During its Jan.19 meeting, the Sierra County Commission approved a resolution in support of House Bill 33 that provides for reinstatement of state meat inspection. If passed, the bill will allow the New Mexico Livestock Board to do inspections. Producers will then have the option of having their livestock “harvested” (slaughtered and butchered) in state-inspected plants that meet federal standards. The meat could then sold in-state, directly to consumers, local restaurants and retailers or at farmer’s markets.
“Big ranchers are learning the market had changed, and we now have consumer demand to sell direct,” state Representative Rebecca Dow (R-District 38), an HB33 co-sponsor, explained to the Sun. HB33 proponents hope that a New Mexico meat inspection program would create economic opportunities by boosting the number of in-state meat processors and increasing New Mexicans’ consumption of New Mexico beef.
WHY NEW MEXICO LOST ITS MEAT INSPECTION PROGRAM IN 2007
New Mexico had a food inspection program administered by the livestock board, a state agency, until 2007. According to a comprehensive review of the livestock board’s inspection program conducted in 2007 by U.S. Department of Agriculture’s Food Safety and Inspection Service, the program’s 2006 annual review revealed “chronic and systemic food safety violations.” Among other problems, the New Mexico program was underfunded, had an insufficient number of staff, and the staff did not have sufficient regulatory knowledge, did not adequately test for pathogens and did not demonstrate adequate oversight.
After the state worked unsuccessfully for 18 months to turn the program around, then Governor Bill Richardson opted to allow FSIS to take over inspections in the state.
HB33 would amend Section 77-2-7 NMSA 1978 to add language that further defines the livestock board’s existing authority to promulgate rules for meat inspection. The new language—11 words in all—specifies that NMLB may adopt meat inspection rules “to ensure the safety and quality of meat for human consumption.” The bill also removes language that limits the livestock board to employing only livestock and brand inspectors, creating the ability for the agency to employ inspectors of slaughter facilities and meat and poultry processing facilities.
HB33 leaves it up to the livestock board to determine how the reinstated inspection program would be structured, funded, staffed and supervised. Procedures to train inspectors and ensure their compliance with federal food safety standards are not specified.
HB33’s Fiscal Impact Statement on HB33, prepared by the Legislative Finance Committee for the finance committees of the New Mexico Legislature, warns: “If meat inspection responsibility returns to the state, steps will need to be taken in the design and implementation of the program to ensure NMLB can meet federal requirements and avoid the problems that caused the original program to be shut down.”
This is not the first legislative attempt to restart the state inspection program. In 2019, HB571 was introduced to provide funds to New Mexico State University to collaborate with the livestock board to study the development and implementation of a state inspection program. The education committee recommended passage of that bill, but it was later indefinitely postponed. HB33 was preceded by an identical bill last year that did not get out of committee. HB33 is scheduled for its first committee hearing next week.
Representative Dow argued in favor of the bill’s passage this year in an email to the Sun because the “feds will not give us more inspection, yet the demand for local meat is growing.”
At Dow’s request, Belinda Garland, executive director of the livestock board, elaborated on the nature of the perceived bottleneck.
“The issue is that there is a limited number of USDA-FSIS inspectors, therefore, inspections cannot always be completed in a timely manner,” Garland said in an email to the Sun.
“Also, several meat and poultry processing businesses in New Mexico find it difficult to complete the process of meeting the FSIS requirements, and they feel that an in-state meat inspection program will allow for more one-on-one guidance through the application process.
“The main focus of the in-state meat and poultry inspection program is to increase the responsiveness to local meat processors, which could result in growth of the value-added meat industry in the state. This will provide more meat products for New Mexico consumers,” Garland concluded.
New Mexico currently has 35 USDA-inspected processing plants, according to the 2021 FSIS inspection directory. Only six are authorized to butcher meat, and two of these plants were granted that status last year.
USDA cannot cap the number of meat-processing plants FSIS must inspect in a state, according to Chadelle Robinson, an assistant professor in the agricultural economics and agricultural business department at NMSU. If a plant meets all the requirements for inspection, she said, a federal inspector must be provided. Robinson added, however, that there is a lag time between when a meat processor successfully completes an application and when the USDA can muster the personnel to inspect a new processor.
SIERRA COUNTY COMMISSION’S ARGUMENT FOR HB33
At the county commission’s Jan. 19 meeting, John Richardson of Slash Ranch in Catron County and Caren Cowan, formerly the director of New Mexico Cattle Growers Association and publisher of New Mexico Stockman, gave presentations in support of HB33.
