysmallmeatpackers.thisgrouphas identifiedfivecriticalneedareasforthesector:1)assistancewithunderstandingregulation;2) findingandretainingcapableandwillinglabor,andtrainingemployees;3)businessplanning andmanagement;4)communicationwithbothcustomersandregulators;and5)accessto capital(nmpan,2008). DuringthecourseoftheirworkNMPANhasfoundthatthemostfrequentlycited challengesforsmallpackersconcerntheirworkforce.meatcuttersatsmallpackingfacilities havebeenfoundtohaveanaverageofbetweennineandtwenty fiveyearsofexperience, indicatingthatyoungpeoplearenotenteringthesector.thereareanumberofopinionsabout whythismightbethecase.oneofthemostcommonisthatthereisalackofmonetary 13

15 incentiveforentryintotheindustry.thosethatareenteringaretypicallytrainedonthejob. Duetothedifficultiestheyfacefindingcapablelabormostsmallmeatpackershaveveryfew qualificationsfornewhires.theyseekemployeeswithadequatephysicalstrengthaswellas goodcoordination,depthperception,andcolorrecognition(martin&lawson,2005).thishas notableimplicationsforthequalityofworkthatcanbeperformedbysmallpackers,aswellas theirabilitytoinnovateandexperimentwithnewservicesandproductdevelopment. Inspiteoftheirresourceconstraints,smallmeatpackersaresubjecttothesamesetof regulationsthatlargemeatpackingfacilitiesface.arecentdiscussionpaperproducedforthe SustainableAgricultureCoalitionbyHildePetersenidentifiesanumberofchallengessmall packersfaceasaresultofthissituation.petersenexplainsthatconsideringthevastdifferences intheiroperations,regulatingsmallandlargepackingfacilitiesthesamecausesanumberof disadvantagesforsmallmeatpackers.specifically,itisbelievedthattheintroductionofthe PathogenReduction/HazardAnalysisCriticalControlPoint(HACCP)landmarkrulein1996 introduceddisproportionateburdensforsmallmeatpackers(petersen,2005).some stakeholdershavearguedthatsystematiccostdifferentialswerebuiltintothedesignofhaccp. Infact,a2001reportbytheEconomicResourceServiceformallyacknowledged disproportionatecostsintheimplementationofhaccpwhichhampertheabilityofsmall meatpackerstoaffordtheproperfacilities,equipmentandtechnologyrequiredforcompliance (ERS,2001).Anecdotally,thecostsassociatedwithmeetingstructuralrequirementsoutlinedin regulationsleavemanysmallprocessorswithoutthecapitalrequiredtomaintaintheirfacilities ortobuytheequipmentneededtocomplywiththoseregulations.inaddition,complicated HACCPprotocolshavemadecompliancewithfederalmeatinspectionlawsextremelyresource 14

16 intensiveandburdensome,contributingtothelossofsmallmeatpackingplantsandhindering newproductdevelopmentinthosethatcontinuetooperate. Petersenalsopointsoutthatincreasedcostsandoperationalburdensarenottheonly challengeslinkedtoregulations.inrecenttestimonybeforethesmallbusinessadministration, leadershipoftheamericanassociationofmeatprocessorsclaimedthatsmallplantsare frequentlysubjecttoparticularlystrictenforcementbytheusda sfoodsafetyinspection Service(Petersen,2005).Thisisanallegationthatisfrequentlyrepeated.Stakeholdersfeel thatsmallplantsareoftensubjecttomorethoroughinspectionthanlargeplantsdueto fundamentaldifferencesinprocessingdesign.concernshavealsobeenexpressedabout unwarrantedintimidationbyfederalinspectorsaimedexplicitlyatsmallmeatpackers.itis allegedthatinconsistentandunbalancedbureaucracyiscreatingreluctancebysmall meatpackerstoseekusdacertification. InmanypartsofthecountryUSDAcertificationistheonlyoptionavailableforsmall meatpackerswhowanttoparticipateincommerce.howeversomestateshavetheirownstate inspectionprograms.whereitexists,state inspectedprocessingisbelievedtobe advantageous.stateinspectionprogramsarethoughttobemoreeasilyadaptedtotheneeds ofsmallbusinesses.therefore,statesthathavemaintainedtheirinspectionprogramsare thoughttoplayacriticalroleinassistingthesmallprocessorsfrequentlyleftbehindinthe federalsystem(petersen,2005).statesystemsaregenerallymoreaccessibleandflexiblein providingresourcestosmallmeatpackers,andareabletoprovidefortheirdiverseand individualneeds.itiswidelybelievedthatstateinspectionprogramsareintegraltothesuccess ofsmallmeatpackersandmustbedevelopedandsupportedinallstates. 15

17 Byvirtueoftheirscale,smallmeatpackersgeneratehigheroperatingcostsperunitat almosteverylevel,andstruggletoperformatthesameefficienciesastheirindustrializedlargescalecounterparts.inaddition,thesaleofby products,wherethemajorityofprofitsaremade forlargeprocessors,isnotviableforsmallplants(clauseetal,2003).smallplantsoftendonot havesufficientquantityortheresourcestorendertheirownbyproducts,andthereforeface thecostofdisposal.theabilitytosuccessfullydisposeofslaughterandprocessingbyproducts inacosteffectivemanorcanbeafactorindeterminingthesuccessorfailureofsmall meatpackers(martin&lawson,2005). Ingeneral,smallplantsproducingcommodityproductsfacestiffcostpressures,causing sometoexittheindustry.however,smallplantsproducingspecialtyornichemeatproducts havepricingflexibilityandthereforemaynotbeasaffectedbytheincreasedcostsofdoing businessthataccompanytheirscale(ers,2001).innovationanddifferentiationofproduct haveallowedasmallnumberofsmallmeatpackerstostayafloatservinggrowingmarketsfor nichemeatproducts.theimportanceofinnovationanddifferentiationtothesurvivalofsmall meatpackerssuggeststhatinterventionstosupportthesectorshouldfocusonidentifyingand understandingfactorsthatinhibitfirmsfrominnovatinginparticularenvironments.this researchprojectattemptstoidentifysuchfactorsforaspecificsetofsmallmeatpackersin NorthCarolina,andmakesrecommendationsforhowthestate sinstitutionalandother resourcesmightbedirectedtoaddresstheselocalizedchallenges. 16

18 Chapter3:OverviewofNorthCarolina smeatpackingsector NorthCarolinaisknownforagro industriallivestockproduction.thestateishometothe world slargesthogprocessingplantandoneofthecountry slargestpoultryslaughterhouses. 8 Accordingtothe2007CensusofAgriculturethetotalmarketvalueofagriculturalproductsin NorthCarolinawasjustover$10.3billion.Ofthat,livestocksalescomprisedapproximately $7.7billion,ornearlyseventy fivepercent.historically,tobaccowasthecornerstoneofthe state sagriculturalactivity.butoverthelastfewdecadesnorthcarolina sagricultural economyhasundergonedramaticchanges,andlivestockhasgainedprominence.figure1 belowillustratesthisshiftawayfromtobaccoandtowardstheproductionoflivestock, specificallyhogsandpoultry.northcarolinacurrentlyrankssecondinthenationinhog productionandfifthinproductionofbroilers(nass,2008). 9 Figure1:MarketValueofNCAgriculturalProducts 10 8 SmithfieldPackingCompanyownstheworld slargesthogprocessingfacility,whichislocatedinthebladencountytownoftarheel,and processesupto32,000hogsperday(geary&sorg,2007).thehouseofraefordfarms,inc.facilitylocatedinthehokecountytownofraeford isoneofthecountry'slargestpoultryslaughterhouses. 9 Abroilerisatypeofchickenorturkeyraisedspecificallyformeatproduction. 10 ThischartwasconstructedusingUSDACensusofAgriculturedata.Allvalueswereadjustedto2007dollarsusingtheBLSinflationcalculator availableathttp://data.bls.gov/cgi bin/cpicalc.pl. 17

19 Theseshiftsinagriculturalactivityhavebeenaccompaniedbyfarmlosses,farm consolidation,andconcentrationoffarmownership.between2003and2006northcarolina lostover5500farms.in2004and2005alone,thestatelostover4,000farms,puttingittopin thenationforfarmlossesalongwithfloridaandtennessee(ncda&cs,2007).despitethese strikingfarmlosses,agriculturalrevenuesinthenorthcarolinahaveremainedrelatively constant(nass,2008).thesecontradictorytrendssuggestthatlargefarmsareexpandingin thestate,graduallysubsumingsmallandmid sizefarms.asthetablebelowreveals,the averagefarmsizeinnorthcarolinahasindeedsteadilyincreasedoverthepastseveralyears,as hasthepercentageorfarmlandcontrolledbylargefarms. Year #offarms (Thousands) Table3:NumberofFarmsandLandinFarmsinNC SalesClassEstimates Ave.FarmSize $1000 $9999 $10,000 $99,999 $100,000+ (Acres) (ThousandAcres) Source:NorthCarolinaAgriculturalStatistics2008 Asnotedpreviously,thelocationandoperationsoflivestocksuppliersaffectstheoptimal location,scale,andoperationsofslaughterplants.thus,growthandconsolidationinpoultry andhogfarminghereinnorthcarolinahasbeenintimatelylinkedtogrowthandconsolidation withinthestate smeatpackingsector.muchofthedramatictransformationoftheu.s. meatpackingindustrydetailedinthepreviouschapterhasbeenplayedoutinorthcarolina.in 2007,morethanelevenmillionhogswereslaughteredinthestate(NASS,2008).Over90%of 18

20 thosewereslaughteredbysmithfieldpackingcompany,whichownsthevastmajorityofthe state sporkprocessingcapacity(geary&sorg,2007). Inlightoftheserecentanddramaticstructuralchanges,NorthCarolinaisaparticularly interestingplaceinwhichtoexaminechallengesandopportunitiesfacedbysmallmeatpackers. Alongsidesomeofthelargestmeatpackingfacilitiesintheworldrunbyglobal,vertically integratedcorporations,mid levelpackerscontinuetofindtheirniche,andasetofsmall meatpackersaresurvivingwithviablebusinessmodels.whilelargefarmsandprocessing facilitiesmostcertainlydominatelivestockmarketsinthestate,therestillremainsastrong traditionofsmallandmid sizedfamilyfarms.andthereareapproximatelytwentysmall meatpackersinnorthcarolinawhohaveidentifiedthemselvesaswillingandabletohelpthese farmersastheyseekaccesstolocalmarkets(lanier,2007). Accordingtothe2007CensusofAgriculture,familyfarmsaccountfor97%ofallfarmsin NorthCarolina,andabout85%areclassifiedassmallfamilyfarms.While96%ofhog productionin2007occurredonfarmssellingover5,000hogs,therewere927farmsthatraised between1and24hogs.ofthese,59%reportedsalesofhogs,indicatingthereare approximately500farmsraisingandsellinghogsonaverysmallscaleinnorthcarolina.there werefewerfarmssellinghogsfrommid sizedoperations,withapproximately168farmshaving inventoriesbetween25and99hogsand137farmsraisingbetween100and1000hogsper year(usda,2007). CattleproductioninNorthCarolinaisnotablydifferentfromhogproduction.Mostofthe cattleraisedinthestateareonfarmswithfewerthan50cows.however,themajorityofnorth Carolinacattleranchersrunstockercattleoperations.Onceweanedtheiranimalsarefedfor 19

