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Brief # 2 Agricultural Policy

The House Passes a Bill to Help Small Farmers

Katherine Cart

March 11, 2021

POLICY

The late spring months of 2020 saw coolers and freezers emptied of steaks, chicken thighs, pork chop. COVID-19 outbreaks amongst the workers of large meat processing plants slashed profits for beef, pork and poultry slaughterhouses. The size of meat retailers tends towards the massive. Three corporations control roughly 90% of the poultry market and four control 85% of the beef market. During that eerie period of empty supermarket freezers and vacant transport trucks, consumers turned to e-commerce for their meat shopping. This abrupt surge of buying power was aimed at a wall of red tape: many small meat and poultry processors are unable to sell beyond their own state lines. Consumers came up empty-handed. Retailers missed out on sales.

The DIRECT (Direct Interstate Exemption for Certain Transactions) Act, seeks to amend selling restrictions and could be a boon for small meat and poultry producers. Currently, twenty-seven states adhere to state-regulated processing inspections; many of their processors cannot sell out of state. The act would allow for “meat inspected by the State to be sold online and across state lines, opening up new markets for meat producers and processors,” says Congressman Cuellar

The act does not loosen any inspection guidelines or allow for lower product quality; processors producing meat and poultry for human consumption already are appraised by federally-approved guidelines. Products would still be traceable from retailer to consumer in the event of a wide recall. While some small processors already sell interstate through the Cooperative Interstate Shipment programs, processors outside of CIS programs that are inspected by Meat and Poultry Inspection programs approved by the Food Safety Inspection Service cannot sell out of state. The means of interstate sales are already in place but are limited by current legislation. The DIRECT Act would allow the continuance of CIS sales while broadening the scope of the consumer and the market of the small retailer.

ANALYSIS

Introduced by Representatives Dusty Johnson (R-SD) and Henry Cuellar (D-TX) in late February 2021, the DIRECT Act has bipartisan support. However, similar bills have been introduced before: the New Markets for State-Inspected Meat and Poultry Act of 2007 died without public hearing. Some of the act’s language was evident in the 2008 Farm Bill, founding the option for state-inspected meat and poultry plants to ship across state lines via the CIS program. In 2018, seeking broader selling freedom for processors of less than fifty employees, the New Markets for State-Inspected Meat and Poultry Act was introduced, but ultimately did not go to vote. The DIRECT Act has been submitted to the Subcommittee on Livestock and Foreign Agriculture. Though its future may yet be uncertain, perhaps the trials and trends of the past year will play out the DIRECT Act in a stronger light. Consumer reports show buyers searching out small retailers online. Small meat retailers with state-line road blocks between production and market, like the cattle ranchers of South Dakota, have amplified support of previous years.

There is some push-back against the DIRECT Act. The North American Meat Institute (NAMI) maintains that as just seven states since 2011 have adopted the CIS program, the roadblock to interstate-selling is of the state, not federal, level. However, the CIS program is restricted for use by meat processors with fewer than 25 employees. Furthermore, the CIS application is long and – though the processors applying already adhere to FSIS-approved guidelines – uncertain to yield approval. Individual livestock and poultry producers cannot apply, but can sell their product across state lines if they choose to process through a CIS-inspected meat processor. State inspection programs are required by law to abide by standards “at least equal to” those of federal-inspected plants. These are the same standards that foreign meat and poultry processors selling to the U.S. are required to have.

The COVID-19 pandemic has underlined the need to strengthen the relationship between small retailers and consumers across all markets. Though the language of the DIRECT Act is concise, the implications are many. Erik Jennings, President of the South Dakota Cattlemen’s Association, noted that “through the COVID-19 pandemic we have experienced a trend for consumers wanting to source beef directly from ranchers.” Current restrictions on interstate sales prevented consumers from freely choosing meat products. Instead, most consumers are presented with what their nearby grocers have displayed – products most likely sourced from meat conglomerates like Tyson, Cargill, JBS USA or SYSCO.

