There’s lots of talk about how the beef industry needs more small processing plants to combat the power of the Big Four beef packers. Becoming a small beef packer is the best way I know to lose your shirt in the shortest possible time. I’ve known two guys who tried it, and they both lost a million dollars. To build a new small plant will cost you 1.2 million dollars which will only process 20 head per week! Plus, the meat has to be inspected by a federal inspector.
The fact that we have no price discovery in fat cattle is because of contract production like they have in the pork and poultry industries. Contract production got us into this mess, and it can get us out, only it’s not the contract the Big Four want you to sign.
I’ve known since I was a freshman in high school how to compete with meatpackers. My ag teacher liked to start FFA members out with a lamb project where they’d feed one or two lambs a diet of alfalfa hay and cull lima beans, which were plentiful in our area, and take the lambs from 60 pounds to 100 pounds. Our chapter had a waiting list of locals who loved the final product, and in 40 years, there was NEVER a complaint about the quality of the lamb, and no one got sick due to unsanitary slaughter conditions. We got around the rule that says the final product had to be federally inspected by exposing a loophole in the law big enough to drive a semi through. Folks with business degrees from Harvard and Wharton like to call what we did a “workaround.”
You see, I didn’t really own the two 60 pound lambs I fed, watered, and cleaned up after every day. No, they were owned (wink, wink) by two people on our chapter’s waiting list who craved the lamb. There was even a page in our FFA project books for any such contracts that we entered into. My customers had full visitation rights if they wanted to see how their lamb was being raised. Talk about transparency! I’d deliver the lamb carcass that we killed in our school’s farm shop to a local butcher who then cut it up according to the specifications of the owner of the lamb. The contractee would then pay me thirty dollars for fulfilling the contract. Neither the lamb nor the facility had to be federally inspected because it was, and still is, legal for the owner of an animal to process it himself or have it done for him, as long as they are the final consumer.
This was all made possible because most folks back then had a big freezer on their back porch that would hold a half a beef and a lamb, and they never had to be at the mercy of supply chain issues like we are now.
I have a friend who made a lot of money on a variation of this theme by buying bull calves at auction, feeding them, and then selling the animals to people who liked to kill them in the manner demanded by their religion. My friend sold them the animal, and then they killed it using my friend’s facilities. To my knowledge, my friend never spent a day in jail, at least for animal-related issues. Hunters do the same thing every year when they shoot a deer, elk, or moose and process it themselves.
I can’t say that I got rich off the two lambs (I only ended up clearing $3.00 per head), but it gave me the idea for my much larger rabbit enterprise where I took care of some thirty does that I sold (double wink, wink) to final consumers who ate the rabbits their does produced. I admit I may have been working in a little bit of a gray area here, but the statute of limitations ran out long ago, so na na nananny goat.
So for those of you itching to go into competition with Tyson, JBS, or Cargill, I have a much better idea. Just send me the $1.2 million you’d spend on a mini-slaughterhouse, and I’ll go to Las Vegas and shoot craps until all the money is gone. Believe me; we’ll both have a lot more fun.