21 threetofourmonthsongrass,thenshippedtofeedlotsinthemidwest.asmarketsforgrassfedbeefaregrowing,however,increasingnumbersofthestate sranchersarekeepingtheir cattleinstateforfinishingandentryintolocalnichemarkets. TheproductivityofNorthCarolina ssmallandmid sizedfarmsisreflectedbythegrowing numberofdirectmarketsforlocalfoodsinthestate.therearecurrentlyoveronehundred farmer smarketslistedinthefarmersmarketdirectorymaintainedbythencda&cs.in addition,northcarolinahasapproximatelyseventycsas,andmorearecreatedeveryyearas interestfrombothconsumersandfarmersgrows(ncce,2008).however,duetothe bottleneckpresentedbythestate ssmallmeatpackers,opportunitieswithinthesemarketsfor smalltomid sizefarmersproducinglivestockarelimited. ThetablebelowoutlinesthevariouscategoriesintowhichNorthCarolina smeatpackers aredivided. PlantCategory ForRegulatoryPurposes CustomPlant Table4:PlantCategories Description Productsfromthesefacilitiescannotentercommerce.Inspectedfour timesperyearbyncda&csstaffforsanitationandproperlabelingof product. StatePlant Productsfromthesefacilitiescanenterintrastatecommerce. InspecteddailybyNCDA&CSstafffordisease,sanitation,andproper labelingofproduct. TAPlant Productsfromthesefacilitiescanenterinterstatecommerceorbe exportedtoforeigncountries.inspecteddailybyncda&csstafffor disease,sanitation,andproperlabelingofproduct. USDAInspectedPlant Productsfromthesefacilitiescanenterinterstatecommerceorbe exportedtoforeigncountries.inspecteddailybyusdastafffor disease,sanitation,andproperlabelingofproduct. BySize VerySmall Fewerthan10employees,orlessthan$2.5millioninannualsales. Small employees. Large 500ormoreemployees. 20

22 Forregulatorypurposes,meatpackersinNorthCarolinaaredividedintofourcategories CustomPlants,StatePlants,TA 11 Plants,andUSDAInspectedPlants.TheMeatandPoultry InspectionDivisionoftheNCDA&CSmaintainslistsofthemeatpackingfacilitiesthatfallinto thesecategories,andischargedwithensuringthattheplantssubjecttonorthcarolinastate inspectionproducesafe,wholesome,andproperlylabeledmeatandpoultryproducts (NCDA&CS,2009). Therearecurrentlyjustunderonehundredandninetyestablishmentsoperatingunder thejurisdictionofthencda&cs.ofthese,twenty onearecustomplants,seventy fourare StatePlants,andninetyareTAPlants.CustomPlantsaremeatpackingfacilitiesthatslaughter and/orprocessmeat,poultryandwildgameforprivateindividuals.productsproducedinthese facilitiescannotentercommerce.theyaremarked NOTFORRESALE andmustbereturned totheownerfortheirpersonaluse.somesmalltomid sizefarmersareabletosellproduct usingcustomplants,butmustdosobysellingtheirlivestockdirectlytoconsumerswhothen paytohavetheanimalsprocessed.customplantsareinspectedjustfourtimesperyear,and onlyforsanitationandproperlabelingofproduct. Incontrast,StatePlantsareinspecteddailyfordisease,sanitation,andproperlabelingof product.productsfromthesefacilitiescanbesoldanywherewithinthestateofnorthcarolina bearingalabelthatindicatestheywere"inspectedandpassedbyn.c.d.a".taplantsarealso inspecteddailyfordisease,sanitation,andproperlabelingofproduct.however,productsfrom thesefacilitiesbearalabelindicatinginspectionbytheusdaandmaybeshippedanywherein theunitedstatesorexportedtoforeigncountries.intermsofregulation,thereistechnically 11 TA referstothetalmadge AikenActof1962,alawpassedtohelpcoordinatestateandfederalfoodsafetyguidelines.Thislawallows trainedinspectorsthatarestateemployeestostaffmeatpackingplantswithusdainspectionprivileges. 21

23 nodifferencebetweenausdainspectedplant,ataplant,andastateplant onlywhoisdoing theinspection. 12 TAPlantsareinspectedtoUSDAstandards,butbystaffwhoareNCDA&CS employees.andncda&csstandardsforstateplantsareidenticaltousdastandards. Therefore,theprimarydifferencebetweenaStatePlantandTAPlantistheabilityto participateininterstatecommerce. 13 StatePlantsandTAPlantsmayalsoslaughterand/or processcustomexemptproductincludingwildgameifkeptseparatefrominspectedproducts. Inregardtosize,therearethreecategoriesofmeatpackersinNorthCarolina very small,small,andlarge.theusda sfoodsafetyinspectionservice(fsis)definesaverysmall packingplantasonewithfewerthan10employeesorlessthan$2.5millioninannualsales, andasmallpackingplantasonewith10 499employees(FSIS,1996).Allotherplantsare consideredtobelarge.oftheapproximatelyonehundredandninetyplantsinspectedbythe NCDA&CS,eightyareverysmallandtheremainderaresmall. Clearly,tobeaviablelinkcapableofhelpingsmalltomid sizefarmerstoaccesslocal marketsaplanthastobeinspectedregularlybyeithertheusdaorthencda&cs.however, notallplantsthatarepositionedtoservethesefarmersarewillingto.largepackersare generallyverticallyintegratedoperationsthatworkwithaselectsetoflargefarmersunder contract,maintainingcontroloverthesupplyofanimalstheyprocess.mid levelpackerswork withintheirownmarketniche,andforthemostparttheirbusinessmodelsinvolvecontractual agreementswithlargefarmsorotherwiseconnectthemtocommoditymarketsforlivestock. Evensmallpackerscanbehesitanttoworkwithsmalltomid sizefarmers,preferringcontracts 12 Itisimportanttonotethatnotallstateshavestateinspectionprograms,andthattheTalmadge Aikenactdoesnotapplyinallstates.Only 27stategovernmentsruntheirownmeatandpoultryinspectionprograms(MPIs).AndtheTalmadge AikenactallowstheUSDAtocontract withstateagencyinspectorstoconductfederalinspectionactivitiesinonly10states.statempisagreetomeetstandards atleastequalto thoseofthefederalstandardssetforthinthefederalmeatinspectionact(fsis,2009). 13 The2008FarmBillproposedinterstatecommerceforstate inspectedplants.asofmarch2009,thencda&cshadnotyetreceivedany requeststoadoptthisproposedchange. 22

24 withlocalbrokersasawayofinsuringaconsistentflowofproductthroughtheirfacilities. However,asnotedearlier,thereareapproximatelytwentysmallmeatpackersinNorthCarolina whohaveidentifiedthemselvesaswillingtoservesmalltomid sizefarmersseekingaccessto localmarkets(lanier,2007). SmallmeatpackersinNorthCarolinaaremostlyfamilybusinessesthathavebeenin operationforseveraldecades.theyhavewitnessedfirsthandtheconsolidationinu.s. meatpacking,andhavehadtochangetheirbusinessstrategieswiththechanginglandscapeof livestockproduction.whereasmostoncehadviablebusinessmodelsworkingonlywithsmall tomid sizefarmers,theynowfindthemselvesactinglargelyasimportantgapfillersforthe state slargescalecontractfarmers,buyingandcreatingmarketsforcullpigs 14,andproviding servicestoregionalbrokersoperatingwithincommoditymarketsforlivestock.duetothe historiclocationoftheirinputs,themajorityofnorthcarolina ssmallmeatpackersarelocated inruralareas.veryfewareincloseproximitytonorthcarolina spopulationcenters.themap includedinappendixbindicatesthelocationsofthetwentysmallmeatpackersonwhomthis researchprojectisfocused.thesepackersarespreadfairlyevenlythroughoutthestate, thoughsomewhatconcentratedinthecentralandeasternregions.allarelocatedinrural communities. ThereareanumberofinstitutionsthatworktosupportNorthCarolina smeatpacking sector.thetablethatfollowsidentifiestheseinstitutionsandtheirrespectivesupportroles. 14 Cullpigsor slowgrowers areanimalsraisedbylargecontractfarmersthatdonotmeetthespecificationssetbylargepackingcompanies. 23

25 Table5:InstitutionsthatSupportNC smeatpackingsector Institution SupportRole NCDA&CS smeatandpoultryinspectiondivision NCSU sdepartmentoffoodscience NorthCarolinaMeatProcessorsAssociation NCChoices Providestechnicalassistancewith: preparationofplansandspecificationsfornewplantsor plantupgrades preparationofhaccpplans requirementsforproductlabels requirementsforequipmentandutensils identificationofequipmentsuppliers StaffsaMeatExtensionSpecialistwhoassistswith: interpretationofregulations resolutionofcomplianceproblems productdevelopment Establishesacollectivevoiceforsmallandverysmallpackers, andfacilitatescommunicationandeducationwithinthe industry. Connectsverysmallpackerstotechnicaltrainingand collaborativebusinessopportunities. IthasalreadybeennotedthattheMeatandPoultryInspectionDivisionoftheNCDA&CS isactivelyengagedwiththestate smeatpackers.theagencyenforcesstateandfederallawsto ensurethatmeatandpoultryplantssubjecttonorthcarolinastateinspectionproducesafe, wholesome,andproperlylabeledmeatandpoultryproducts.inaddition,thencda&cs providesarangeoftechnicalassistancetothesector,particularlytosmallandverysmall packerswithlimitedresources.theyassistwiththepreparationofplansandspecificationsfor newplantsorplantupgrades,andwiththedevelopmentofhaccpplans.theyalsoprovide educationandtrainingonrequirementsforproductlabelsandprocessingequipmentand utensils,andmaintainlistsofequipmentsuppliers.seniormanagerswithinthemeatand PoultryInspectionDivisiondoconsiderableoutreachwithavarietyofagri business stakeholdersinthestate.andtheyhavedemonstratedsupportfordevelopingregulatoryand othersolutionsthatareresponsivetotheneedsofsmalltomid sizefarmersandlocalfood systementerprises. 24