Richardson informed the commission that New Mexico ranchers send millions of dollars of animals to Texas and other states that have more USDA-inspected processing plants. Then New Mexico has to import beef from out of state to meet demand. Passage of HB33 would both create meat inspection jobs in New Mexico and, more importantly, allow producers in Sierra and Socorro Counties to get “more for their hard work.” Under the present system, out-of-state meat processors reap most of the reward, he said.
Cowan, who is now executive director of Protect Americans Now, a not-for-profit organization advocating against “government overreach,” confirmed that 99 percent of New Mexico beef cattle are shipped out of state for processing. HB33 will “help us become more self-sufficient as ranchers, as communities,” she said, pointing out that, at one point during the pandemic meat, was rationed in Albuquerque because of supply chain problems caused by coronavirus-related shutdowns.
Richardson agreed that “COVID has really peeled back the layers of how fragile our meat delivery system is.”
Commissioners Hank Hopkins, Travis Day and Jim Paxon all expressed support for HB33. Sierra County has two small meat-processing plants, in Williamsburg and Arrey, but they are not USDA-inspected. Reinstating state meat certification will support the county’s economic development efforts, Paxon said, in that it should result in a “little larger operation in Sierra County to process beef and pork.”
It will also support beef ranchers like Richardson, Commissioner Hopkins and Commissioner Day’s father, Paxon explained. Producers will be able to sell their locally raised and butchered meat and won’t have to incur the extra expenses associated with shipping livestock out of state for processing.
These benefits will compensate somewhat for tough market conditions overall. Commissioner Day noted that, while retail prices for meat are rising, the increase is not trickling down to New Mexico producers, who are actually seeing livestock market prices going down.
HOW HB33 COULD OPEN A NEW DIRECT MARKET
There are currently two ways that New Mexico producers can market their meat directly to consumers, according to a New Mexico State University Cooperative Extension Service’s publication entitled “Selling Meat Director to Consumers from the Ranch or Farm” (Guide B-234), published in May 2020.
The first is to have livestock butchered at a USDA-inspected plant. That meat can be sold in or out of state. “We have to meet USDA standards in order to sell out of state and to any federally funded program, like senior meals sites and schools,” Dow explained to the Sun.
The second option for New Mexico producers to have meat processed is to seek a “custom exemption.” Under this provision, a producer sells a live animal to the consumer, who is then responsible for having it processed. Meat prepared this way must be for the consumer’s personal use only and may not be sold to third parties. While not subject to federal inspection, the processor is still required to follow food safety guidelines and is inspected annually.
HB33, if passed, would give producers a third way to market meat, by having livestock processed at a state-inspected plant. Meat processed in state could only be sold in state—to consumers, restaurants, retailers and at farmer’s markets.
NMSU’s extension service is encouraging New Mexico producers to take advantage of custom exemption provisions to help them “weather the storm.” Marcy Ward, one of the authors of Guide B-234, explained to the Sun that the custom exemption process is informal. In some cases, a group of people will get together to purchase an animal and share the butchered products. In other cases, a rancher will become aware of interested consumers and work with them as a group.
Producers generally have the responsibility of scheduling and transporting the animal for processing. They can’t simply sell an animal and walk away. Guide B-234 educates the producer on the information that should be provided consumers so that they can have the animal properly processed.
Commissioner Day, in an interview with the Sun, said that he is not aware of any “middle-man” business in the state that can link ranchers with consumers, or vice versa. The New Mexico Department of Agriculture has filled some of the void, he pointed out, by providing an online listing of ranchers who have livestock to sell to consumers.
Ward said that there seems to be considerable interest in custom exemption processing. Guide B-234 has been downloaded 12,000 times since it was posted.
An estimated 25 facilities provide custom processing in the state (there is no official list). According to Ward, many of the processors are backlogged, with delivery scheduled as far as six months out.
A possible remedy, Ward suggested, would be a “mobile abattoir” that could travel to ranches and provide processing on site. Introduced this legislative session, House Memorial 1 requests that the New Mexico Department of Agriculture assess the economic benefits of this concept. The experience of the Taos County Economic Development Corporation may be relevant. In 2006 TCEDC received $500,000 from the New Mexico Legislature to establish a mobile abattoir, better known in northern New Mexico as a matanza. The mobile matanza closed for lack of funding in 2018, but because the service was missed, efforts are underway to restart it, the House agriculture and water resources committee was informed at a recent legislative meeting at which HM1 was discussed.
