Processing Matters: Navigating Inspection Pathways for Direct-to-Consumer Beef Sales in Oregon

Today’s consumers are more interested in how and where their beef is produced than ever before. Retail meat counters have become flooded with marketing designed to communicate all the characteristics associated with their products: grass-fed, local, breeds, organic, antibiotic free, and many more. Beneath all the labels, lies the opportunity to for Oregon cattlemen to connect with their consumers. As a small producer, how can you begin to bridge the gap? Many small ranching operations are considering retaining ownership of the calf-crop through the finishing stage and sell beef direct-to-consumer. While this is a great method to connect consumers with the ranchers raising the beef they buy and the food supply, there are some key things to keep in mind when preparing to process meat with the intention of using the direct-to-consumer sales market.

Where the beef is processed matters. If you are producing beef with the intent to sell directly, the processing location of that beef impacts your ability to do so. Depending on the type of inspection that the processing facility holds, it could potentially limit your ability to move the product. In the state of Oregon, there are three types of inspection utilized: Custom Exempt, State Inspection and USDA/FSIS Inspection. Each type of inspection has its own guidelines and impacts on your beef business.

Most meat processors across the state operate under Custom Exemption. These facilities are allowed to operate without the oversight of federal inspectors with the understanding that the products from the animals processed are returned to the owner if the animal. This means any producer using a custom processing facility is not permitted to sale ‘uninspected’ beef after it has been processed. As the owner of the animal, any potential risk associated with a facility that is not overseen by a state or federal agency is assumed by you.

So, what can be done when using a custom exempt processor? All animals, or portions of, must be sold on the hoof. Meaning, any animal can be divided into halves, quarters, or eighths then sold based on live weight prior to slaughter. Slaughter can occur at the designated facility or on-farm by a licensed mobile slaughter business. After slaughter, all owners of the animal must contact the custom facility directly for cutting specifications, and payment. This method ensures transfer of ownership occurs before the harvesting phase, making the recipient of the product the owner. To prevent the resale of ‘uninspected’ meat products, all custom facilities are required to use packaging labeled ‘Not for resale’.

In 2022, Oregon became the first state on the West Coast with an approved state meat inspection program. Taking the number of states with this approval to 28. State inspected facilities are required to operate under conditions ‘at least equal to’ the guidelines set by the Federal Meat Inspection Act for USDA/FSIS plants. The Oregon Department of Agriculture approached this opportunity with the intent to give producers more economic opportunity by diversifying processing opportunities to alleviate bottlenecks. While the national herd size has continued to decline, Oregon’s number of cattle and cales has stayed relatively stable over the past 10 years.

Beef slaughtered or processed at state inspected facilities has the same benefit of inspection when entering the retail market such as farmers markets, local grocers or on-farm, post processing sales. This system has the protentional to give small producers an opportunity to feed their local retailers or do custom ordering for their own sales. However, unlike federally inspected and passed products, meat processed under state inspection is only eligible for sale within state lines. Another benefit of the state inspected processing; is processors can operate under multiple grants of inspection. Meaning, the 16 stationary custom exempt processors and approximately 8- mobile units can become state inspected and grow their customer base. The added advantage of dual inspection grants is allowing producers located in rural counties access to processors what can provide saleable products. Utilization of the growing number of state inspected facilities will allow producers of all sizes the opportunity to sell beef directly to their local consumers.

The Federal Meat Inspection Act (1906) requires that all meat that is commercially sold must be inspected and passed for wholesomeness, and proper labeling to ensure it is safe. The benefit of using a USDA inspected meat processor is the ability to sale individual cuts directly to consumers after processing. These products can be sold at farmers markets, through on-farm stores or through contracts with local businesses. Additionally, meat slaughtered and processed at USDA inspected processors can be sold across state lines giving producers a broader reach when marketing their beef.

Recently many beef producers have invested in the development of ranch branded products and ship frozen boxes with a variation of product through online systems. In the pacific northwest, there is a limited amount of USDA/FSIS inspected meat packing facilities, that are not geographically located near most of the the state’s cattle population. Furthermore, larger packing facilities are often looking for a load between 70-80 head of uniform quality of cattle when purchasing loads to process. Obtaining a load of this quantity without sourcing calves from multiple breeders is generally challenging, often resulting in a group of cattle with varying genetic and phenotypic attributes. When using larger packing facilities there is typically a limited ability for customization of cuts, potentially reducing the variation of cuts any producer would have available to sale. While there are significant marketing and sales advantages when using a USDA inspected processor, there are not an abundance of opportunities for Oregon’s cattle to make their way through the facilities and back to the producer for direct sales. It is more common for cattle to be purchased and processed to enter the commercial meat industry rather than be returned to the rancher for their own market.

Don’t price yourself out of profit. It is critical that as a producer, you are viewing beef sales through a business perspective. With many producers relinquishing ownership of a calf-crop at weaning, the decision to hold onto cattle until they are finished is not one to make hastily. Transitioning to finishing even a small number of cattle can require significant investments in equipment, infrastructure and time. These are all factors to consider when determining prices for your product. Often, when growing a brand pricing is viewed as competitive rather than determining what is needed to sustain the business. Underpricing product can be detrimental to the longevity of a direct sales business. Consumer interest is continually growing, and locally raised, processed and harvested beef can be priced accordingly.

What are your distribution and marketing plans? There is a variety of options to explore when looking to distribute direct marketed beef products. The most successful direct marketed products set themselves apart from many products in the space. This is a producer’s opportunity to tell their story and create a connection through their branding. For some, that is telling the story of their family’s deep history of raising and caring for the land and cattle they own. Others may achieve this though illustrating the experience being a first-generation rancher looking to make their mark on the industry. Another common method is using niche genetics and creating a beef product different than those on the commercial market. This is typically done through specific breed marketing, genetic selection within breeds to achieve a desired meat palatability attribute.

Navigating distribution logistics can pose a challenge when a new business is trying to find its place in the market. Evaluating where the product demand is located plays a large role in determining how your beef will be moved. It is equally important to ensure your beef supply meets the demand. Overselling product, or not having a consistent supply of beef can negatively impact the rate of return customers. Having a steady year around supply of calves being fed is often overlooked when beginning to scale up product distribution.

Understanding your options for meat processing plays a role in deciding what direct sales could look like for your operation. Consumers are looking for more ways to connect with their producer whether it’s through direct on-farm sales, locally branded beef at grocers or the utilization of live sales and custom exempt processing. When deciding which processing avenue to choose, knowing the different marking opportunities that comes with each type of inspection is critical.