26 NorthCarolinaStateUniversity s(ncsu)departmentoffoodscienceishometoameat ExtensionSpecialistwhoprovidesextensivetechnicalassistancetothesector.Thisindividual worksregularlywithpackersofallsizes,helpingwithinterpretationofregulations,and providingscientificbackingandsupportingdocumentationfortheresolutionofcompliance problemsencountered.healsoassistspackerswithnewproductdevelopment.inaddition, heworkswithbothstateandfederalregulators,educatingthemaboutkeyconceptsinfood sciencesothattheycanbetterinterpretandenforceregulations. TheNorthCarolinaMeatProcessorsAssociation(NCMPA)isanon profitthatwas establishedtopromote,develop,andmaintaintheadvancementofthestate smeatprocessing industry.theirmembershipiscomprisedmostlyofpackersinthemid levelniche,thougha fewsmallpackersareinvolved,andcloserelationshipsaremaintainedwithsomeofthelarge packersinthestate.meatpackingisoneofthemosthighlyregulatedindustries.assuch,the organizationisimportanttoestablishingacollectivevoiceforsomeofthestate slesspowerful packersandtofacilitatingcommunicationwiththencda&cs,thenorthcarolinaagribusiness Council,andimportantindustryalliessuchastheNationalRenderersAssociation.NCMPA holdstwoeducationalmeetingsannually,duringwhichmembersconvenetodiscussthemost pressingissuesfacingthesector. NCChoices,aprojectoftheCenterforEnvironmentalFarmingSystems(CEFS) 15,is activelyworkingtotransformthelocalmeatsvaluechaininnorthcarolinaintoonethat equitablyandeffectivelyservessmalltomid sizefarmers,small scaleprocessors,and consumers.theorganization soverarchingmissionistoincreaseconsumeraccesstohealthy 15 CEFSwasestablishedin1994byNorthCarolinaStateUniversity,NorthCarolinaA&TUniversity,andtheNorthCarolinaDepartmentof AgricultureandConsumerServices.Theorganization sstatedmissionistodevelopandpromotefoodandfarmingsystemsthatprotectthe environment,strengthenlocalcommunities,andprovideeconomicopportunitiesinnorthcarolinaandbeyond(cefs,2008). 25

27 foodchoicesraisedorgrownlocallyandsustainably,providenewmarketopportunitiesfor smallandmid sizedfarmers,andsupportthegrowthoflocalfoodeconomies.inordertofulfill thismission,ncchoiceshasdoneextensiveoutreachtosmallmeatpackersinnorthcarolina. Theyrecentlyinitiatedapilotprojectinvolvingthestate slargestnaturalfoodsco opandtwo smallmeatpackers.thisprojecthasresultedinconsistentweeklysalesoflocalbeefandpork thatisproducedsustainablyonfamilyfarms.ncchoicesintendstoscaleupthispilot,andto playanincreasingroleinprovidingsmallmeatpackerswithtechnicaltrainingandcollaborative businessopportunities. 26

28 Chapter4:SurveyandInterviewFindings Aprimaryobjectiveofthisresearchprojecthasbeentoidentifythechallengesfacedbya specificsetofsmallmeatpackersinnorthcarolina.anothergoalhasbeentoassesslocal attitudesandinterestswithinthesectorinregardtoservingsmalltomid sizefarmersseeking accesstolocalmarkets.inordertomeettheseobjectives,asurveywasadministeredtotheset oftwentysmallmeatpackersidentifiedinthemostrecentlypublished IndependentFarmers DirectoryofSlaughterFacilitiesinNorthCarolina.Thesepackerswereselectedasthefocusof thisresearchprojectbecausetheirexpressedinterestinworkingwithsmalltomid sizefarmers makestheirperspectiveaspotentiallinksinadynamiclocalmeatsvaluechainparticularly valuable. Thesurveydistributedtothesesmallmeatpackersasksasetofquestionstocapture variousaspectsoftheirbusinessoperations,includingwhatservicestheyprovide,thespecies andvolumeofanimalscurrentlymovingthroughtheirfacility,andtheircapacitytohandle increasedinput.respondentsarealsoaskedabouttheirworkforce,theirregulatorystatus,and thetypesoftechnicalassistanceorsupporttheyhaveorwouldliketoreceive.inaddition,a numberofopen endedquestionsareincludedinthesurvey,askingrespondentstoidentify theirbiggestchallengesandopportunities,andtoindicatetheirlevelofinterestincollaborating withothersmallmeatpackers.thefulltextofthissurveyisincludedinappendixa. InordertoensureahighresponserateIinitiallycontactedalltwentytargetrespondents byphone,explainingwhoiwasandthepurposeofmyresearch.onephonenumberhadbeen disconnected,andanotherwasneveranswered.fourteenofthetargetrespondentsreached wereaskediftheywouldbewillingtocompleteasurveyinsupportofmywork.theywere 27

29 toldtheycouldcompletethesurveyoverthephone,electronically,orhaveitmailedtothem. Noneofthesepotentialrespondentswerewillingtocompletethesurveyoverthephone.Only threewerecapableoffillingitoutelectronically.sixaskedtohaveitmailedtothem,andfive askedtohaveitfaxedtothem.ofthethreesurveysdistributedelectronicallyonlyonewas completed.ofthesixsurveysthatwer edwithself addressedreturnenvelops,twowere returned.noresponseswerereceivedtothesurveysthatwerefaxed. Fourofthetargetrespondentsreachedwereaskediftheywerewillingtobeinterviewed inpersonattheirfacility.allfourindicatedthattheywereandinterviewswerescheduledat theirconvenience.thesefourtargetsforinpersoninterviewswerenotchosenrandomly,but selectedasarepresentativesampleofthediversityofsmallmeatpackersinthestatethatare currentlyworkingwithsmalltomid sizefarmers.duringtheseinterviewssurveyquestions wereasked,toursofmeatpackingfacilitiesweregiven,andindepthdiscussionswerehadwith facilityownersinregardtothehistoryandoperationsoftheirbusiness. Thenetresultofthesecombinedeffortsisthatsevenoftheeighteentargetrespondents reachedcompletedthesurvey,leadingtoatotalresponserateof39%.concurrentwiththese surveysandinterviews,formalandinformalinterviewswereconductedwithasetof institutionalandotherstakeholderswhohaveregularinteractionswithnorthcarolina ssmall meatpackers.ispokewithanumberofindividualswhoprovidetechnicalandotherforms assistancetothesector.ialsohadtheopportunitytotalktoonefarmerwhoregularlyworks withthesepackerstogetmeatproductstolocalmarkets,andtooneretailerwhoiscurrently engagedinapilotprojectwithtwosmallmeatpackersinthestate.inaddition,duringthe courseofthisresearchprojectiwasinvitedtoattendthenorthcarolinameatprocessors 28

30 Association smidwintereducationalmeeting.doingsoprovidedvaluableperspectiveon industrydynamicsandgavemeawindowintosomeofthemosttimelyissuesfacingsmall meatpackers. Usingtheresearchmethodsidentifiedabove,Iwasabletomakeasetoffindingsin regardtotherangeandseverityofchallengesfacedbythesetofsmallmeatpackersinnorth Carolinawhoarewillingandabletoworkwiththestate ssmalltomid sizefarmers.belowi sharethesefindingsinthehopethattheywillhelpplannersandothersbegintoidentifythe currentbarriersandchallengestointegratingthesesmallmeatpackersasmoreviablelinksin thestate slocalmeatsvaluechain. WorkingWithSmalltoMid SizeFarmers Consideringthenumberofsmalltomid sizefarmersproducinglivestockinnorth Carolina,andtheincreasingnumbersoffarmer smarketsandotherdirectsalesoutlets availabletothem,itwasnotsurprisingtolearnthatmostsurveyrespondentsdosomelevelof businesswiththesefarmers.ifoundthatonerespondentwasprimarilyorientedtoward servingsmalltomid sizefarmers.heisconsideredthego toprocessorforanumberoffarmers inthepiedmontregionofthestatepracticingsustainableagriculture.otherswereonly workingwiththesefarmersasasmallbutconsistentportionoftheirbusiness.theremainder processanimalsforthiscustomerbaseonlyintermittently.itwasunclearexactlyhowmuchof theproductresultingfromtheseco packingarrangementswouldqualifyassustainableorniche meatproducts.twosurveyrespondentsarecurrentlyparticipatinginthencchoicespilot notedearlier,supplyingthestate slargestnaturalfoodsco opwithweeklydeliveriesoflocal 29

31 beefandporkthatisproducedsustainablyonfamilyfarms.oneofthesesamerespondents alsoprocessesweeklyordersofbeefforthewholefoodsmarketlocatedinchapelhill. Whentalkingwithsomeindustrystakeholdersthereisanunspokenbutpowerful assumptionthatmostprocessorsprefernottoservesmalltomid sizefarmersseekingaccess tolocalmarkets.yet,whenaskedwhattheirbiggestchallengesweretoworkingwithsmallto mid sizefarmersthemajorityofrespondentsindicatedthatthechallengeswereactuallyquite limited.therewasageneralconsensusthatfarmersoftendon tunderstandmeatprocessing, andthattheythereforehavespecialrequeststhatcanbedifficulttoaccommodate.butmost processorswithwhomiengagedseemedtoeasilyhandlethisbyprovidingalittlecustomer education.threeoftheprocessorsthatiintervieweddescribedusingacustomerservice orientedbusinessmodel,indicatingthatitwasacompetitiveadvantageforthemtobe attentivetofarmers specialrequests.theysawitastheirjobtoeducatefarmersabouthowto getthemostprofitoutoftheiranimals,andenjoyedadvisingthemonthebestwaytofully utilizetheanimal.tworespondentsindicatedthatinconsistentnumbersofanimalscoming fromsmalltomid sizefarmerswasaproblem.however,noneoftheprocessorswho respondedtothesurveyhaveminimumprocessingrequirementsfortheircustomers. OtherCustomers&Capacity Inadditiontoperformingfee for serviceslaughterandprocessingforsmalltomid size farmers,mostrespondentsperformthesesameservicesseasonallyforhunters,andsomedoso forregionalbrokersanddistributorsparticipatingincommoditymarkets.ifoundthatall surveyrespondentsdomorethanjustfee for servicework.alloftheirbusinessmodelsinclude 30

