High costs, low profit margins of locally sourced meat trump ideals for some

MassLive, April 24, 2014. By Kate Royals.

This story is the third of several focusing on locally raised meat and small farms in Western Massachusetts. Previous stories looked at the “farm to plate” path of meat in Western Massachusetts and the challenges restaurants face when sourcing local beef.

As long as more money is coming in to the bank than is leaving, Carolyn Wheeler, owner of a small beef cattle farm in Shelburne, is happy. Wheeler, who owns Wheel-View Farm with her husband John, says if you look at the hours they work, the couple isn’t “getting very much per hour.”

Small farmers in Massachusetts face several financial challenges that result in higher product prices and lower profit margins. The costs of animal feed, labor, farm maintenance, and processing all add up for small operations like Wheeler’s.

“The two across-the-board biggest expenses we have are feed and slaughter and processing,” said Pete Solis, owner of Mockingbird Farm in Easthampton, who buys organic feed for the cows, pigs and chickens on his farm. He just started purchasing feed in bulk, which has saved him about 20 to 30 percent in costs.

Because the cattle at Wheel-View are grass-fed during the summer and eat hay from the fields during the winter, Wheeler avoids the cost of buying corn or soy feed. However, the farm racks up costs and time associated with fencing and mowing, along with bailing and buying the plastic wrapping for the hay the animals eat during the winter months.

While some farms can avoid buying feed by raising animals only on grass and hay, one expense can’t be avoided: slaughtering and processing. Costs of processing at the nearest USDA-inspected slaughterhouse — Adams Farm in Athol, Mass. — run at a $65 processing fee per cow, plus anywhere from $.68 to $.83 per pound for packaging. For a typical cow with a hanging weight of 500 lbs., processing costs would range from $405 to $480.

Transportation costs to and from the slaughterhouse can put a dent in farmers’ budgets as well. Wheeler, who sends about six cows per month to Adams, minimizes some of these expenses by paying to use a nearby farm’s cattle trailer and freezer truck and transporting the two farms’ cattle together to the slaughterhouse.

Solis estimates that feed and slaughter costs account for about 85 to 90 percent of what it takes to raise one of his chickens and bring it to sale.

“The way the slaughterhouse is set up it doesn’t matter if you bring 50 chickens or 5,000 chickens — they’re charging you 5 dollars per bird to slaughter,” Solis said of the poultry slaughterhouse he uses in Westminster Station, Vt. The slaughterhouse is located about 70 miles from Easthampton, which results in higher transportation costs for Solis.

While larger meat processing companies like Tyson Foods, Inc., Hormel Foods, and Cargill drive down the cost of their meat through mass production and super-efficient work flow, small farms’ products remain expensive. These companies make up a large part of the market share of meat production in the country and contribute to meat’s relatively low prices.

Those in the industry say mass production of meat is beneficial to Americans, resulting in some of the most affordable food in the world.

“There are 315 million plus Americans and an estimated 95 percent make meat or poultry a regular part of their balanced diet. In order to satisfy that demand, we must produce large amounts of meat and make it affordable,” said Eric Mittenthal, Vice President of Public Affairs for the American Meat Institute, a national trade association that represents meat processing companies.

Mittenthal points out that larger companies are able to drive down costs because of their purchasing power and other efficiencies, like automation in food processing plants and housing systems of animals that are more inexpensive and require less labor, that small farms don’t have the resources to implement.

While larger grocery stores and butcher shops in the area do not typically offer much, if any, locally raised meat, some offer a small amount of certain cuts. Gary Golec, the manager of Serio’s Market in Northampton, buys top rounds that can be made into steaks or extra lean hamburger beef from River Rock Farm in Brimfield. He sells the beef for $9.99 per pound, a full $4.50 more per pound than the same cut made from Western beef.

Despite the higher price, he still makes less of a profit margin on the local meat, he said.

“I could get other (local) cuts, like strip steaks or rib eyes, but those would probably cost me almost $10 to $12 a pound. I would be retailing that for $18, $19, or even $21 a pound,” Golec said. “But my clientele — a lot of them would have a tough time taking out $21 a pound for steak.”

Arnold’s Meats, a butcher shop with stores in East Longmeadow and Chicopee, sells hamburger meat from Adams Farm, which also raises its own cattle. The store’s owner Larry Katz says it gets the local hamburger meat for $3.59 a pound. The hamburger meat he buys from from IBP Beef (owned by Tyson Foods, Inc., one of the world’s largest producers of meat and poultry) is priced at $2.95 a pound.

While high prices and a lack of supply contribute to the scarcity of locally raised meat, some are optimistic about its future. Converting some forests to pasture land, cooperative efforts among farmers to purchase necessities like feed in bulk, and experimenting with year-round forage crops for animals may help to drive down costs and scale up supply, says Margaret Christie, special projects director for CISA (Community Involved in Sustaining Agriculture).

“There are some ways we could reduce costs over time that are not damaging to public health, the environment, and the animals themselves,” said Christie.

For now, however, dollars and cents often trump most consumers’ concerns about the environment and a desire to support local farmers.

Janet Ryan, a librarian in Amherst, said that while she’s “philosophically totally in favor of local meat,” her choice to buy non-local meat comes down to the price.

“If I felt it was something I could do, I would.”