Final Report for LNC96-105
Project Information
The two objectives of this project are to develop sustainable hog slaughtering arrangements and markets for family farmers in Missouri. To meet these objectives, the research team identified, visited with, and consulted with producers and processors in Missouri, Iowa, Minnesota, Indiana, Illinois, Kentucky, Texas, and Michigan regarding the two objectives. More specifically, factors that contributed to the successful emergence of groups of hogs farmers working cooperatively, adding value to their product, and sourcing slaughter markets were identified and analyzed. The results of these investigations reveal that pork producers across much of the country are faced with issues similar to those for Missouri producers. We found several examples of farmers grouping together in networks to source inputs, gather information, and sell their products. Some of these networks were “new generation” coops, some were limited liability corporations, and other were more traditional coops. We also found common examples of large independent farmers restructuring their operations to concentrate on farrowing and then contracting with their neighbors for finishing. We also found a limited number of examples of independent farmers coordinating a farrowing to marketing system that specialized in a particular product, such as Berkshire Gold, targeted for a specialty market. A common strategy to gain and maintain better access to slaughter markets was pooling several different producers’ hogs in a single potload and providing such potloads on a regular basis. Some members of the Osage group are now participating in this kind of arrangement.
Research conducted on the feasibility of targeting niche markets such as the Hispanic and/or range/chemical-free/organic markets indicated that although the Hispanic market is growing, that their diet in the Midwest area is rapidly becoming similar to Anglo diets which decreases the “niche” character of the market. Regarding the range/chemical-free/organic strategy, relevant data in the U.S. that illustrated the feasibility of production systems that do not rely on the regular use of antibiotics were lacking. Although very interested in this strategy, this lack of scientific support was a major hurdle keeping the group from proceeding on this course. Further research revealed that data from Europe indicated that with appropriate management methods and small-scale processing this approach is feasible. The research team found examples from Europe that incorporated a cooperative organizational form with strict animal welfare components in production combined with small batch processing. The arrangement creates a pork production system with close ties between the producers and the processors and has prompted some members of the Osage group to pursue a “closed, member-owned coop” similar to the New Generation Coops in the Northern Plains.
Another major result of the research was the resolution of the situation regarding decreasing access to slaughter facilities. The team found a rapid demise of small slaughter facilities with USDA certification combined with a trend toward processors increasingly relying on long-term contracts with large operators for predictable supplies of quality hogs. Some packers told us that there would be some plants in the near future that only accepted contracted hogs. Packers also reported that they would kill the group’s hogs but could not guarantee to give them back the same hogs for possible value-added further-processing. In response to this disturbing information, the Osage group has made successful contact with a local small packer that has agreed to do the killing and then return the product to the Osage group for distribution. As a result of information gathered by the research team, the group is now developing its own branded label and has obtained a grant from the State of Missouri to investigate the feasibility of buying or building an existing small processing plant.
Introduction:
This project has yielded important results for family farm-based hog operations in Missouri and other places. A major objective of this research was to investigate the situation related to slaughter access and secure such access for the Osage group. While the Osage group does have access to a small slaughter operation, the small size limits the feasibility of moving a large percentage of the group’s hogs through that facility. The hogs that go to the local slaughter plant bring a premium because they are marketed as local and fresh pork. The Osage group is interested in expanding this kind of value- added market as opposed to only participating in the commodity mass market. This research indicates that even if small to moderate-sized producers can survive economically, they are facing serious problems with continued access to slaughter. Project research indicates that the major slaughter firms are rapidly moving to vertical coordination arrangements such as long term contracts. Some firms we talked with indicated that in the near future some of their plants would accept only accept hogs from producers under some form of contractual arrangement. Other firms indicated that the number of hogs sourced form independents would continue to decline and would only be used when they could not fill their shackle space with their own supplies. This issue of “captive supplies” is very important to both hog and beef producers and is now the focus on federal investigations.
Our research indicated that in some areas of the country groups of producers had made arrangements with large slaughter facilities to kill their animals and then get back a equal amount of product. The producer groups would then further process this pork into special branded cuts and products. But, the facilities would not guarantee that the group would get back their own animals. The group deemed this arrangement as being unacceptable because of their goal to produce and market their own hogs. One idea was to find other small processors in the area and thereby have four or five locations to source as killing operations. Research indicated that this was not possible as many of the smaller operations were dropping their USDA inspection status because of the increasing government regulations related to HAACP. We did find a small-sized operation within an hours drive from Osage County that is willing to slaughter and package hogs (with branded labels if preferred) from the Osage group but at the present time the group would have to do the marketing. The first notable result of the research is the fact that we have found a regional slaughter facility that is willing to work with the group.