32 on siteretailoperations.inaddition,fiveoutofsevenrespondentssupplyproductto restaurantsincloseproximitytotheirfacility,andtwooutofsevensupplylocalretailers.three outofsevenrespondentsdistributeproductsundertheirownlabelintowholesalemarkets. Manyoftheanimalssourcedfortheseretailandwholesaleopportunitiesarecullpigsorcows. Asnotedpreviously,thesepackersfillanimportantgapforlargecontractfarmersunableto movetheir slowgrowers intraditionalcommoditymarkets.thesepackersalsosource livestockatlocalauctions. Whenaskedaboutthespeciesofanimalsbeingprocessedintheirfacilities,allseven surveyrespondentsindicatedthattheyprocessbeef,andsixofthesevenprocesspork.the onerespondentwhodoesnotprocessporkisahalalfacility,andthusdoesnotdosofor culturalreasons.onlyonesurveyrespondentindicatedthattheyprocesspoultry.interviews withindustrystakeholdersconfirmthatthisprocessorisindeedtheonlysmallmeatpacking facilityinthestateavailabletosmallandmid sizedpoultryfarmers.heiscapableofhandling upto100,000birdsannually.capacityforbeefandporkprocessorsrangedconsiderablybased uponboththesizeoftheirfacilityandthesizeoftheirworkforce.thesmallestfacilitieshandle asfewasonecoweachweekandfourhogsperweek,whilethelargesthandleuptoseventy cowsperweekandonehundredhogsperweek.whensurveyrespondentswereaskedifthey couldhandleincreasedinputtotheirfacilitythreesaidthattheycould,andtheremainder indicatedthattheycouldiftheyimplementchangessuchashiringmoreworkersorupdating theirequipment. 31

33 Capabilities Allofthepackersthatweretargetedforthisstudyarecapableofslaughteringlivestock andbreakingdowntheresultingcarcassesintoprimals,thebasicsectionsfromwhichsteaks, porkchops,andotherproductsarecut. Mostareabletoproducefreshcutsofmeatandto performverybasicvalue addedservicessuchasgrindinganddry aging.however,veryfew performtherangeofvalue addedservicesthatfarmersdesire.ofthosewhorespondedtothe survey,onlyoneiscurrentlycapableofprovidingafullrangeofvalue addedservicesincluding curing,smoking,brining,salting,andsausagemaking.industrystakeholdersverifythatthis particularpackeriscurrentlytheonlysmallmeatpackerworkingwithsmalltomid sizefarmers whoiscapableofproducinghighmargin,value addedproductssuchasbaconandham. Unfortunately,thispackerislocatedfarawayfromboththestate spopulationcentersandthe majorityofsmalltomid sizefarmerspracticingsustainableagriculture.thissituationwillsoon change,asthegoldenleaffoundationrecentlyawardedgrantfundingthatwillbeusedto considerablyincreasevalue addedprocessingcapabilitiesatafacilitythatisincloseproximity toanumberoffarmersorientedtowardslocalnichemarkets. Value addedprocessingequipmentisnottheonlykindofequipmentimportantfor helpingfarmersprofitablyaccesslocalmarkets.smallmeatpackersmustalsopossesstheright kindsofpackagingandlabelingtechnologies.allsurveyrespondentsindicatedthatthey providevacuumsealpackaging,andmanyarecapableofprovidinglabelingthatindicatesthe farmoforigin.thisformofpackagingistheminimumrequiredforfarmerstosatisfy consumersindirectmarketssuchasfarmer smarketsandlocalmeatbuyingclubs. Interestingly,noneofthesurveyrespondentsindicatedthattheyarecapableofprovidingwhat 32

34 wouldbeconsideredretailreadypackaging.retailgrocersdemandthatmeatproductslook appealingontheirshelves,meetingconsumerexpectations,andthattheyhaveareasonable shelflife. Challenges Whensurveyrespondentswereaskedtoidentifythebiggestchallengestogrowingor expandingtheirbusinessthemostfrequentresponsewas findingandkeepingatrained workforce.thesecondmostcommonresponseswere HACCPorotherregulatory compliance and lackofcapitaltodoplantupgrades.surveyrespondentswerealsoasked aboutthetypesofassistanceofsupportthatwouldbemostbeneficialtotheirbusiness.the mostfrequentresponsestothisquestionwere accesstocapital, marketingandsales,and businessskills.throughconsiderationoftheseandothersurveyresponses,andbasedon informationobtainedduringinterviews,ihavedividedthechallengesfacedbynorthcarolina s smallmeatpackersintosixcategories.belowisharethemostpertinentfindingswithineachof thesecategories,rankingthemfrommostsignificanttoleast. Workforce Themostnotedchallengeforthesmallmeatpackerswhoparticipatedinthisresearch projectwas findingandretainingcapablelabor.surveyrespondentsvariedconsiderablyin regardtothenumberoffull timeproductionemployeestheycurrentlyhaveonstaff.this variationwasseeminglycorrelatedtothevolumeofanimalsmovingthroughtheirfacilities. Thesmallestfacilitiesemployeeanaverageofthreefull timeproductionemployees,whilethe 33

35 largestfacilityemployeesapproximatelytwenty five.interestingly,onlyonerespondent indicatedthattheneedtohiremoreworkerswasalimitingfactorintheirabilityto accommodateincreasedinput. Whenaskedhowmanyyearsofexperiencetheirmeatcuttershaveonaverage,themost frequentresponsewas tentofifteenyears.throughmyinpersoninterviewswithpackersi wasabletodiscernthatmostfacilitieshaveacoregroupoftwotothreeseniorcutterswho havebeenwiththatfacilityfortwentyormoreyears,andthenasetofentrylevelstaffthat comeandgo.oneintervieweeusedtheterm revolvingdoor todepicttheturnoverratethat hisfacilityseeswithhisentry levelstaffmembers.allspokepassionatelyabouthowdifficultit istofindgoodlabor.therewasageneralconsensusthat peopledon twanttowork anymore,andthatyoungpeoplearenotbeingattractedtothesector. Consideringthehighturnoverrateforentry levelemployees,onesomewhatsurprising findingfromsurveyresultswasthatmostpackerspaycompetitivewages.sixoftheseven surveyrespondentsindicatedthattheypaytheirmeatcuttersbetweentenandfifteendollars perhour.whileperhapsnotalwaysalivingwage,thisissignificantlymorethanminimum wage,andiscomparabletowagespaidatlargemeatpackingfacilitiesinnorthcarolina. Anotherworkforcerelatedchallengeidentifiedfromsurveyresponseswas accessto trainingprogramsforstaff.duringthecourseofmyinterviewsidiscoveredthattrainingfor entry levelmeatcuttersistypicallyprovidedonthejob.becauseofthedifficultyrecruitingand retainingemployees,criteriaforevaluatingnewhiresareminimal.plantmanagersindicated thattheylookforemployeeswhoarewillingtoworkhardanddemonstrateinterestinlearning newskills.totestforthesequalitiestheyoftenstartnewemployeesoutinsomeofthenastier 34

36 jobsinthefacility,suchascleaningthekillfloor.iftheyseethattheemployeeshowsinitiative theywillquicklymovethemintomorehighlyskilledandbetter paidpositions.oneplant managercommentedthathecantellbythewayanemployeefirstpicksupaknifeiftheywill beanygood. Regulation Oneofthesecondmostnotedchallengesforthesmallmeatpackerswhoparticipatedin thisresearchprojectwas HACCPorotherregulatorycompliance.Specifically,keepingup withchangingregulationswasfoundtobethedifficultythesesmallmeatpackersface.several commentedextensivelyonhowregulationsareconstantlychanging,alongwiththe interpretationsofthoseregulations. Whenaskediftheyhadanyongoingregulatoryissuesorchallengesthemajorityof respondentsindicatedtheydid.oneresponded Nonethatwecannotworkwith. Another explained, Anybodyinthemeatbusinessdoes.Becauseregulationsarealwayschanging. Thereisalwaysmoretodo,andthisislikelytogetworse. Severalotherrespondentsechoed thissentiment.oneintervieweespokespecificallyabouthowheisworkingtoadjusttothe requirementsofnewregulationbeingputinplacetomitigatetheriskofbovinespongiform encephalopathy(bse).anotherindicatedthathumanehandlingrequirementshadbeena recentchallenge.thepaperworkinvolvedinmeetingregulatoryrequirementswasnotedasa burdenbyseveralpackers. Regardlessoftheirregulatorycategory,nearlyallsurveyrespondentsexpressedthatthey currentlyhaveapositiverelationshiptotheirinspector.ofthesevensurveyrespondents,two 35

37 arestateplants,fouraretaplants,andoneisusdainspected.ifoundthatownersofstate PlantshadnointerestinbecomingTAorUSDAInspectedPlants.Theyfelttheyhadsufficient businessopportunitiesengagingonlyinintrastatecommerce,andthereforefoundnoneedto switchtheirstatus.formostthedecisiontobeastateplanthadbeenmadeseveraldecades priorandhadneverbeenreconsidered.likewise,taplantshadnointerestinbecomingusda Inspected.SeveralrespondentsindicatedthatinspectionbyNCDA&CSstaffwaspreferredto inspectionbyusdaemployees,astheyfeltthatlocalregulatorsweremorelikelytobe understandingoftheirneedsandconstraints.whenaskediftheyhadeverreceivedassistance meetingregulatoryrequirementsfourofthesevensurveyrespondentsindicatedtheyhad, fromeitherthencda&csorncsu. NCSU smeatextensionspecialistfindsthatforthemostpartthestate ssmall meatpackershavealove haterelationshipwithregulations.thissentimentwasindeed expressedduringmyinpersoninterviewswithpackers.theyrecognizethatcomplyingwith foodsafetyregulationsiswhatallowsthemtheprivilegeofsellingproducttoconsumers,but arealsoextremelyfrustratedbytheconstantchangesandseeminglyneverendingstreamof paperworkinvolved.severalindicatedthattheneedtocreatenewhaccpprotocolsforeach newproductlineprocessedintheirfacilityactedasadeterrenttonewproductdevelopment. AccesstoCapital Whenaskedwhattypesofassistanceorsupportwouldbemostbeneficialtotheir businessmovingforwardthemostfrequentresponsegivenwas accesstocapital.inaddition, oneofthesecondmostnotedchallengesforsurveyrespondentswas lackofcapitaltodo 36

