The Covid-19 pandemic taught our nation many things. One of those things was the volatility of our nation’s food supply chain. With many families left wondering where they could get food and shelves left empty on many occasions, proteins became hard to find and prices reflected it. Consumers felt it in their pocketbooks and inside their homes at the kitchen table. The large meat processing companies were faced with unprecedented closures and meat was not making it to markets. That’s where the small to mid-sized meat and poultry processors stepped up their game. So many across the country accepted the challenge and set record levels of production. The small to mid-size processors intensified production and helped their farmers and communities. Without these processors, the market could have been completely turned upside down. Farmers had a way to continue processing their livestock and poultry. Consumers had another avenue of attaining meats for their families.
The work of the small and mid-sized processors didn’t go unnoticed. Even President Joe Biden addressed what the loss of processors would mean when he said “Without meaningful competition, farmers and ranchers don’t get to choose who they sell to. Or put another way, our farmers and ranchers have to pay whatever these four big companies say they have to pay, by and large. But that’s only half of it.These companies can use their position as middlemen to overcharge grocery stores and, ultimately, families.”
Today, the small and mid-sized processors face a new challenge. A challenge that will ultimately be too much for many. You see, the EPA (Environmental Protection Agency) is going to regulate wastewater from meat and poultry processors. Yes, we all want clean water, and no one is arguing to not take measures to ensure it, but we need a solution that is viable for even the smallest meat processor. The EPA is proposing a wastewater management system required by all processors regardless of size, production, or output. This will impact USDA and custom processors. The proposed cost of these regulations are $5,000 to $3.2 million upfront and $5,000 to $400,000 annually for maintenance and testing. We are only a couple months away from a final ruling on this and no one knows what equipment will be needed. With that range of costs, processors are terrified….justifiably. Wastewater management can’t be a one size fits all solution and certainly can’t be one that threatens the existence of thousands of small companies across the country.
Let’s discuss who is impacted by these regulations and how.
The small to mid-sized poultry and meat processor
They are the most directly impacted. They are forced into paying for, creating the infrastructure, and maintaining the wastewater management systems. As mentioned above, this can be very costly. These types of costs are sunk costs with no way to recoup. It doesn’t increase efficiency, productivity, or help operational processes. Therefore, it is not an investment! To continue operations, most will have to raise costs to the consumers. With inflation and food costs already soaring, this is not something any meat processor or retailer wants to do.
Cha-Ching! The consumer will undoubtedly pay more at the checkout for all meats. If the processor can stay open, their costs just went up….most likely substantially. Therefore, those costs must be passed on to the consumer. If the small and mid-sized processors don’t survive, it opens up the market to the Big Four processors and now they can charge whatever they want for their products. No one charges less.
Finding a processor is already a challenge to livestock farmers and ranchers. Often, processors are already operating at maximum capacities so finding one to accept animals can be difficult. Not all processors process poultry so there are already limited poultry processors. Not all processors process sheep and goat so there are already limited sheep/goat processors. If processors face shutting their doors, this becomes even more difficult. For the sheep and goat producers, the remaining processors will undoubtedly see an increase in the demand for beef and pork processing making is harder to locate processor for sheep and goat. While it is hard to put a number on the impacts of this, you can see it will be much more difficult and costly to process your livestock. With fewer processors, there is a reduction in competition. Therefore, farmers are most likely going to have to accept less for their animals. Harder to sell and for less money is a hard pill to swallow for livestock farmers and ranchers.
So what’s next?
The industry was pretty much blind-sided by these new regulations. The U.S. Environmental Protection Agency (EPA) announced earlier this year that it intends to update its water pollution rules for meat and poultry processing facilities for the first time in nearly 20 years, following a lawsuit from environmental groups and animal rights activists arguing current standards are too weak. Proposed regulations are scheduled to come out in December 2023, followed by a public comment period. Final regulations are expected to be implemented in December of 2025.
It is time to speak up!
- Contact your state’s congressmen and senators and tell them you want to see this stopped or amended.
- Make sure meat processors and livestock producers are aware of this potential regulation and how it might devastate their businesses.
- Watch for the EPA’s proposed regulations and make your voice heard during the comment period. These should come out in December 2023.
The EPA seems completely disconnected with the agriculture and meat processing industries. Or simply don’t care. They refer to small business as one with less than 1,000 employees! This illustrates the disconnect between the agency and how our industry operates.
Speaking up in numbers is a must! Tell your story to let them know how you will be impacted.