The second major result of the research is that the group has decided to develop its own branded label and pursue a chemical-free product. Research in support of this strategy was lacking in the U.S. which constituted a major barrier for the group. The group saw the decision to go chemical-free as enticing but also very problematic because of the threat of herd decimation due to disease outbreaks. After further investigation, successful examples were found in Europe that combined animal welfare-based production with small batch processing into a tightly controlled system with high levels of communication and coordination between producers, processors, and consumers. The discovery of this system was the catalyst needed to congeal a concerted effort on the group’s part to pursue a small-scale chemical-free strategy to service the growing demand for high quality meat products, including opportunities in the organic sector. Furthermore, the group is presently developing its own value-added branded label. Finally, the group is forming a “closed, member-owned coop” and has been awarded a grant by the State of Missouri to investigate the feasibility of buying or building their own packing and/or processing plant.
- Develop sustainable hog markets for family farmers in Missouri. This objective focuses on locally-owned value-added approaches to hog marketing which keeps more of the profits in hands of the producers and the local communities.
Develop sustainable slaughtering arrangements for family farmers in Missouri. This objective focuses on countering the trends towards decreasing slaughter access for smaller producers by developing local or regional arrangements.
Research
Several approaches were used to pursue the above objectives. First, internet searches were conducted to identify other groups of producers who might be producing and processing locally-owned value-added meat products. Some of the groups/companies identified were contacted, visited, and evaluated as to the strategies for success. Other groups of similar producers were obtained by word of mouth or institutional contacts such as the Missouri Pork Producers Council and the National Pork Producers Council. Again, some of these groups were contacted, visited, and evaluated regarding the strategies for success. The research team visited several small slaughter plants in Missouri to ascertain what the trends were regarding hog slaughter. The project research team members traveled across Missouri, Iowa, Minnesota, Michigan, Illinois, Indiana, and Texas. The trip to Minnesota gathered information on New Generation Coops as a possible organizational form for the Osage Group. Information was gathered from producers and groups of producers regarding their organizational structure and their perceived advantages and disadvantages of different forms of organization.
The team has also brought in members of the National Pork Producers Council and a swine genetics firm to meet with the larger group and discuss the trends going on in the industry. Additionally, contacts were made with Laura’s Lean Beef about the strategies that company used to establish an alternative beef market. The team also visited with large processors regarding the possibility of working out an arrangement for the processor to kill the group’s “chemical free” hogs and then return them to the group for further processing. The research team also traveled to the World Pork Expo in Des Moines, Iowa to gather information relevant to the grant and talk with producer groups working to create producer-owned pork production systems such as the Pipestone Coop in Minnesota.
To help bring focus to the group, after much of the preliminary information was gathered, the group brought in a facilitator to guide them through a nominal group process to better identify the desired strategies for the next phase of the research. The group decided that they wanted to proceed with studying the feasibility of servicing the Hispanic market and producing, slaughtering, and marketing branded chemical-free or organic pork products in the Missouri area. The group contracted with the University of Missouri “Agriculture Value-Added Programs” office to conduct research on both Hispanic markets and chemical-free/organic markets. In support of the Hispanic market thrust, the group met with representatives of the National Pork Producers Council and arranged to accompany that group on a tour to Southwest Texas to study Hispanic groceries and pork product preferences. The research results on the Hispanic markets indicated that although this was a growing market in the area, that their diets and pork product choices were not very different from what the mass pork market provided. Furthermore, the possibly of supplying such product to the Texas area was deemed unfeasible. The data on the growth of demand for organic products in general, and meat products in particular was encouraging to the group. This area became the focus of further research. While research gathered by the group and by the University of Missouri indicated a growth in demand, the kind of information needed to clearly demonstrate to the producers that this production and processing system was feasible in Missouri was lacking. At this point the group made contacts in Europe and found examples of small to medium-scale producer/processor/consumer networks focusing on chemical-free pork production. The group talked with a representative of the University of Missouri “Agriculture Value-Added Programs” and a representative from the Missouri Department of Agriculture about a research trip to Europe to investigate their production system. In Jan. 1999, a four member research team including two Osage group members, a meat scientist from the University of Missouri, and the Deputy Director of the Missouri Department of Agriculture traveled to Europe and visited producers, veterinarians, and processors, in England, Germany, and Italy (The two Osage group members traveled at their own expense. The long lead time necessary to meet the requirements of the SARE grant for foreign travel prohibited the feasibility of using grant dollars to support the trip). The group returned from Europe encouraged and ready to proceed with a strategy to organize as a “closed, member-owned coop” and build a chemical-free pork production system in mid-Missouri. Through the success of the SARE grant the group has now secured a grant from the State of Missouri to investigate the feasibility of building and/or buying a pork processing facility.