38 plantupgrades.inspiteofthispronouncedfrustrationwithalackofaccesstocapital,the majorityofsurveyrespondentslackedclearideasofhowtheymightusesuchcapital.fiveof sevensurveyrespondentsindicatedtheyareinterestedinopportunitiesforexpandingor growingtheirbusiness,butonlytwocouldofferspecificideasofinvestmentsthatwouldbe necessarytodoso. Marketing&Sales Thesecondmostfrequentresponsetoaquestionaboutthetypesofassistanceor supportthatwouldbemostbeneficialtosurveyrespondentswas marketingandsales.one respondentindicatedthatduetotheremotelocationofhisfacilitypotentialcustomershavea hardtimefindingthem.hefeltthiswasahindrancetohisbusiness,andthatmoreadvertising couldbeapotentialsolutiontothisproblem.thispackerhadaparticularlypassiveapproach tomarketing,takingwhateverbusinesscamehiswaybasedonhistoricrelationships,withno efforttosecureregularcontractsornewcustomers.thissamepackerexpressedadistinct disbeliefinthelong termpotentialofmarketsforsustainablelocalfoods.heviewedincreasing demandforlocalnichemeatproductsasatrend,andnotonehewaswillingtotakeabeton. Ofthoseinterviewed,threepackerswereactivelyseekingnewmarketopportunities,with aspecificinterestinofferinglocalmeatproductstolocalconsumers.however,thesepackers seemedtolackanunderstandingofhowtheymightaccessandservewhattheysawasgrowing nichemarketsforlocalfoods.oneprocessorwasparticularlyeagerforassistancetappinginto thesemarkets,ashebelievesthemtobeanexcitingopportunitytodiversifyhiscustomerbase andgrowhisbusiness.heexplainedthatthecorecustomerforhison siteretailoperationwas 37

39 adisappearingdemographicofolderruralconsumers,andadmittedthathedoesnot understandthewantsorneedsofconsumerslookingforsustainablelocalfoods.heaskedme anumberofquestionsaboutwhatpeopleinaplacelikechapelhilleat,andwasparticularly interestedinassistancewithproductdevelopment.hehadasensethatthisnewmarketwould appreciateproductslikesalamiorproscuitto,buthadnofamiliaritywiththeseproductshimself orhowtheyareconsumedbyothers. DuringthecourseofmyinterviewsIfoundthatveryfewpackersunderstoodthe importanceofbrandingorproductmanagement.mostlackedanunderstandingofthevariety ofactivitiesinvolvedinstrategicmarketingandsales.whiletwopackersindicatedthatthey hadstudiedbusinessincollege,mostaretradesmenwhohavealwaysworkedinthefamily business. BusinessPlanning&Management Theneedforassistancewithbusinessplanningandmanagementwasalsoidentifiedby thesesmallmeatpackers.noneofthesurveyrespondentsindicatedthattheyhadreceived suchassistanceinthepast.whenaskedanopenendedquestionabouttheirchallengesa numberofrespondentsindicateddifficultymanagingtheircoststructure.oneexplainedthat theircostsgoupeveryyear,sothatitisdifficulttostaycompetitive. DuringthecourseofthisresearchprojectIwasabletomakeanumberofobservationsin regardtothebusinesspracticesofthesesmallmeatpackers.ifoundthatmostdonotuse orotherbasiccomputertechnologyintheireverydayoperations.theyareheavily reliantonfaxmachinesandothermorebasictoolslikeinvoicebooksandotherpaperrecords. 38

40 WasteDisposal Onlyonesurveyrespondentnamedwastedisposalasachallengefortheirbusiness. However,severalintervieweesnotedthatfeeschargedforthecollectionofoffal 16 havesteadily increasedovertheyears.andmanyreflecteduponatimewhenrenderingcompaniespaid themfortheiroffal,sothatwastefromtheirfacilityactuallygeneratedanadditionalrevenue stream.oneindicatedthattheyusedtoreceiveamonthlycheckfromtherenderingcompany forupwardsof$400,butnowtheygetaninvoicefromthecompanyforthatamountormore. MostofthepackerswithwhomIengagedwerenothappywiththefactthattheyonly haveoneoptionfordisposaloftheiroffal.carolinabyproductsistheonlyrendereroperating innorthcarolina,andthushasaneffectivemonopolyoverthestate ssmallmeatpackers. Severalpackerswereveryuncomfortablewiththissituation,expressingthattheyfeltatthe mercyofthecompany,astheydon tseeanyotherviablealternativesforwastedisposal. CarolinaByproductswasrecentlyacquiredbyValleyProteins,oneofthefourlargestrenderers inthecountry. Opportunities Whenaskediftheywereinterestedinexpandingorgrowingtheirbusiness,themajority ofsurveyrespondentsindicatedtheywere.onlytwosaidno.oneexplainedthattheyhavea familyoperatedbusinessaswellasfarmland,andarealwaysbusyinboth.fromtheinperson interviewsiconductedifoundthatthesesmallmeatpackersaregenerallyalwaysinterestedin opportunitiestogrowtheirbusiness.infact,twofacilitieshadrecentlytakensignificantsteps 16 Offalisthetermusedforthewastepartsofabutcheredanimal,suchasbones,feet,andguts. 39

41 todoso.asnotedabove,withtheassistanceofthegoldenleaffoundation,onewillsoonbe installingnearlyhalfamilliondollarsworthofequipmenttooffermorevalue addedproducts totheircustomers.anotherrecentlyaddedafull servicepoultryprocessingfacilitytotheir operation,andiseagertoprocessmorechickensinthecomingyearandtobranchinto processingquail,ducks,andturkeyaswell. However,thesetwopackerstakingstrategicstepstogrowandexpandtheiroperations wereexceptions.mostintervieweesseemedtolackclearideasofhowtheymightgrowor expandtheirbusiness.theywereopentoopportunities,butnotactivelyseekingthem. When askeddirectlyaboutthebiggestopportunitiesforexpandingtheirbusinessveryfew respondentshadspecificortargetedresponses.oneindicatedfoodstampsasanareaof opportunity.oneidentifiedamoveintoprovidinglocalfoodstolocalconsumers.similarly, anotherstated themarketisendlessforhelpingindependentfarmerswithnaturalniche products. Duetohislocationandcapabilities,thisparticularpackerisintheuniquesituation thatnearly100%ofhiscustomersaresmallandmid sizedfarmerssellingtheirproductsat farmersmarketsandtoselectrestaurantsthroughoutthestate. Allsurveyrespondentsindicatedthattheywouldbeinterestedinopportunitiestoserve moresmalltomid sizefarmers.oneexplainedthattheirworkwiththisclientelehaddeclined overtheyears.thiswassomethingiheardmultipletimes thatbusinesswithsmalltomid size farmershaddwindledovertheyearsasthefarmershaddisappearedorincreasedtheirscale andturnedtocontractfarmingforlargepackers,butwaspickingupagain. IfoundthatmanyofthepackersthatIengagedwithwereinasortofCatch 22.Inorder tohaveamoreprofitablebusinesstheyrecognizedtheneedtoexpandandaccessnewmarket 40

42 opportunities.buttheywerelargelyunawareofwhatthesemarketopportunitiesmightbeand alreadystretchedthinandcouldnotaffordtoexpand,eitherfinanciallyorintermsofother resourcessuchasworkforce. CollaborativeSolutions Onewaythatsmallmeatpackersmightremaincompetitiveintoday smarketplaceisby workingtogether.whenaskediftheywouldbeinterestedincollaboratingwithothersmall meatpackerstohelplocalsmallandmid sizedfarmerstoaccesslocalmarkets,onlyone respondentsaidno.thisrespondentspecifiedthattheylikehavingasmall,independent business.throughoutthecourseofthisresearchifoundthatthesmallmeatpackerswhoi engagedwithweremuchmoreinterestedincollaboratingwithoneanotherthanianticipated. Oneexplainedthatotherpackers knowwhatyouaregoingthrough and maybehaveideas thatcouldhelpyou. Whenaskedaboutthespecificreservationsthattheywouldhaveaboutcollaborating withothersmallmeatpackers,fewwerenamed.tworespondentsdidindicatethat independencewasveryimportanttothem.oneforliabilityreasons,notwanting tobetiedto whatsomeoneelsedoes.anotherbecausetheywereconcernedabouttightlycontrolling theirgrowth,preferringtoremainsmallduetolimitedresources. GoingintothisprojectIhadassumedthesesmallmeatpackerswouldbefiercely independentsmallbusinessowners.ifoundthattheydoindeedtakegreatprideintheir businesses,andvaluetheirindependence.buttheyalsorecognizetheneedtocreatenew marketopportunitiesforthemselves.andtheyrecognizethattheydon tnecessarilyhavethe 41

43 marketingandsalesexpertiseortechnicalcapabilitiesneededtoaccesstheseopportunities. Theyknowthattheyareinahighlyregulatedindustry,andthattheircompetitivenessisin manywaysdictatedbythelargerindustrystructurethatsurroundsthem.therefore,theyare opentonewwaysoffindingtheirniche. 42

44 Chapter5:RecommendationsandConclusion Thepreviouschapterdiscussesindepththefindingsofthisresearchproject inthehopethattheywillhelpplannersandotherstoidentifythecurrentbarriersand challengestointegratingnorthcarolina ssmallmeatpackersaspartofadynamiclocalfood economy.inthischapteriidentifywhatibelievetobethekeyfindingsofthisstudy,andoffer anintegratedanalysisofthesefindingsalongwithasetofrecommendationsforpotential institutionalandothersolutionstoaddressthechallengesandopportunitiesidentified.in addition,iprovideaconclusionandsuggestionsforfurtherresearch.thefindingsand conclusionspresentedinthischaptergivehopethattheexistenceofexcesscapacityamongst thepackerswhoparticipatedinthisresearchprojectindicatesthataddressingkeychallenges withinthesectorcouldresultinamoreviablelocalmeatsvaluechainwithinnorthcarolina. KeyFindings - ThereissignificantexcesscapacityamongstthesetofsmallmeatpackersinNorth Carolinawillingandabletoworkwithsmallandmid sizedfarmersseekingaccesstolocal markets. - Thereisadramaticneedformorevalue addedprocessingcapabilitieswithinthesector. Upgradestopackagingandlabelingequipmentarealsoneeded. - Recruitingandmaintaininganadequatelytrainedworkforceisaseriouschallengefor thesesmallpackers.thesectorisheavilydependentupontheexpertiseofasmallgroup ofseniorcuttersandplantmanagerswhohavebeenintheindustryforupwardsof20 years.youngpeoplearenotbeingattractedtothesectorasaprofession. - Thesmallmeatpackerssurveyedarenotablyfrustratedbyconstantchangesinfoodsafety regulations.theneedtodevelopnewhaccpprotocolsforeachnewproductlinebeing processedinafacilityactsasadeterrenttonewproductdevelopment.however,most surveyrespondentshaveproductiverelationshipswiththeirinspectors,andcangetthe supporttheyneedwhencomplianceproblemsarise. 43

