- 11.27.2022
Bozeman Daily Chronicle: Montana increases state meatpacking capacity with rancher-owned cooperative
The Montana Premium Processing Cooperative in Havre celebrated its grand opening last week, giving Montana ranchers more options for meat processing as officials work to boost state meatpacking capacity.
The co-op, a brainchild of Montana Farmers Union members, will serve as a slaughterhouse and processing facility for Montana producers, with the capacity to process around 3,000 head annually and employ multiple full-time positions once fully operational in January.
The cooperative model aims to stop ranchers from losing money to out-of-state meatpackers, while addressing the limited capacity and lengthy wait times that plague processors in Montana.
“It keeps the power of the facility in the hands of the people using it to harvest their animals,” said Matt Rains, MFU chief of staff. “It’s not at the whim of a private entity.”
On Monday the co-op had 52 members who purchased a $5,000 stock to invest in the startup. Through grants, government money, and member shares, the million-dollar facility was able to open debt-free.
Just four meatpacking companies — Tyson, JBS, Marfrig, and Seaboard — control around 85% of the meat market. According to a federal government analysis, those companies controlled the market to double their profit margins during COVID while ranchers lost money.
“But when you take out the middleman and sell the animal direct to the consumer, the consumer saves money and the producer makes money,” said Walter Schweitzer, MFU president and co-op board director. “Everyone wins, except for the corporate monopolies.”
Paul Neubauer, a Havre-based rancher and co-op board chair, said most members joined because they had to travel long distances to a USDA-inspected facility, or faced difficulties finding a harvest slot.
“Ranchers are effectively competing across the state for harvest slots… there are long delays and scheduling is many months out,” Neubauer said.
Brett DeBruycker, a rancher based in Dutton, will use the co-op to expand retail and online beef sales. He’ll also save gas money when the drive to the processor drops from five to two hours, and receive an annual dividend.
“Getting more of these local processing plants up and running helps ranching remain viable, and keeps money in local communities rather than in CEO bonuses,” DeBruycker said.
Willow Wieskamp, a rancher near Sunburst, processes her cattle in Ronan. It’s the closest USDA-inspected facility to her — and a four-hour drive.
The co-op will cut that drive in half, Wieskamp said. She also hopes it will have a more consistent slaughter schedule. She books in Ronan a year out, and has to accept whatever slots are available, even if they’re inconvenient.
“I really hope it’s a success,” Wieskamp said. “Financially, it would have a huge positive impact.”
Eric Belasco, agricultural economics professor at MSU, said ranchers used to get more money for their products, but that dropped as steps in the supply chain increased.
When a consumer buys a hamburger, the money is distributed among all the actors it took to sell that product — the rancher, the feedlot, the processing plant, the truck driver, the grocery store, and so on.
But the idea is that if ranchers can hold onto their product longer, they’ll get more money, Belasco said. Members of the Havre co-op will still own their animals when they’re processed unlike most ranchers selling to slaughterhouses and feedlots.
Still, in a large facility, more animals drive down the average processing cost. Their size and workforce makes them more efficient than smaller packers, Belasco said.
“They’re tough to compete with financially because, at the end of the day, you have to make money,” Belasco said.
But during the COVID-19 pandemic, consumers saw the consequences of relying on just four out-of-state corporations for meat processing, Schweitzer said.
“When consumers were going to the grocery store and being rationed dairy products and meat while livestock producers were euthanizing their livestock, and dairy producers were dumping milk down the drain — this is a broken system,” Schweitzer said.
Increasing state meatpacking capacity is a bipartisan goal for Montana politicians. This year, Democratic Sen. Jon Tester secured millions in COVID-relief money to support local meat processors, and Republican Gov. Greg Gianforte finalized an agreement with the USDA that allows state-inspected facilities to ship products across state lines, creating more markets for Montana meat.
Montana’s meatpacking capacity more than doubled this year, the governor’s office said.
In fiscal year 2021 (July 1 through June 30, 2021), state-inspected and custom facilities processed 50,901 animals. In FY2022, that number grew to 105,332 animals.
For context, Montana ranchers raised 2.5 million cattle in 2022. There are 33 USDA-inspected facilities in the state, a few dozen state-inspected and custom-exempt facilities, and a handful of cooperatives.
“We believe there are still opportunities for processing expansion in the state,” said Keni Reese, spokesperson for the Montana Stockgrowers Association. “Having more processing options in Montana provides more opportunities for producers to add value to their product.”
Members hope the Havre-based co-op will help ranchers statewide. They already have representatives from Bozeman, Kalispell, Livingston, and Billings.
“We have a pretty wide footprint in terms of memberships,” Neubauer said. “There’s a lot of interest from people even a couple hundred miles away.”
Last year, the Montana Farmers Union purchased a mobile harvest unit to help ranchers butcher animals locally — a plan that fell through because of the state’s meatpacker shortage.
But the mobile harvest unit found a new home in the Havre facility, and it might move again soon.
Once the co-op reaches capacity, MFU hopes to move the mobile unit to a new facility, and then build a permanent kill floor in Havre.
“The beauty of the co-op model is the new facility will go to the place with the most need, because the members will decide the next location, ” Rains said.