NCBA’s Lane Discusses Senate Hearing, Small and Medium Packing Plant Expansion Efforts

Following yesterday’s hearing about the cattle industry in front of the Senate Ag Committee, Ethan Lane, vice president of the National Cattlemen's beef Association (NCBA), joined AgriTalk host Chip Flory to discuss funding available for small and medium processing plants to expand shackle availability and testimony at the hearing.

The first topic was money allocated in what Lane calls the Ramp Up Act, a bill that made it into the appropriations bill in December and allocated nearly $60 million to help state-inspected facilities that want to become FSIS certified to sell across state lines. This support can help expansion and increase slaughter capacity, Lane says.

“This has been a big part of this conversation and it's a hurdle for the state inspected plants, particularly in states that aren't part of the cooperative interstate shipment program. And it's only eight of the 28 states with meat inspection programs at the state level that participate in that,” he says. “This opens the door for a lot of other states that have those small plants to get into that multi-state game and to offer more options for producers to market their product to a wider area.”

There are two different routes a processing plant can participate through. There’s the cooperative interstate shipment program part and getting into the system that way, and these funds are also going to be open to those facilities to apply for grants directly so they can get that money and they can go right to USDA for FSIS Inspection standards, Lane notes. This opens more options for more of those state-inspected facilities to gain access to that larger market.

Flory says $60 million sounds like a lot of money, but these facilities are not inexpensive to build or expand.

“The numbers are staggering,” Lane says. “At $100,000 a hook right now for new hook space, it seems like everything you do in this environment is incredibly expensive. And that's what we're seeing on the new processing capacity side. There'll be another bill dropping today called the Butcher Block Act that we've been working on for two Congresses now. It’s looking at ways to provide loan guarantees and some additional funds so that we can get some of these new hook spaces brought online. When you're talking about tens of millions or hundreds of millions of dollars for 500 or 1,000 head of capacity per day, it’s a serious investment to get one of these facilities off the ground.”

That $100,000 per hook investment is a barrier to entry. Lane says a 25 head per day plant that is a $2.5 million dollar facility investment is a problem the industry is trying to solve. No one will argue that the big four plants have cash-flow issues, but to get some of the smaller plants up and running is a big challenge.

Pivoting to the Senate Ag Committee hearing, Lane says there was a lot of agreement on the creation of a contract library and the need for additional transparency in the industry.

“The hurdles to that are that are those who are opposed for confidentiality reasons. I think it was important for the Hill to hear from some of these economists that a lot of that data that we need is there. It's not like we have to figure out a way to collect it. USDA is getting it now,” he says. “If you read between the lines of some of the senators’ questions, there's a lot of agreement in a bipartisan fashion on that committee about some of those areas and where we can make progress. That's hopefully what USDA heard. And a lot of that stuff they can make changes on, without having to have Congress do anything on it.”

Lane added that while those that testified came from different perspectives—Mark Gardiner of Gardiner Angus Ranch and Justin Tupper of U.S. Cattlemen’s Association, for example—everyone is trying to solve the same problem. They’re just talking about different ways to achieve those goals.

“I hope we don't fall into the trap of denigrating how our neighbor does business because it's different than the way we do it. That's always dangerous in agriculture, because we're just not big enough to divide ourselves up. We need to stick together or we're going to get steamrolled by the vegans of the world and the anti-animal agriculture set,” Lane says.

“We’ve got to make sure that that no matter how you choose to engage in the market, there is a way for you to do it and a path to profitability if you put the work in, and hopefully that was recognized yesterday. I think it was helpful to hear all of those perspectives, and I certainly think that a lot of those senators had questions answered that they just haven't had a chance to really get a good explanation on until now,” he continues.

One voice that was absent from the hearing was one that purely represents the packers. And while those represented could shed light on the dynamic, there wasn’t a representative from a plant, Flory noted.  

“I think the hope we had for the hearing was that it wasn't really as much a hearing based on different segments of the industry as it was folks who can really speak to the challenges across the supply chain. So I think those economists who could go multi-direction and say, ‘look, I don't have a dog in this fight other than I'm watching it, and here's what I see.’ I think that was the real deliverable, and I think that the chairwoman Stabenow did an excellent job of putting together a panel that did that,” Lane says.

Lane says he feels optimistic that the hearing provided action steps to start to bring solutions to the industry.

“The after-action reports that we've seen were accurate in that there's a lot of agreement that there's some issues and problems. There's a lot of agreement that our producers aren't getting paid what they should be getting paid. And there's a lot of disagreement about how to solve that,” he says.

Watch the full hearing here: https://www.agriculture.senate.gov/hearings/examining-markets-transparency-and-prices-from-cattle-producer-to-consumer