45 - Severalsurveyrespondentsexpressedaninterestinofferinglocalmeatproductstolocal consumers.however,theylackedanunderstandingofhowtheymightaccessandserve whattheysawasgrowingmarketsforsustainablelocalmeats. - Currentlythemajorityofthesesmallmeatpackersareoperatingwithoutaccessto orbasiccomputersoftwarepackages.theyarethereforeheavilyreliantonmanual processesandpaperrecords. - Surveyrespondentsweresurprisinglyopentocollaboratingwithoneanothertoaddress thechallengesandopportunitiestheyface. AnalysisofFindings&Recommendations ` InthefollowingsubsectionsIprovideananalysisofmykeyfindings,puttingtheminto conversationwitheachotherandanunderstandingoftheinstitutionalandotherresources availablewithinthestateofnorthcarolinatomakeasetofrecommendationsforpotential actionsforaddressingthechallengesfacedbynorthcarolina ssmallmeatpackers. CustomersandCapacity Themajorityofsurveyrespondentsindicatedtheycouldaccommodateincreasedinputto theirfacilitybymakingslightchangestotheiroperations,andthattheywouldwelcomeit. Thesesamerespondentsnotedthattheywouldwelcomemorebusinessfromsmalltomid size farmers.infactmanysawservingthesefarmersastheirbiggestbusinessopportunity.in conversationwithotherfindings,theexistenceofexcesscapacityamongstthesesmall meatpackers,andtheirinterestinworkingwithsmalltomid sizefarmers,suggestthat improvementstothesectorinregardtoworkforceandcapabilitiescouldresultinamoreviable anddynamiclocalmeatsvaluechain.thecapacityofthestate ssmallmeatpackingfacilitiesis notthelimitingfactortogrowthanddevelopmentofmarketsforlocalnichemeatproducts. 44

46 Oncesolutionsareprovidedforkeyoperationalchallengeswithinthesector,itwillnolonger actasabottleneck. CapabilitiesandWorkforce Asnotedinmyfindings,onlyonerespondentindicatedthattheneedtohiremore workerswasalimitingfactorintheirabilitytoaccommodateincreasedinput.thisindicates thatwhilepackerscertainlystrugglewiththeneedformoreworkers,themorepreciseneedis forskilledworkersthatwillallowthemtoproducethequalityandvarietyofproductsnecessary tocompeteinthemarketplace. Whenfarmershavetotravelgreatdistancestothenearestprocessingfacilitythiscuts intoprofitsandcanstresstheirlivestock,resultinginalowerqualityofmeat.whilesmall meatpackersarespreadfairlyevenlythroughoutnorthcarolina,theproximityofaprocessoris notalwaystheirmostimportantattribute.itisextremelycommonthatthenearestslaughter facilitydoesnotprovidealltheservicesafarmerdesiresinordertooptimizetheirprofits.only onesmallmeatpackerinnorthcarolinaiscurrentlycapableofproducingafullrangeofvalue addedproducts.asaresultofgrantfundingrecentlyawardedbythegoldenleaffoundation, anotherfacilityrecentlyinstallednearlyhalfamilliondollarsinvalue addedprocessing equipment.however,significanttrainingwillberequiredbeforetheyareabletooptimizethe useofthatequipment. NorthCarolina ssmallmeatpackersneedhelpattractingandretainingatrained workforce.whilesomeindicatedthattheyhavereceivedassistancefromtheirlocal unemploymentofficeidentifyingpotentialnewhires,nonehadreceivedsupportwiththe 45

47 traininganddevelopmentofskilledworkers. Theproblemthesepackersfacerecruitingyoungpeopleasentry levelmeatcuttersisnot specifictonorthcarolina.duetoshiftsintheproductionpracticesandproductmixoflarge packers,andrelatedchangesintheretailgrocersector,butcheryisadisappearingprofession (MacDonaldetal,2000).AccordingtotheUSBureauofLaborStatisticsemploymentofhighly skilledbutchersisdeclining.in1994therewere218,994skilledbutchersandmeatcuttersin theunitedstates.by2002therewereonly132,000,andthisnumberhascontinuedtodecline (Martin&Lawson,2005). Inordertoremedytheworkforceproblemsfacingthestate ssmallmeatpackersi recommendthedevelopmentofacommunitycollegeprogramaimedatreinvigoratingthelost artofbutchery.theprogramcouldleveragetheembodiedknowledgeoftheremainingsenior cuttersinthesector,ensuringthatitisnotlost.itcouldalsoserveasalinkbetweenlocalchefs andsmallmeatpackers,resultingininnovationsinproductdevelopment,andimproved linkagesbetweentheseruralpackersandthestate smostactivemarketsforlocal,nichemeat products.trendsintheculinaryworldtowardworkingwith lost cutsofmeatandutilizing wholeanimalshavesparkedaninterest nose to tail eating,andpiquedanewlevelof consumerinterestinbutchery.suchdynamicssuggestthatthroughstrategicpartnerships, outreachandeducationthereisapotentialformakingthesectormoreattractivetoyoung people. NCSUishometoawell reputedschooloffoodsciencethatofferscourseworkand degreesinmeatscience.howeverifoundthatthisprogramisprimarilyorientedtoward industrialscaleproductionofmeatproducts.theirlabsarefundedbylargemeatpacking 46

48 companies,andstudentsandstaffaretrainedtostrivefor safe,affordable,andabundant food withanimplicitassumptionthatscaleistheonlywayofachievingthatgoal.whilethe MeatExtensionSpecialisthousedintheprogramdoesprovideaconsiderableamountof technicalassistancetosmallmeatpackers,mostgraduatesleavethestatetoworkforlarge foodcompanies.therefore,tiesbetweenthisprogramandtheproposedcommunitycollege curriculumwouldbeimportant,butlikelylimitedinscope. Regularworkshopsthatallowsmallmeatpackersmorefrequentandstructuredaccessto facilities,staff,andstudentsinncsu sdepartmentoffoodsciencewouldbeanother importantwaytoachievethetraininginvalue addedprocessingandtheassistancewithnew productdevelopmentneededwithinthesector.irecommendthatthencda&csdevelopand sponsorsuchworkshops. Throughinteractionswithvariousactorsinthestate slocalfoodsmovementihave discoveredthatthereislatentdemandforproductslikeanorthcarolinaproscuitto,orlocally producedbolognaandhotdogs.currentlysmalltomid sizefarmersseekingtomeetthis demandmusttraveloutofstate,toprocessorsasfarawayaspennsylvania.oncetheabove recommendedtrainingandpartnershipsareimplementedfurtherinvestmentsinthestate s valueaddedprocessinginfrastructurewouldbeassuredtogeneratesignificantreturnsforboth processorsandthefarmerstheyserve. Investmentsinbetterpackagingandlabelingequipmentwouldalsogeneratenewmarket opportunities.noneofthepackerswhoparticipatedinthisstudyarecapableofproviding retailreadypackaging.thisseverelylimitstheirabilitytohelpfarmersseekingaccesstoretail andfoodservicemarkets.retailersinparticularhavehighexpectationsforshelf ready 47

49 packaging,demandingthatitensureanoptimumshelflifewhilealsomeetingconsumer expectations.irecommendthatasassistanceisprovidedtothesector,andimprovementsin theircapabilitiesaremade,strategicinvestmentsbemadeintheequipmentnecessaryto supplyretailerswithshelf readyproducts. Regulation Asthisresearchprojectwasbeingconducted,reportssurfacedinlocalnewspapers suggestingthatnorthcarolinagovernorbeverlyperduewasconsideringendingthestate s meatandpoultryinspectionprogramsasoneofmanystepstomanageagrowingbudgetcrisis (Christensen,2009).Thisisnotthefirsttimethattheprogramhasbeenonthechoppingblock, butpastattemptstocutithavefailed.thisislargelyattributedtothefactthatfederalfunding covers50%oftheprogram soperatingcosts.theprogramleveragesimportantfederaldollars andextendsthecapacityoftheusda sfoodsafetyandinspectionserviceforinspectingsmall andverysmallplants. IfNorthCarolina smeatandpoultryinspectionprogramsweretobecuttheusdawould berequiredtotakeoverinspectionofallplantscurrentlyinspectedbyncda&csstaff. AnecdotalaccountssuggestthatwhentheUSDAhastakenoverstateinspectionprogramsin otherstates20 30%ofverysmallplantshaveclosed.Conventionalwisdomsuggeststhatsmall meatpackersinstateswiththeirownstateinspectionprogramsareprovidedmore personalizedguidance,particularlyindevelopingandimplementinghaccpprotocols.inone recentstudy,stateinspectiondirectorsfromstatesthathaveretainedtheirstatemeat inspectionprogramscitedgreatereaseinrespondingtotheuniqueneedsofprocessorsand 48

50 thedesiretodeveloplocalornichemarketsasreasonsforkeepingtheprogram(unppc,2001). Thesesentimentsareverymuchinlinewiththoseexpressedbymanyofthepackerswho Iengagedwithduringthecourseofthisproject.Inaddition,mypresenceattheNCMPAMid WinterEducationalMeetingallowedmetowitnessfirsthandtheproactivewayinwhichthe NCDA&CSengageswiththesector.Byallaccounts,theagency smeatandpoultryinspection Divisiondoesacommendablejobprovidingnecessarytechnicalassistancetothestate ssmall meatpackers.therefore,itismystrongrecommendationthatnorthcarolina sstatemeat inspectionprogramsnotbecut,butcontinuetobefundedattheircurrentlevels.inorderfor NorthCarolina ssmallmeatpackerstosurviveandtobecomemoreviablelinksinthestate s localfoodeconomyitiscriticalthatboththencda&csandncsucontinuetheirrolesin supportingthesector. Asnotedpreviously,allsurveyrespondentsreportedpositiverelationshipswiththeir inspectors.ifoundthatregulationisnotachallengefromacomplianceperspective,butrather fromaresourcesperspective.frequentchangesinregulationwerereportedtobeamajor sourceoffrustration,creatingaddedexpensesandhinderingproductivity.packersexplained thateachproductlinecomingoutoftheirfacilityrequiresitsownhaccpprotocoland correspondingbatchofpaperwork.therefore,anticipationofregulatoryburdensissomething thatkeepsprocessorsfromengaginginnewproductdevelopment. Foodsafetyisamajorandemergingissueforthelocalfoodsmovement.Asmore consumersaresourcingtheirfoodsfromfarmer smarkets,andaslocalsourcinginitiativessuch asfarm to schoolprogramsarebecomingmorewidespread,smalltomid sizefarmersare beingaskedforincreasingnumbersofcertifications.localfoodsadvocatesarestrugglingto 49

