Remedy for Slaughterhouse Logjam?

Access to slaughterhouses has been poor for small livestock producers in most of the country for many years now but has become considerably worse since the onset of the COVID-19 crisis. USDA-inspected slaughterhouses have since last spring been booking customers as far out as 2022. Many custom slaughterhouses are now booking well into 2021.

Demand for locally raised meat is only going to increase. At a recent food safety conference, a high ranking official from the United States Department of Agriculture (USDA) announced that the department was working to have low-dose ionizing radiation, known as irradiation, to be considered as a “processing aid”a which means there would be no labeling requirement to inform consumers that meat or poultry they were purchasing had been irradiated.

One possible answer for the slaughterhouse logjam is the personal use exemption codified in federal regulation at 9 CFR 303(a)(1). The regulation states:

    The requirements of the [Federal Meat Inspection] Act and the regulations in this subchapter for the inspection of the preparation of products do not apply to:
    (1) The slaughtering by any individual of livestock of his own raising and the preparation by him and transportation and commerce of the carcasses, parts thereof, meat and meat food products of such livestock exclusively for use by him and members of his household and his non-paying guests and employees.[1]

On May 24, 2018, USDA’s Food Safety and Inspection Service (FSIS) published a guidance document titled, “FSIS Guidelines for Determining Whether a Livestock Slaughter or Processing Firm Is Exempt from the Inspection Requirements of the Federal Meat Inspection Act.” In the guidance, FSIS explains what those under various exemptions from inspection, including the personal use exemption, can legally do. FSIS’s interpretation of the guidance provides a way for farmers to sell live meat animals while being under the personal use rather than the custom slaughter exemption.

The guidance states that under the personal use exemption,

    A person may purchase livestock from a farm or ranch and then slaughter it onsite using the farm or ranch facilities or equipment.
        a. If a person purchases livestock, and uses the on-site facilities without assistance from the seller, then the activity remains personal use.
        b. If the seller participates in the slaughter or processing activity, then the facility owner is subject to the custom [slaughter] exempt criteria….[2]

The document goes on to state, ”the owners of the livestock may or may not reside at the same physical location as the animal”[3], establishing that there can be more than one owner under the personal use exemption. FSIS does not say how many owners there can be under the exemption, but it has stated that there can be unlimited owners under the custom slaughter exemption.[4] FSIS has stated that all owners must obtain some portion of the custom animal but has not required that there be a specific minimum amount.[5]

The only other requirements listed in the guidance for the personal use exemption have to do with adulteration. FSIS requires:

  • “No livestock are slaughtered which are unfit for human consumption.”[6]
  • “Specified risk materials (SRMs) are inedible and prohibited for use as human food.”[7]
  • “The carcasses and parts are not prepared, packed or held, under insanitary conditions.”[8]

There are many more requirements for the custom slaughter and custom processing exemption than there are for the personal use exemption including requirements for the physical facility, water, labeling, recordkeeping, and ingredients used in the preparation of meat products.[9] There are also state licensing requirements for custom facilities; usually there is no licensing requirement for a farmer operating under the personal use exemption.

Most, if not all, states have adopted the personal use exemption as part of their law, few of those states have imposed additional requirements beyond what the Feds’ mandate.

There is no limit on the number of livestock that an owner may slaughter and process for their personal use.[10] Livestock slaughtered and processed under this exemption can be shipped across state lines.[11] For the farmer shut out at inspected and custom slaughterhouses, it’s possible to sell live animals under the personal use exemption if one of the owners is experienced at meat processing, whether that individual is another farmer or someone specializing in the trade.

aProcessing aids: Ingredients that are present in a meat or poultry product in an insignificant amount and that have no functional or technical effects in the finished meat or poultry product are considered to be processing aids. Processing aids are not required to be listed in the ingredients statement for a meat or poultry product. [FSIS, “Compliance Guide on the Determination of Processing Aids”, PDF, April 8, 2008; weblink]