The National Cattlemen’s Beef Association began advocating early last year for the allowance of interstate e-commerce, responding, says NCBA’s Todd Wilkinson to an “urgent need for our industry to expand opportunities for state-inspected meatpackers.” The DIRECT Act will provide consumers with the opportunity to voice both dissent and support for individual processors through e-commerce and support retailers across a broader spectrum of industry practices. “There is no reason a steak should be more difficult to order online than any other items on your grocery list,” says Patrick Robinette of the U.S. Cattleman’s Association.

Currently, twenty-three states operate under USDA inspection. The processors in these states are able to sell across state lines. Large meat producers have the financial capital to choose in which state they ranch, thus opening wide their market. Smaller ranchers typically have less freedom to move their place of business to a state operating under USDA inspection. Wealth begets wealth.

The act is not alone in its focus on US meat production policy. The Packers and Stockyards act of 1921 has received recent attention; the recently introduced Justice for Black Farmers Act would reform the language of the act to better protect workers, ranchers and consumers of meat mega-corporations. Larger, industrial meat-processing employees often suffer deleterious conditions, a fact painfully highlighted by COVID-19 outbreaks in unsafe, cramped production environments. While the DIRECT Act does not provide direct reform of large meat and poultry processors, it does allow for the growth and diversification of smaller processors, the employees of which generally report higher job satisfaction.

The DIRECT Act is of benefit to consumers and small retailers alike, and though the allowance of consumers to choose from whom they purchase meat and poultry products could detract some profit from big processors already selling interstate, the immediate difference is nominal. President of the South Dakota Pork Producers council Shane Odegaard says that, “any way we can increase sales, or make our products more readily available to consumers is a win-win situation for farmers, small businesses, and our consumers.”

Learn More:

Niche Meat Processor Assistance Network

While NMP is an excellent resource for small meat and poultry processors, this Oregon State University extension also provides the consumer an in-depth look at what it takes to maintain the American meat market. https://www.nichemeatprocessing.org/

Get Free Range

Beyond providing educational content on small, sustainable animal products, GFR is an interactive tool that allows consumers to map-search for small meat and poultry processors in their area, supplying contact info, connecting consumers to producers and eliminating the need for corporate middle-man contracts. https://www.getfreerange.info/

 

Sources:

“”At Least Equal To” Data System Guidance for State Cooperative Meat and Poultry Inspection (MPI) Programs Electing Not to Use Public Health Information System (PHIS)” United States Department of Agriculture (January, 2015) Retrieved 9 March from: https://www.fsis.usda.gov/guidelines/2015-0003

Direct Interstate Retail Exemption for Certain Transactions Act. H.R. 547 117th Cong. (2021) https://www.congress.gov/bill/117th-congress/house-bill/547/text?q=%7B%22search%22%3A%5B%22meat%22%5D%7D&r=4&s=10

Nemetz, Russel. “Bi-Partisan DIRECT Act Introduced to Help Local Meat Processors.” (2 February, 2021) Retrieved 5 March from: https://www.aginfo.net/report/48580/Land-Livestock-Report/Bi-Partisan-DIRECT-Act-Introduced-to-Help-Local-Meat-Processors#:~:text=The%20DIRECT%20Act%20will%3A,of%20beef%2C%20100%20lbs.&text=of%20lamb

New Markets for State-Inspected Meat and Poultry Act of 2007. S. 1150 110th Cong. (2007) https://www.congress.gov/bill/110th-congress/senate-bill/1150/text?q=%7B%22search%22%3A%5B%22%5C%22New+Markets+for+State-Inspected+Meat+and+Poultry+Act%5C%22%22%5D%7D&r=6&s=9

“Open Markets and Allies Demand Antitrust Enforcement in Meat Industry to Protect Workers, Farmers.” (1 May, 2020) Retrieved 5 March from: https://www.openmarketsinstitute.org/publications/open-markets-allies-demand-antitrust-enforcement-meat-industry-protect-workers-farmers

Schwab, Andy. “DIRECT Act Could Help Sell State Inspected Meat Through e-Commerce.” Northern Ag Network (28 January, 2021) Retrieved 5 March from: https://www.northernag.net/direct-act-could-help-sell-state-inspected-meat-through-e-commerce/

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