51 findanapproachtomanagingfoodsafetythatisscaleappropriateandmindfulofthelimited resourcesavailabletosmallandmid sizedfarmers. Smallmeatpackersarewellpositionedinthisregard.Theyarealreadyoperatingunder tightregulatorycontrol,meetingstrictstandardsforparticipatinginlocalcommerce.however, itisunclearthatsubjectingsmallmeatpackerstoasetofconstantlychangingregulationsthat arelargelydesignedtomonitoractivityinlargeindustrialmeatpackingplantsisappropriate. Onepackerexplainedwhyhefeelsthatsmallmeatpackersshouldberegulatedseparately. Whilehebelievesstronglyinoperatingacleanfacilityandmaintaininggoodpaperwork,he feelsthattheregulationsheissubjecttoareoverkillforasmallfacilitylikehisown,and perhapsinsufficientforlargeindustrialfacilities.heobservedthatthemeatrecallscausing constantchangesinregulationareoccurringalmostexclusivelyinlargeplants.becauseoftheir scale,inspectorsinthoseplantscouldn tpossiblycatcheverypotentialproblem.butinafacility likeisowntheratioofanimalstoinspectorsisentirelydifferent. Basedonmyresearchfindings,andanunderstandingofemergingissueswithinthelocal foodsmovement,irecommendresearchanddevelopmentofscaleappropriatefoodsafety regulationforsmallmeatpackers.thisworkcouldbedoneasacollaborativeeffortbetween theusda sfoodsafetyandinspectionserviceandasetoftheremainingstatelevelmeatand poultryinspectionprogramsinthecountry. AccesstoCapitalandBusinessPlanning&Management IfoundthatlackofaccesstocapitalwasapersistentcomplaintforNorthCarolina ssmall meatpackers.andyetthemajorityofthesepackerslackedspecificideasforinvestments 50

52 necessarytogroworexpandtheirbusiness.itiscriticalthateffortstosupportthestate ssmall meatpackersarenotlimitedto throwingmoney atthesector.myfindingssuggestthatthe majorityofthesepackersneedassistancewithbusinessplanningandmanagement,andhelp understandingandaccessinglocalmarketsfornichemeatproductsbeforeinvestmentswithin thesectorwouldhavesubstantialreturns.ibelievethattherealpainpointforthesepackersis notaccesstocapital,butrathertheincreasinglytightmarginswithinwhichtheyoperate,and theirinabilitytoidentifyandgoafterlucrativegrowthopportunities. Onlytwoofthesmallmeatpackersinteractedwithduringthecourseofthisresearch projecthavereceivedanylevelofprofessionalbusinesstraining.idon tbelieveittobemerely acoincidencethatthesesametwopackersareconsideredbymanyindustrystakeholderstobe themostsuccessful,andthemostviablelinksinthestate slocalmeatsvaluechain.getting localmeatsintolocalmarketsatapricethatconsumerswillpayisnoeasytask.small meatpackersfaceincreasinglyhighoperatingcosts.theystruggletoperformatthesame efficienciesaslargepackerswhoseproductstheymustcompetewithinthemarketplace. Remainingcompetitiveasasmallmeatpackerrequiresadegreeofprofessionalbusiness planningandmanagementthatmostsmallmeatpackersarenotcurrentlycapableof.the sectorneedsanincreasedfocusonbusinessfundamentals.irecommendthatnorthcarolina s smallmeatpackersmakeuseofthestate sexistingresourcesforsmallbusinesses.andthat businesscounselorswithinthestate ssmallbusinessandtechnologydevelopmentcentersdo coordinatedoutreachtothesector. NorthCarolina ssmallmeatpackersneedtobebroughtintothe21 st centuryinregardto basicbusinessmanagement.increasedcomputerliteracywithinthesectorwouldallowforthe 51

53 useoffundamentalbusinesstoolssuchase mailanddigitalrecordkeeping.andincreased automationofcertainoperationalparameterssuchastemperaturecontrolwouldcreatemuch neededefficiencies.currentlyveryfewprocessesinthesesmallmeatpackingfacilitiesare automatedandthereisheavyrelianceonlow techmethodsofcommunicationandrecords management.thisisasignificantproblemforaheavilyregulatedindustrythatrequires continuousmonitoringofvariousoperationalprocessesandatremendousamountof recordkeeping.therefore,irecommendthatthesectorbesupportedbothfinanciallyand technicallyinmakingnecessarytechnologicalupgrades. Marketing&SalesandCollaborativeSolutions Threeofsevensurveyrespondentsexpressedaninterestinofferingmorelocalmeat productstolocalconsumers.buttheylackedanunderstandingofthemoststrategicwaysthey mightdoso.currently,theonlywaythatnorthcarolina ssmallmeatpackersareparticipating inthelocalmeatsvaluechainisthroughco packingarrangementswithsustainablelocal farmers.yetthereistremendousopportunityforthemtoprovidelocalnichemeatproductsto localretailgrocersandrestaurants.tobecomemoreviableandactivelinksinthelocalfood systemthesepackersneedassistanceunderstandingtheneedsandpreferencesofthe sustainablelocalfoodsconsumer,andthewaysinwhichtheymightaccessthatconsumer. Thereisaclearneedforanintermediaryorganizationtoactasamarketingandsales cooperativefornorthcarolina ssmallmeatpackers.duringthecourseofthisresearchproject I velearnedthatdemandfromthestate snaturalfoodgrocersandfinediningestablishments foraconsistentandaggregatedsupplyoflocalnichemeatproductsishigh.thereisadefinite 52

54 opportunitytocreateandsupplythesechannelmarketswithalineofpremiumbrandedlocal meatproducts.doingsowouldsolveanumberofpainpointsforthoselookingtobuilda sustainablelocalfoodsystem.yetpackersarenotequippedtocarryoutthebrandingand productmanagementactivitiesnecessarytoservethesechannelmarkets. Irecommendthecreationofanintermediaryorganizationtodothebrandingand relationshipmanagementnecessarytoconsistentlygetasupplyofsustainable,localmeat productstomarket.thecurrentncchoicespilotdemonstratesawillingnessfromlocal retailersandchefstobeflexibleandpatientasthesupplychainforsuchamarketingandsales cooperativeisdeveloped.andsurveyresponsesindicatearemarkablelevelofinterestin collaborativesolutionsamongstthestate ssmallmeatpackers.thesepackersunderstandtheir weaknesses,andrecognizetheneedtocreatenewmarketopportunities.theyacknowledge thepotentialgainstobehadfromaffiliationwithanorganizationthatcouldhelpthemto accessgrowingmarketsforsustainablelocalfoods,andareopentoworkingwithoneanother tosecurethesegains. WasteDisposal SmallmeatpackersoperatinginNorthCarolinacurrentlyhaveonlyoneoptionforproper disposalofoffal.thereisonlyonerenderingcompanyinoperationinthestate,andlandfills willnotacceptresidualsofanimalcarcasses.thereisapressingneedforinnovationinthe arenaofwastedisposalforthestate ssmall scaleslaughterandprocessingfacilities. Nationally,significantresearchhasbeendoneoncompostingasameansfordisposingofoffal. Theterm naturalrendering hasemergedtodescribetheprocess.irecommendthat 53

55 resourceswithinthencda&csorncsubeusedtoinvestigatetheviabilityofcompostingasa costeffectivealternativefordisposalofoffal,andtodeveloprecommendationsregardingbest managementpracticesforoffalcomposting. Conclusion WhilethechallengesfacingNorthCarolina ssmallmeatpackersaresignificant,thereare anumberofresourcesavailabletothesector.ingeneral,ifoundthattechnicalsupportfor smallmeatpackersinnorthcarolinaisstrong.themajorityofsurveyrespondentshadreceived someformoffreetechnicalassistanceatsomepointintheirhistory.additionally,thosewho hadnottakenadvantageofthisassistanceknewthatitwasavailable.themostpopularkindof assistancebeingreceivedinmeetingchallengeswaswithregulatoryrequirements.however, processorshavealsoreceivedassistanceincreasingtheirprocessingefficiencyandsecuring accesstocapital. ThegrantrecentlyawardedbyTheGoldenLeafFoundationtoassistoneprocessorwith theacquisitionofnewvalue addedprocessingequipmentisasignthatimportantfundersare beginningtoseethelinkbetweensupportingnorthcarolina ssmallmeatpackersandcreating opportunitiesforthestate ssmallandmid sizedfarmers.yettostopsmallmeatpackersfrom beingabottleneckwithinthelocalfoodsmovementmoreproactivestrategiesareneeded. Althoughitdidnotrankhighasachallengeinsurveyresults,theincreasinglyhighcost ofdoingbusinessisathreadthatrunsthroughoutmanyofthechallengesidentifiedbysurvey respondents.frequentchangesinregulationcreateunanticipatedexpenses,hinder productivity,andareahiddencostofinnovation.marginsforthesepackershavegotten 54

56 slimmerandslimmerovertheyearsasthecostofnecessitieslikewastedisposalandpackaging materialshaveescalated,alongwiththecostofimportantemployeebenefitssuchashealth insuranceandworkers compensation. Nationally,innovationanddifferentiationofproducthaveallowedanumberofsmall meatpackerstostayafloatwhilemanymorehavebeenforcedtoexittheindustry(petersen, 2005).Smallmeatpackerscannotcompeteonefficiency.Theymustfindothersourcesof competitiveadvantage.fornorthcarolina ssmallmeatpackersapromisingpotentialstrategy fordifferentiatingthemselvesisparticipationandinnovationwithingrowingnichemarketsfor localmeat.however,supportforsuchparticipationandinnovationisnecessary.publicly fundedresearchandoutreachwithinthestatehavehistoricallyfocusedveryheavilyonthe needsoflarge scaleoperations.fundingsourcesneedtoberedirectedinordertoprovidethe cost sharingnecessaryforsmallprocessorstoinnovateandthrive. CurrentlytherelationshipbetweenNorthCarolina ssmallmeatpackersandthesmallto mid sizefarmersinthestatepracticingsustainableagricultureislimitedtoco packing arrangements.theseco packingarrangementsareallowingsomefarmerstoparticipatein directmarketsforlocalfoods.however,thesearrangementsdonotcreatemarket opportunitiesforthestate slowresourcefarmers,whohavelittleinterestorabilitytomarket theirownproducts.collaborativesolutionsarenecessaryinordertomovebeyonddirect marketsandcreatelinkagestothestate sretailgrocersandrestaurants,andtodevelopthe rangeofvalue addedproductsthatlocalconsumersdemand. Thecurrentrolethatthesmallmeatpackersexaminedplayineducatingfarmersonthe bestwaystofullyutilizeanimalsinorderminimizewasteandmaximizeprofitssuggestthat 55