———

1. 9 CFR 303.1(a)(1), see also 21 USC 623(a)
2. USDA-FSIS, “FSIS Guidelines for Determining Whether a Livestock Slaughter or Processing Firm Is Exempt from the Inspection Requirements of the Federal Meat Inspection Act”, PDF, May 24, 2018, p. 3. Accessed 11/5/2020 at https://www.fsis.usda.gov/wps/portal/fsis/topics/regulatory-compliance/guidelines/2018-0007
3. Ibid.
4. FSIS, “For Dr. Gillespie – ownership, custom meat”, AskFSIS, PDF, April 13, 2017
5. Ibid.
6. Guidelines, p.3
7. Ibid.
8. Ibid. See also 9 CFR 310.22
9. See 9 CFR 303.1(a)(2)
10. Guidelines, p.3
11. Ibid.

1967 Wholesome Meat Act: Disaster for Small Slaughterhouses

Passage of the PRIME Act [H.R. 5859 / S. 1620] would give states the power to legalize the sale of custom processed meat in intrastate commerce (i.e., meat from an animal slaughtered and processed at a facility where an inspector is not required to be present to observe the slaughtering and conduct an ante mortem and post mortem inspection of the animal).

Currently, federal law prohibits the sale of custom processed meat; the prohibition went into effect with the passage of the Wholesome Meat Act of 1967. The Act mandated that meat could not be sold unless it was slaughtered and processed at a facility that was either federally inspected or one inspected in a state whose meat inspection laws were at least as strict as the federal requirements; meat slaughtered and processed at a state facility could only be sold within the state.

The Wholesome Meat Act has done tremendous damage to local slaughterhouse infrastructure around the country. In 1967 there were nearly 10,000 slaughterhouses in the country1; today there are less than 3,000.2*

The bottleneck caused by the lack of slaughterhouses has frustrated small livestock operations in getting their products to market and has led to an inability to meet the overall demand for locally produced meat. The 1967 Act has been one of the worst laws ever passed for local food; what’s more, it was known from the beginning that the Act would have the effect it did.

On September 16, 1971, the Small Business Administration (SBA) presented a paper to the United States Senate Select Committee on Small Business titled: “The Effects of the Wholesome Meat Act of 1967 upon Small Business – A Study of One Industry’s Economic Problems Resulting from Environmental-Consumer Legislation Prepared by the Small Business Administration.”3

The SBA paper3 discusses the cost of compliance (mainly, the costs of facility upgrades) with the requirements of the Act and the effects it could have on small-scale slaughterhouses and processing plants. The paper includes the following comments:

  • “[I]t could be argued that the Wholesome Meat Act was as much of a disaster for many small meat firms as a hurricane….” [p. 32]

  • During the Congressional deliberations in 1967 over the Wholesome Meat Act, there was little discussion of the effects that the Wholesome Meat Act would have upon those 15,000 or so firms who now would be subject to rigorous inspection of their product. [p.31]

  • Emphasis was upon “consumerism”, the American housewife and her family. And this was “consumerism” in a rather narrow sense. There was little or no consideration given to the costs, particularly in the first few years, that would have to be borne by the meat industries in order to comply with the Wholesome Meat Act. “…[I]t was likely that meat prices would increase for several years, because of the Act. Scant attention was paid to this highly important problem during the Congressional consideration of the Wholesome Meat Act.” [p. 31]

  • Nor was much attention paid to the potential effects of the new law upon competition within the meat industries. “[T]he meat industries are among the more competitive in the American economy. But the Wholesome Meat Act could lead to a significant diminution of competition. How many firms would have to shut down because they could no longer compete due to the new law? … Would the Wholesome Act lead, however unwittingly, to an undesirable increase in concentration in the meat industries? Questions such as these, highly fundamental questions, were barely raised during the legislative process.” [p. 31]

