The economic outlook for small meat processors heading into 2026 remains challenging due to tight supplies, high prices and a challenging labor market. However, this is weighed against continued strong sales for meat products following a record-setting year for the meat department.

Legislation introduced in early November 2025 aims to expand market opportunities for smaller processors. The Direct Interstate Retail Exemption for Certain Transactions (DIRECT) Act would give livestock and poultry producers greater market access nationwide by allowing retail stores and restaurants to sell state-inspected meat and poultry online and ship it across state lines to household consumers. The bill requires that products be shipped direct to consumers in normal retail quantities and not be exported.

Direct-to-consumer internet sales of state-inspected products are currently restricted to intrastate commerce unless the state opts into a specific federal program.

American Association of Meat Processors Executive Director Chris Young shared these insights on the outlook for small processors in the coming year:

What market opportunities are emerging for small processors in 2026?

Chris Young: I don’t know if there is one that stands out at this point. I think it is still just the push by consumers for locally grown and produced products. Customers are certainly looking for value, especially when it comes to products that are made with beef. There is a high demand for beef tallow, and some have taken that on and are doing well.

What are the biggest challenges facing small processors in the coming year?

Chris Young: One of the biggest challenges facing small processors is lack of labor. Trying to find people that want to work in the industry is hard, then finding people who already have some skill is even harder. We are looking at ways to offer training and schooling for the industry as far back as high school students. There are also challenges with delivering quality products at a price point that consumers can handle in their budgets. This is difficult with the costs associated with processing products, especially when you are not doing it in large runs and you are making lots of different products.

How are tariffs affecting small processors’ decision-making?

Chris Young: We haven’t seen huge things from the tariffs, but there are certainly higher prices on goods and machinery and parts that are coming in from different countries.

What facility/equipment upgrades are small processors embracing to boost efficiency?

Chris Young: There has been a real push for machinery that fits in small plants, and we have seen that availability increase over the years. Small processors are embracing new equipment because some of it supports making quality products and others boost efficiency, which helps to offset the lack of available labor.

What consumer trends are influencing new product development for small processors?

Chris Young : I think the continued push by consumers wanting to know what is in the products they are buying along with the current administration's MAHA movement continues to push small processors to make more products with cleaner labels.