The results of the research are several. First, it appears that small to moderate-sized producers are going to experience continuing difficulty in accessing slaughter arrangements. Our research endeavors revealed that the number of small-scale slaughter facilities that are USDA inspected are decreasing rapidly. Due to increased regulations associated with HAACP, many of the smaller processors we talked with indicated that they were dropping their USDA certification because of the time and economic expense of meetings the regulations. Furthermore, many of the processors we talked with who were keeping their certification indicated that they required only a few hogs to meet their needs and that they had one or two producers that provided them with those hogs.
Similarly, conversations with large scale packers reveals that they are increasingly looking for large producers to provide them with potloads of genetically uniform lean, market hogs on a regular basis. This trend includes a steady move to contract integration in the form of 5-10 year production contracts with large producers or groups of large producers. Some of the Osage group members are “pooling” potloads and sending them out-of-state for slaughter. Research on whether a large processor would be willing to “custom kill” the group’s chemical free hogs revealed that the processor would kill them but it would be very problematic to get those exact animals back for further processing. Furthermore, the issue of which cuts/parts the group wants back, i.e. just the prime cuts or also the head, hide, entrails, etc. made this arrangement difficult.
Finally, one packer informed us that he encourage the group to pursue their chemical-free niche market but “if they tried to get into the meat case in the major grocery stores” his company would drive them out of business. These results do not bode well for small-sized producers who are losing access to local slaughterers and often cannot provide the uniform potloads to the large packers.
The research team did make a successful contact with a small regional packer that is willing to increase its slaughter and work with the Osage group. The caveat is that the Osage group will be responsible for marketing this product. But, the regional packer indicated that they intent to expand their marketing in the local metropolitan areas and at that time might begin marketing some of the Osage product. Furthermore, that packer expressed some interest in pursuing a “chemical free” product. The groups sees this a major accomplishment of the grant. It appears that the groundwork for a more sustainable slaughtering arrangement has been obtained.
Discussions with producers and producer groups during the course of the grant indicated that the process of starting up a small group-based pork production system was full of setbacks and difficulties. A major suggestion that came out of these conversations was that a small dedicated core group was the most feasible form and that the group needed to have as much control of the operation as possible from genetics to product to marketing. We heard several stories of feed dealers or veterinarians getting involved in ventures and then later exploiting that venture to serve their vested interests. Another outcome of these discussions relates to advantages and disadvantages of different organization structures for a producer group. The Osage group was very interested in the surge of New Generation Coops in the northern Great Plains as well as the limited liability corporation organization form. In response to new programs offered by the Missouri Department of Agriculture, members of the group have decided to form a “closed, member-owned coop” along the lines of the New Generation Coops in the Northern Plains. As a result of this information though, the group decided to continue to pursue information that might facilitate the group owning its own packing plant to thereby maintain better control over the overall project.
The second set of results relates to the sustainable marketing objective of niche markets such as the Hispanic niche or chemical-free pork. As an outcome of work done in collaboration with the National Pork Producers and the University of Missouri, the group has decided not to pursue the Hispanic market at this time and to concentrate on the chemical-free niche. Research provided by the University of Missouri and research team members indicates that this market is small at the present time but growing rapidly. Conversations with representatives of Laura’s Lean Beef again indicated that the pursuit of such a market required a very carefully controlled process to guarantee consistent high quality product and consumer satisfaction. Efforts to find examples of a producer-controlled and chemical-free pork production operation in the U.S. failed. This was a major concern to the Osage group. The fact that good information on how to grow the hogs without the use of antibiotics was lacking in the U.S. was especially troubling to the group. Such information and examples were found in Europe. In Europe they discovered that light and heavy hogs had a market niche to fill and the examples of producing hogs with no antibiotics resolved their primary concern about production practices. The Europe trip also stimulated the Osage group to look more closely at the feasibility of processing their hogs under a cooperative agreement. From that trip producers started to be able to visualize a production system outside the typical “production window” practices in the U.S. As a result of the research trip to Europe, the group has decided to move forward in pursuit of either building or buying a packing/processing plant so they can either kill and further process their own branded product or have the regional facility kill the hogs for them and then further process their branded product themselves. To this end the Osage group has received a grant from the State of Missouri to carry out an extensive feasibility study regarding the two options mentioned above.