  • The SBA report notes that following passage of the Wholesome Meat Act, legislation was introduced in Congress that would have allowed SBA disaster loans for slaughterhouses attempting to become compliant with the Act if the slaughterhouse’s financial need could not be met “by private financial institutions or by regular Government credit programs.”  As recorded in the report, “the SBA disaster fund ‘is based upon the legal principle that the emergency is created by the act of the sovereign U.S. Government which is beyond the control of the individual business. This may cause major losses to the businessman, particularly if the company is forced out of business. The sovereign act is thus similar to a natural disaster…’” [p.33]

  • “We find that the small business concerns affected by the Act need a substantial amount of financial assistance in effecting compliance with the Wholesome Meat Act. The establishments not in conformance with the Wholesome Meat Act say they need $278.6 million to make the improvements needed to conform to the law. Of this amount, the establishments surveyed say $132.2 million is unavailable. In addition, fully one-third of the establishments not in conformance with the Act report that financing is unavailable…. We find that the amount that may be forthcoming from private financial institutions is seriously deficient.” [p.84]

  • “The Wholesome Meat Act only directly affects strictly intrastate producers whose production at the most is 20-25 percent of the total national products of meat. Of this intrastate group, slightly less than half are not in conformance with the Wholesome Meat Act and probably about one-third or so of the group not in conformance will go out of business if some form of Federal loan program is not developed for their benefit.” [p. 86]

  • “The authors think the empirical evidence contained in this report points inevitably to the conclusion that many firms will suffer substantial economic injury without Federal assistance. In fact, many face terminal economic injury without some form of Government relief.” [p.87]

Much of what the SBA report questioned about the Wholesome Meat Act has come to pass. The Act did contribute significantly to the consolidation of the meat industry; today four companies control over 80% of beef processing in the U.S. and four companies control over 60% of pork processing.4

The inability to comply with costly federal requirements has led to thousands of slaughter and processing facilities going out of business; many of these were small facilities processing only for commerce within the state. These facilities might have been accountable for only 20-25 percent of national meat products but they gave the small livestock farmer much better access to slaughterhouses at a better price than is the case today. The local abattoirs that dotted the country are mostly gone. Passage of the PRIME Act can begin the process of bringing them back.

The Wholesome Meat Act has not led to the production of safer meat today; there are more recalls than ever for positive pathogen tests in meat products. The 1967 Act has also contributed to higher meat prices as the writers of the SBA report predicted; the higher costs with expanded federal regulation have been passed on to the consumer. The Wholesome Meat Act has failed small-scale slaughterhouses, family farms, consumers and communities on numerous levels.

It’s time to start the process of rolling it back by passing the PRIME Act. Call you representative and ask that they sign on as a cosponsor of HR 2859 / S 1620.

ACTION ALERT 5/6/2020 – Help pass the PRIME Act – Call today!

———-
REFERENCES
1 Denny, R.C.H. (2012). Between the Farm and the Farmer’s Market: Slaughterhouses, Regulations, and Alternative Food Networks (Master’s thesis). Retrieved from Auburn University AUETD database, https://etd.auburn.edu/handle/10415/3247*

2 United States Department of Agriculture, National Agricultural Statistics Service. Livestock Slaughter 2019 Summary. April 2020. p. 62. Posted at http://www.usda.gov/nass/PUBS/TODAYRPT/lsan0415.pdf [View PDF – http://bit.ly/1i6sxS9]

3 United States. Small Business Administration, and United States. Congress. Senate. Committee on Small Business. The Effects of the Wholesome Meat Act of 1967 Upon Small Business: A Study of One Industry’s Economic Problems Resulting from Environmental-Consumer Legislation. Washington: U.S. Govt. Print. Off., 1971.

4 Heffernan, W. & Hendrickson, M. (2007). Concentration of agricultural markets. University of Missouri, Department of Rural Sociology. Posted online at http://www.foodcircles.missouri.edu/07contable.pdf [View PDF – http://bit.ly/1JZuqGf

Reprinted by permission of the Farm-to-Consumer Legal Defense Fund from article originally posted September 10, 2015, titled “The Wholesome Meat Act of 1967: Disaster for Small Slaughterhouses from the Start“. Republished here with minor edits.