Being small has never been cooler — at least, that’s what a small but growing part of the U.S. population believes when it comes to meat. Small companies, locally raised and produced meat, classes on butchering or charcuterie —consumers are increasingly interested in where their meat comes from, and they are turning to small, local meat shops and processors.
Chris Young, outreach specialist for the American Association of Meat Processors, says that the local food movement is one of the biggest opportunities for AAMP members.
“Our small custom and USDA slaughter facilities are doing a growing business trying to keep up with the demand for locally grown meat and poultry. I don’t see this trend changing anytime soon as the consumer continues to look for what they perceive is a better product, grown and processed at the local level,” he says.
Unfortunately, small companies continue to face their own pressures and challenges. Young notes that keeping up with regulatory changes and increased testing will present difficulties throughout the year.
“These two items present challenges to small establishments who do not have staff that they can dedicate to this area and the cost of increased testing comes directly off the bottom line,” he says. “Small processors feel the pinch in both areas and this often times leads to frustration and for some the question of whether to stay in business or not.”
Among members of the Southeastern Meat Association, responses for challenges facing small processors ranged from new business regulations and healthcare expense to raw material costs and availability, as well as the continuing consolidation of grocery and foodservice warehouses, with fewer DSD (direct store delivery) opportunities.
While there are many challenges facing the industry, the most successful businesses have a plan that works for them. Some companies may choose to broaden their offerings, while others may narrow their focus, discontinuing some services or products. Following are examples on what some companies have planned for 2015.
White Oak Pastures branches out
The Harris family of Bluffton, Ga., has been involved in agriculture since the 1860s. Within the last decade, Will Harris made the transition from a cattle rancher to a cattle rancher/processor by adding on a beef slaughter and processing plant. The business has grown and expanded ever since.
Today, White Oak Pastures pasture raises 10 different species – five red meat (cows, hogs, sheep, rabbits, goats) and five poultry (chicken, turkey, guineas, ducks, geese) — and hand-butchers them on the farm. That’s just the start.
“We also raise pastured eggs, certified organic vegetables, we have a restaurant, cabins for lodging for agri-tourism, we have classes that are offered, we make diesel, we tan hides, we put up vegetables, make jerky and make sausages, we make soap and pet food,” Harris explains. “We have a lot of ancillary businesses in food, none of which would really stand on their own but contribute to the total package.”
Two of Harris’ daughters have joined the business. Jenni, marketing manager, and Jodi, farm events manager, represent the fifth generation to work on the family farm. They join a young and ambitious team that Harris has assembled to manage the businesses.
As for Harris, his own responsibilities have changed greatly over the last few years. He jokes that used used to be just a cowboy, and now he is the Andy Griffith-like sheriff of White Oak Pastures. At 59, he is the oldest person in the business, while the majority of employees are between 18 and 38 years of age.
“Most of the ideas for expansion and development that we’ve implemented came from these employees, not from me. But I’m the guy that decides what we can or can’t afford to do right now,” he says.
The biggest impediment to growth for the company, Harris says, is a lack of housing for employees. Bluffton is a small town of around 100 people, so Harris has built some nice housing for his employees. He hopes to add more in order to expand his workforce and attract more talent. About half of his employees have come from all across the country, but the thing that unites everyone is the company culture.
“There are different pressures and things pulling that culture every day to get it off direction, and the guy in charge has to keep it on direction,” he says of his duties. “Our culture is, we’re going to be nice to each other, we’re going to respect each other, we’re going to work together as a team to get things done. If you can’t be nice to other people, this is not the right place to be.”
Harris says that he is looking for more business opportunities for White Oak Pastures, but becoming a larger processor is not his goal.
“The idea of making the company bigger and bigger by selling more beef and chicken is not attractive to me,” he says. “The idea of entering into more little ancillary businesses that strengthen the operation is very appealing.”
Deli Star bolsters its food safety reputation
“Quality Cooked Meats” is Deli Star’s motto, and for more than 25 years, it has provided a wide range of cooked products to further processors and the foodservice industry. The company uses its post-pasteurization capabilities as an example of its commitment to food safety, and last year, Deli Star became SQF Level II certified.
“SQF Certification helped Deli Star meet our goal of being a leader in food safety and quality and our focus on continuous improvement,” explains Mike Weber, director of quality for the Fayetteville, Ill. processor.
The process began with evaluating current company policies and practices and performing a gap assessment with the SQF Code.
“Deli Star’s prior focus on food safety and quality was evident during the gap analysis process and served as a strong base for building and enhancing procedures compliant with the SQF Code,” Weber says.
For companies looking to go through the certification process, Weber says an understanding of SQF code and company procedures is ?essential.
“A systematic gap assessment and focus on planning and communication within the organization are critical to the successful development of a functional and effective SQF program,” he adds.
The certification will only help to make Deli Star an attractive partner for the future. Justin Siegel, president of the company, says that one of the company’s goals is to partner with a national brand and start a mutually beneficial relationship. The company also will continue to play to its traditional strengths.
“Our biggest opportunities continue to be in the sandwich and salad-making industries – selling to further processors,” Siegel says.
The record high meat prices negatively impacted Deli Star in 2014, but having soldiered through a tough year, the company is looking forward to turning things around in 2015.
“Lessons learned from 2014 are an increased awareness of the markets, cost/quality improvements, and yield management,” Siegel notes.
Small processors tend to have a difficult time competing with large, vertically integrated companies, particularly in the kind of environment the industry saw in 2014.
“Once markets turn upside down like they did in 2014, it becomes a bigger challenge for small to mid-sized processors to compete on price,” he adds. “As long as the markets stay on track though, small to mid-sized processors can compete in the large national arena by having better quality and reacting quickly to research and development opportunities and customer service opportunities.”
Western’s Smokehouse plans major expansion
About 10 years ago, Western’s Smokehouse of Greentop, Mo. started producing snack sticks. It can be a difficult market for a small processor, going up against the established giants of the category, but the company’s investments in snack sticks paid off in a big way last year. Kevin Western, COO of the company, said that Western’s Smokehouse had overall sales growth of 45 percent last year.
Last year, employees were working six days a week about half the year. That amount of work in the company’s current production space prompted a major construction project.
“We’re building a 23,000-square-foot processing plant that, when fully equipped, can handle up to 40,000 pounds daily throughput,” Western says, noting the company’s current production space is about 8,000 square feet.
Western’s Smokehouse is expected to move into its new space this spring. The company ordered familiar equipment to reduce the transition time. At the onset, the company will produce 15,000 to 20,000 pounds per day, and Western says that he hopes to grow the market for the company’s branded products. A national sales rep was recently hired to focus on that goal.
As Western’s Smokehouse has grown, it has had to change its business plan to adapt.
“We used to slaughter, we used to do catering, we used to do a lot of the things that small processors do,” Western says. “As we started focusing our efforts toward meat snacks, we discontinued some of those activities. It really emphasized the focus and caused the growth.”
Many small, family-owned businesses may face similar decisions.
“What we do not may not be what we did 10 or 20 years ago — what our dad did or our grandpa did,” he says. “Don’t be afraid to make some changes if you need to. Just because it worked for you 10, 20 years ago might not work for you now.”