Finally, the grant helped the group to become more organized in their attempt to maintain a family-farm based system of pork production in their region. The Osage River Valley has a long history of family pork producers that is threatened by the current industrialization and consolidation of the pork system. The efforts put forth by many members of the Osage group as part of the grant helped rebuild a sense of confidence that they could continue the family tradition. Furthermore, contacts made as part of the grant research process has lead many members of the Osage group to join the National Farmer’s Union to in an effort to protect family farms from corporate domination and join together to maintain fair markets for their products. Though less directly targeted to the original goals of the project, this outcome is important as it indicates that the level of despair has been lessened by efforts supported through this grant.
The potential contributions fall under three general areas. First, independent pork producers are facing a situation that in all likelihood will continue to decline unless they intervene to take control of their production system from genetic stock to supermarket shelf. Trends in the swine industry indicate that market access will continue to decline and that the large producers and packers are going to dominate the commodity market. Opportunities are rising for alternative/niche markets such as organic/chemical free/range and innovators and early adopters will capture the advantages of early entry into these areas.
Second, the kinds of information needed for these types of groups to make decisions is lacking in the U.S. Research is currently being undertaken on alternative swine production systems such chemical free pork but the results are not out yet. There are some institutional and political barriers to alternative approaches that need to be identified and challenged. Alternative production systems based on cooperative arrangements between producers, processors, and consumers are more advanced in Europe and deserve closer attention to better inform the experiments in such ventures in the U.S.
Third, states with a history of independent hog production need to carefully look at the industry trends and provide institutional support for value-added programs for family farmers in pork production in particular and agriculture in general. The recent creation of a value-added program under the Missouri Department of Agriculture mimics the success of the New Generation Coop movement in the Northern Plains.
Economic Analysis
This project deals with more macro economic issues than micro issues and therefore does not lend itself to traditional economic comparisons of one approach versus another. Economic and social analyses indicate that access to slaughter is decreasing but that opportunities to serve niche markets is on the increase. The economics of chemical free production is now a central topic of investigation by the group. The trip to Europe solidified their commitment to this strategy. The grant secured from the State of Missouri to evaluate the feasibility of the “closed, member-owned coop” packing plant.
Farmer Adoption
The Osage group is a homogenous group culturally but very diversified in their size of operations. Some of the larger producers (about 20) are still interested in the networking or pooling of hogs into potloads for the big packers. These producers already have large enough quantities of lean hogs to meet the demands of various packers. A more diverse group of small and moderate-sized producers (about 15) is more interested in the gains to be made from chemical-free pork production. This last group of farmers participated in the research process and is the core group interested in working towards a producer-owned, cooperative-based, packing/processing facility. The remainder of the Osage group participated only sporadically in the project. To some degree I think lack of participation by many members is a direct result of Extension’s “expert” model where you hire people to do the research and bring you the results as opposed to a more “participatory” model involving both researchers and practitioners. There were several instances where the latter model prevailed, but there were also several instances where it was clear that the people hired to work on the grant were expected to “bring the answers” to the rest of the group.
The Osage group holds a business meeting every other month where the research team made its report. The business meeting is usually attended by 10 to 15 producers who make up the elected officials plus other participating producers. Additionally, special topics meetings were been arranged by the research team where groups of 25 to 30 producers attend for information on specific topics. The central special topic was the production and processing opportunities and constraints facing a producer-owned and controlled chemical-free pork production system. Annual meetings of the entire group were used as a venue to keep the Osage Independent Pork Producers Association members appraised of the progress being made on the project. The final report was presented at the March 1999 annual meeting and was attended by over 150 people.
Involvement of Other Audiences:
The University of Missouri and Missouri Department of Agriculture are both significantly linked to this project. This is the first such project in Missouri and is receiving attention from these organizations as well as the Missouri Pork Producers Association. The new grant from the State of Missouri continues this linkage into the foreseeable future. Additionally, partially as a result of the work on the grant, the Osage group is now associated with the National Farmer’s Union and is much more involved in issues related to maintaining the family-style of pork production as well as political lobbying related to issues of corporate concentration in the pork industry and fair markets and pricing.
