USDA's Beef Industry Plan: What Does It Mean for the Small Processor

USDA Secretary Brooke Rollins has released the long-awaited plan to fortify the American beef industry. The topic has been in the news recently, largely because of some off-the-cuff remarks made by President Trump at various events. The problems in the beef industry, though, have been building up for years if not decades, and those problems have culminated in where we are at today: The U.S. cattle herd is at a 75-year-low, ground beef is over $6 per pound, and the cost of some cuts have priced many consumers out of the beef sector entirely. The USDA plan aims to grow the herd and reverse the shrinking number of cattle ranchers in the country. Other elements are targeted at the beef processing industry, including offering new grants, increased access to remote beef grading and reducing inspection costs for small processors. The American Association of Meat Processors has pushed for many of these reforms, and we are glad to see them included in the plan.

“I see things in the announcement that will have a positive impact on our members’ long-term,” said Chris Young, AAMP Executive Director. “The combination of new grant funds, low-interest loans and a reduction in overtime inspection costs are all things that will help the small processors' bottom line and make their businesses more sustainable. Being able to add production space or automation will allow them to increase production and meet growing consumer demands for beef and other proteins.”

Let’s dig into some of the details. (NOTE: If you want to read the full 13-page report, you can do so here.)

Focusing on the elements of the plan that involve enhancing local processing and aiding small processors, there is much to like. First and foremost, we are very pleased about the announcement of a fourth round of grant funding through the Meat and Poultry Processing Expansion Program (MPPEP). The first two rounds of the grant program helped many of our members advance their growth plans, whether through the purchase of new processing equipment or expansion of their facilities. This new program, which will focus on promoting local supply chains, will total up to $2 million per award. As many as 50 small meat processors across the country could receive funding to diversify the beef supply chain and open local market opportunities. USDA will strategically direct funding to areas that have a lack of local processing but have a demand for these smaller processors. More information about the grants will be made available by the end of the year, and we will keep our members informed.

Additionally, the USDA’s Agricultural Marketing Service will expand its remote grading program for beef, targeting small and medium processors that supply local and regional markets. AMS will also expand its Instrument Enhanced Grading program, which leverages camera technology to improve the consistency and accuracy of the AMS grading program and reduce staffing needs, bringing costs down for meat processors of all sizes. Several AAMP companies have utilized this technology already, and it has allowed small butcher shops to sell Prime and Choice beef without the significant costs of bringing a USDA Grader to their facility. We are excited about the marketing opportunities this can offer our members.

During the COVID pandemic, FSIS temporarily reduced the costs of overtime and holiday inspection for small and very small establishments. AAMP was a proponent of this initiative, as it helped offset the costs of keeping up with the demand for meat that our members experienced. We are happy to see that the agency will again reduce those fees by 75% for very small processors and 30% for small processors. We have long maintained that our members are some of the hardest-working people in the meat industry, but the costs of working overtime can lead to hundreds of dollars in additional inspection fees, and that’s before you even factor in the costs of paying your employees overtime wages! This temporary decrease may make the cost of working overtime a little more manageable.

There are other elements to this plan that pertain to cattle production and expanding beef access through school programs and dietary guidelines. There are other organizations much more qualified to judge that part of the plan, and we will let them speak on those topics. But we feel like this plan can offer some great opportunities for our members, and we commend the USDA for continuing to consider the needs of the small and very small meat processors. A diversified meat supply chain, with a strong and growing community of independent producers and independent processors, is the best thing for American consumers.