57 theyareimportantintermediariesthatneedtobebolstered.myfindingsalsosuggestthat thereisagrowinginterestwithinthesectorinunderstandingandaccessingnichemarketsfor localfoods.bringinginterestedpackerstogetherintoaconsortium,oramarketingandsales cooperative,wouldbeaproductiveandimportantstepindevelopingthemasamoreviable anddynamiclinksinthelocalfoodsystem. Furtherresearchisnecessarytobuilduponthefindingsandrecommendationspresented inthispaper.thereisadefiniteneedforacompanionpiecetothisresearchprojectthat engagesdirectlywiththesmalltomid sizefarmersinnorthcarolinaproducinglivestock.an understandingoftheirperspectiveonsmallmeatpackers,particularlytheirviewoftherolethat thesepackersplayinhelpingthemtoaccesslocalmarkets,iscritical.itisalsoimportantto determinethelevelofinterestthatthesefarmershaveinworkingcollaborativelytotake advantageofnewmarketopportunities.inputfromlocalfoodconsumersandchannelmarkets isalsocriticaltofullyunderstandthebarrierstoexpandinggrowthinlocal,sustainablemeat productioninnorthcarolina.marketresearchisneededtoquantifylocaldemandfor sustainablelocalmeatproducts,willingnesstopayforthoseproducts,andtodeterminewhat attributesoftheseproductslocalconsumersmostvalue.finally,thereremainsthe unansweredquestionofhowtogetmoresmallmeatpackersinthestatetoengagewithsmall tomid sizefarmers.puttingmyresearchfindingsintoconversationwithfindingsfromthe researchsuggestedherewillprovideinsightintoprogramsandsupportsthatcanbedeveloped toeducateandengagemoreofnorthcarolina ssmallmeatpackersinthestate slocalmeats valuechain. 56

58 References CenterforEnvironmentalFarmingSystems(CEFS).Nodate. CEFSHomePage, Retrievedfrom Christensen,Rob.2009.Perduesaysslashmore.TheNews&Observer,February26,2009.Retrievedfrom Clause,Reginald,MaryHolz Clause,SaraDurhkopf,A.SeverinJohnson,RickParker,MadelineSchultz&Craig Tordsen.November2003. Co locationofindustrieswithsmalllivestockslaughterfacilities, PresentedbyIowa StateUniversityExtensionValue AddedAgricultureProgram.Retrievedfrom EconomicResourceService(ERS) BriefingRoom:IndustryFoodSafetyActions: IndustryStructure, FoodSafetyandInspectionService(FSIS).July1996. KeyFacts:ImpactofHACCPRuleonSmallBusinesses, Retrievedfromhttp:// FoodSafetyandInspectionService(FSIS).Nodate. FSISRegulations&Policies, Retrievedfrom Geary,Bob&Sorg,Lisa.2007.BigPig.TheIndependent,April4,2007.Retrievedfrom Harper,CharlesL.&BryanF.LeBeau.2003.Food,Society,andEnvironment.Prentice Hall:NewJersey. Lanier,Mike IndependentFarmers DirectoryofSlaughterFacilitiesinNorthCarolina, Levy,Brian.2001.StateInspectorsReviveLocalMarkets,TheJournalofNewRulesProject,Winter.Retrievedfrom MacDonald,JamesM.,MichaelE.Ollinger,KennethE.Nelson&CharlesR.Handy.ConsolidationinU.S. Meatpacking.FoodandRuralEconomicsDivision,EconomicResearchService,USDA.AgriculturalEconomic ReportNo.785. Martin,Aurora&Lawson,DebraS.November2005.SolvingtheLocalMeatConundrum:MeatProductionand ProcessinginOregonandWashington. NationalAgriculturalStatisticsService(NASS) NorthCarolinaAgriculturalStatistics, NicheMeatProcessorAssistanceNetwork(NMPAN).Nodate. NMPANHomePage, Retrievedfrom NorthCarolinaCooperativeExtension(NCCE) CommunitySupportedAgriculture(CSA)ResourceGuidefor Farmers, NorthCarolinaDepartmentofAgriculture&ConsumerServices(NCDA&CS).Nodate. NCDA&CSMeat&Poultry HomePage, Retrievedfromhttp://

59 NorthCarolinaDepartmentofAgriculture&ConsumerServices(NCDA&CS).February2007. NorthCarolinaleads nationinlossoffarms again, 07farmloss.htm PackagedFacts.May2007.FreshandLocalFoodintheU.S. Petersen,Hilde.2005.SustainingSmallMeatpackersPolicyDiscussionPaper.Retrievedfrom Stull,DonaldD.&MichaelJ.Broadway.2004.SlaughterhouseBlues:TheMeatandPoultry IndustryinNorthAmerica.(ForewardbyEricSchlosser).Wadsworth:Toronto. UnitedStatesDepartmentofAgriculture(USDA). 2007CensusofAgriculture, Retrievedfrom UniversityofNebraskaPublicPolicyCenter(UNPPC).May2001. PotentialImpactsofStateMeatandPoultry InspectionfortheStateofNebraska:FinalReport,

60 Appendices

61 AppendixA

62 Survey to Determine Challenges and Opportunities for NC s Small Meatpackers This survey is being conducted by Tina Prevatte, a graduate student in UNC-Chapel Hill s Department of City and Regional Planning. It will take approximately 15 minutes to complete, and the information collected will be used to determine the diversity of concerns and constraints being felt by North Carolina s small meatpackers, and to put forth a set of recommendations for potential policy changes or other next steps necessary to support the sector. What is the name of your business? Name of person filling out this survey? 1. What services does your facility provide? Check all that apply. Slaughter Certified Organic Processing Custom Exempt Processing Certified Humane Handling USDA Inspected Processing Primal Cuts NCDA Inspected Processing Retail Cuts Value-Added Processing (smoking, aging, grinding, sausage, brining, curing, etc.) Please specify: Other (e.g., kosher or halal processing): 2. What sort of packaging/labeling does your facility provide? Check all that apply. Cut and wrap. Please specify: Paper wrap Tray and shrink Vacuum sealed Other: Retail-ready packaging. Please describe: Other: 3. What is the current maximum capacity of your facility for each species processed? Please indicate if you are reporting by week, month, or year Cattle Hogs Poultry Other: 4. Do you have a minimum processing requirement per customer? No Yes Minimum charge? Minimum number of animals? Cattle Hogs Poultry 5. Approximate per head price of your services? Cattle Hogs Poultry 6. On average, what does it cost you to process each animal? Cattle Hogs Poultry

63 7. How many animals did you process in 2008, and how many are you estimating for 2009? Please indicate if you are reporting by week, month, or year Cattle Cattle Hogs Hogs Poultry Poultry 8. If customers brought in more animals in the future, would your facility be able to accommodate the increased input? Yes, our facility is currently able to accommodate increased input Yes, our facility could accommodate increased input by implementing the following changes (e.g., hiring more workers): Yes, but only during certain times of the year What months: No, our facility is already processing at maximum capacity Other: 9. How many (full-time equivalent) production employees do you currently have? Please circle or more 10. On average, how many years of experience do your meat cutters have? Please circle On average, how much are your meat cutters paid? Please circle. $5-10/hr $10-15/hr $15-20/hr $20-25/hr 12. If your facility is USDA inspected for slaughter and processing, how would you describe the availability of a USDA inspector at your facility? A USDA inspector is on-site at all times A USDA inspector is on-site part-time How often is the inspector on-site? 13. If your facility is not USDA inspected, why not? Check all that apply. Our facility is at full capacity with custom exempt processing Our facility is at full capacity with NCDA inspected processing Our geographic location is too remote No demand from clients for USDA inspection Regulatory requirements too complex Too expensive to comply with USDA inspection requirements Please explain: NCDA inspection is preferred Please explain why: Other: 14. Do you have any ongoing regulatory issues or challenges? Please explain.

64 15. Who are your primary customers? Please indicate what % of your business they represent. % Contract farmers % Retailers % Independent farmers % Restaurants % Hunters % Other: 16. If you buy live animals for processing and distribution under your own label, where do you purchase them? At auction Direct from farm Please list name(s) of farm(s): Other: Not applicable 17. If you distribute meat under your own label, what is your method of product distribution? Check all that apply. Direct sales Restaurants Retailers Institutional foodservice market (e.g., hospitals) Distributors/Wholesalers Other: Not applicable 18. Are you interesting in expanding or growing your business? No Please explain: Yes Please explain: 19. Are you interested in serving more independent farmers? No Please explain: Yes Please explain: 20. What are your biggest challenges to working with independent farmers? Check all that apply. Inconsistent number of animals Special requests for processing They don t understand meat processing They expect organic certification They expect animal welfare certification Other: 21. What are currently the biggest challenges to the success of your business? 22. What types of assistance or support have you received in the past? Please indicate by whom. Assistance meeting regulatory requirements (e.g., HACCP): Finding and retaining capable labor: Training employees: Increasing processing efficiency: Business skills (e.g., management, financial planning, cost accounting) : Engineering/process flow: Marketing and sales/communications: Access to capital: Other:

65 23. What types of assistance or support would be beneficial to your business? Please rank top 3. Assistance meeting regulatory requirements (e.g., HACCP) Finding and retaining capable labor Training employees Increasing processing efficiency Business skills (e.g., management, financial planning, cost accounting) Engineering/process flow Marketing and sales/communications Access to capital Other: 24. If you are interested in growing or expanding your business, what do you see as your biggest challenges to doing so? Please rank top 3. Finding and keeping a trained workforce Access to training programs for staff Business planning and management Marketing expertise Waste disposal problems Lack of capital to do plant upgrades Need assistance with product distribution Cold storage capacity High operating costs HACCP or other regulatory compliance Other: 25. What do you see as the biggest opportunities for expanding your business? 26. Would you be interested in collaborating with other small meatpackers to help local independent farmers access growing local retail and restaurant markets? No Please explain why: Yes Please explain why: 27. What reservations would you have about collaborating with other small meatpackers? 28. Do you have a plan to sell or pass your business on (a succession plan)? If so, what is it, and how many years until you would like to retire? Thank you for taking the time to complete this survey. Any additional comments you have in regard to challenges and opportunities for small meatpackers in NC are welcome below.

66 Appendix B: Locations of Small Meatpackers Surveyed