Educational & Outreach Activities
Participation Summary:
In August 1998 the goals and results were included as part of the Missouri Young Farmers and Young Wives Association tours sponsored by the Fatima Adult Agriculture Education program. Approximately 300 attended the three day event. Tour members visited production sites of four of the Osage group members and discussed issues related to pork production in general and the project in particular.
Over 100 copies of the project report entitled, “ A Crisis, A Change, A Future”, were prepared and presented to the membership of the Osage Independent Pork Producers Association at an annual meeting in March 1999. Over 150 people attended the meeting. During this meeting the results of the research were presented and recommendations were discussed as to the next steps to be taken by the group (this publication is cited in Appendix 1 and provided with this final report). The Deputy Director of the Missouri Department of Agriculture, state representatives, and financial officers of the area attended this event and promised to continue to work with the group as it moves ahead towards its goals. This meeting spurred additional interest by local communities looking for increased employment opportunities. At this meeting the Osage group also voted to develop a formal relationship with the National Farmer’s Union to work together on advancing the needs of family farmers.
A paper summarizing the project entitled “Surviving in the Pork Industry Through Locally-Owned Value-Added Enterprises (LOVAs): The Case of the Osage Independent Pork Producers in Missouri” is being given at the June 1999 meetings of the Agriculture, Food, and Human Values Society by Dr. Constance. He will submit this paper to the Journal of Alternative Agriculture for publication. This paper is cited in Appendix 1.
The Europe trip with the meat scientist from the University of Missouri and the Director of the Missouri Department of Agriculture was key in making the research carried out under the grant and the continuing efforts of the group known to people interested in agricultural issues in Missouri and neighboring states.
Douglas Constance and Mark Russell. 1999. “A Crisis, A Change, A Future.” Final Report presented to the Osage Independent Pork Producers Association.
Douglas H. Constance. 1999.“Surviving the Pork Industry Through Locally-Owned Valued-Addes Enterprises (LOVAS): The Case of the Osage Independent Pork Producers in Missouri.” Paper presented at the annual meeting of the Agriculture, Food, and Human Values Society. Toronto, Ontario, Canada. June 5.
Project Outcomes
Areas needing additional study
A main area of further study for U.S. producers is production information on techniques for raising swine without the use (or with minimal use) of chemicals. This was a goal of several members of the group early on in the project but the paucity of data available in the U.S. substantially hindered their enthusiasm in support of this goal. The producers are especially worried that without the use of sub-therapeutic antibiotics, their animals will be especially susceptible to disease. They expressed a need for examples of production practices to minimize the outbreak of diseases and how diseases might be treated without the use of antibiotics. Data gathered on the Europe trip provided such information for the group.
Group members also expressed an interest in information on hoop structures and how feasible they are for low-cost chemical-free production. Similar research is needed on pasture-based operations and alternative housing farrowing and housing arrangements. Again, such information seems to be better available in Europe but U.S. producers need similar research carried out under conditions that better match their regional climates and conditions. Basically, the amount of research available on both production and processing at the small-scale and low-cost level is minimal and severely needed by these kinds of producers before they disappear.
This point brings up a problem associated with the traditional research of the Land Grant System. Historically the LGU system has been wedded to a productivist mentality that assumes that bigger and high-tech . is better. A major discontent of the Osage group was the suggestion by Univ. of Missouri Extension personnel that they either get up to 300 sows or get out of the business. This situation has created a great rift between the two groups that had previously enjoyed a much more compatible relationship. Similarly, the Missouri Pork Producers Association (MMPA) is perceived by the group as being strongly biased toward larger producers who can provide the potloads to the large packers. This situation has created a legitimation crisis with the University and MMPA which this grant has helped to resolve to some degree. Indeed this is an informal result of the grant. I can only provide strong encouragement for continued research on low-cost, low-input, farmer controlled options targeted to producers that either cannot or do not desire to follow the “bigger is better” mantra.
Further study is also needed on new models of extension for producers. As mentioned above in the Farmer Adoption, Involvement, and Impacts section, too often too many of the Osage group members expected the research team to bring them the answers. This is often the way Extension has historically operated, i.e. the experts are called in to provide answers to problems. Recent research reveals that this model is less and less appropriate for solving complex problems where economic, social, and environmental components must be incorporated to accommodate a particular set of socio-historical needs or concerns. The group Extension model used in Australia in the Land Care system might be a good example; another good example might be the some incorporation of the Hawksbury School method, also from Australia.