Push to prevent next meat shortage hits big obstacle

MAXWELL, IOWA >> Sudden meat shortages last year because of the coronavirus led to millions of dollars in federal grants to help small meat processors expand so the nation could lessen its reliance on giant slaughterhouses to supply grocery stores and restaurants.

Like shortages of protective clothing for health care workers, hospital equipment and even toilet paper, the reality of empty meat counters was a shock to many Americans unaccustomed to scarcities. But where most other supply gaps are being addressed by changing how the U.S. acquires key items, the money flowing to small slaughterhouses shows no sign of solving the meat problem.

The meat industry has been consolidating for decades, and 80% or more of meat is slaughtered by just a few companies, whose operations were crippled last year when the virus began spreading among workers.

“Even a significant increase in processing capacity in those small and mid-size processors, that’s a small amount in the grand scheme of things,” Iowa Agriculture Secretary Mike Naig said. “Yes, it provided some relief but no, it’s not at the level that will rival the big processors.”

Or as Terry Houser, a meat processing expert at Iowa State University, put it, “Small plants cannot replace the big plants when they go down.”

The problem illustrates the difficulty of creating more sources of supply in an industry that is trending in the opposite direction.

There’s little doubt the grants will help small processors and in turn provide sorely needed rural jobs, but the economics of meat now centers on large, highly efficient slaughterhouses, not smaller plants whose numbers have been decreasing sharply.

The number of smaller operations that meet local demand plunged by 42% to 1,910 between 1990 and 2016, according to the U.S. Department of Agriculture.

When the coronavirus sickened thousands of workers at the big slaughterhouses, forcing some to close temporarily, output dropped to 60% of normal. Many producers suddenly had nowhere to take their animals for slaughter, and the small processors who remained, who mostly provide meat for local markets, couldn’t take up the slack.

Later, Iowa was among at least 16 states that used some of the billions of dollars in federal COVIDrelief aid to provide grants to small meat processors, enabling them to replace equipment and expand. In Iowa, the state awarded $4 million to help 109 small meat and poultry plants increase production, with some of the funding also going toward marketing and education.

Likewise, Arkansas awarded $5 million in federally funded grants, Indiana divvied up $4 million and Montana used $2 million to fund grants of up to $150,000.