STARTUP COSTS AND REALITIES
Ward believes HB33 will pass. The difficulty might lie in convincing New Mexico processors to become state-inspected plants, because they will have to fulfill the same federal requirements demanded of a USDA-inspected plant. New procedures and paperwork could increase costs. However, the ability to market meat with a known New Mexico terroir is a selling point that may persuade existing processors to become state-inspected and motivate others to start new processing businesses, Ward said.
NMSU’s Chadelle Robinson, in collaboration with colleague Jay Lillywhite and graduate student Lenora Parker-Sedillo, conducted and published a study last fall that examined meat inspection programs in 22 states. From their interviews with program directors, the NMSU team were able to describe keys to implementation and operating success. All policies and procedures must be “at least equal” to federal standards. Inspectors must be trained and their training updated regularly. Because the costs of training and retaining personnel is a major challenge for many states, the program must be well funded. Communication is essential. The program must establish close working relationships with FSIS and with processing facilities.
As part of their research, the NMSU collaborators also interviewed 21 managers of existing New Mexico meat-processing operations.
Eighteen were not interested in a state meat-inspection program either because they were already FSIS-inspected or only processed wild game, or because they could not afford to meet the standards required to sell meat products to consumers.
Only six managers expressed an interest in participating in a state inspection program. These six plants operate under the custom exemption provision, processing about 4,500 head of beef a year. Based on their interviews, the NMSU team determined that the six plants could potentially increase capacity by another 3,600 animals (beef, hogs, sheep) a year under a state meat inspection program.
A New Mexico meat inspection program of this size (6 plants, 3,600 animals) would have an annual estimated cost of $1.14 million and employ ten. An additional $289,249 “implementation budget” would be needed the first year to purchase vehicles, supplies and hire personnel.
HB33’s Fiscal Impact Report projected the expenses of creating a statewide inspection program that would grow from five full-time employees in the first year to 17 in the second and subsequent years. Start-up costs would be $500,000; the second-year budget would increase to nearly $1.6 million and stabilize at $1.614 million in the third and subsequent years.
“Some, but not all, of the cost of the program will be offset by inspection fees, and upon audit and certification of New Mexico’s program, the U.S. Department of Agriculture may reimburse up to 50 percent of program costs,” the impact report states. “However, NMDA warns the state would likely need to fully fund the program for at least the first three years of implementation.” The report also states that “funding for recurring operating costs in excess of new inspection fee revenue and federal funding would likely be requested from the general fund.”
While the costs of establishing a state meat inspection program can be reasonably estimated, the actual economic benefits to the state are not clear. The consensus among directors of other state programs, according to the NMSU study, is that “program costs far exceed revenues.”
However, the NMSU team found that the directors also believe that their programs “encourage small business development, support rural economies, allow smaller producers the opportunity to expand, and encourage consumers to purchase local products”.
THE ECONOMIC DEVELOPMENT CHALLENGE FOR SIERRA COUNTY
During the Sierra County Commission’s discussion of the resolution to support HB33, Commissioner Day made reference to a 2018 agribusiness capacity analysis conducted by NMSU and published by the Middle Rio Grande Economic Development Association. Among other things, it assessed the regional economic impact and potential profitability of a local meat processing plant. “Economically, if one opened up here, it would be a big game changer for our county,” Day said at the January meeting.
The analysis, which relied on data from 2012 (the most recent available), posited: “Direct sales of agricultural products to consumers by small farms is essential for building a support network for economic developments in communities.” The number of farms in Sierra County with direct sales to consumers decreased from 22 to 13 between 2007 and 2012, however, resulting in a drop in sales from $112,000 to $24,000.
Expanded or new meat processing operations in the region would help to boost direct sales, according to the analysis. The number of cows raised in Sierra and Socorro Counties may be enough to support a small-to-medium processing plant. Socorro County might be the better location, because in 2012 it had almost 47,000 cattle/calves, while Sierra County had just under 19,000.
State regulations will play a role in where a meat processing plant can be located, because these operations can have an impact on the environmental and public health, the analysis points out. For example, processing a single animal consumes between 150 and 200 gallons of water.
It will require a significant capital commitment to start, sustain and expand a meat processing business here, according to the analysis.
Three different sized plants were modeled: a very small plant serving Socorro County; a small plant serving Socorro and Sierra Counties and a plant that would serve producers throughout the region. The cost-benefit findings are summarized in the table.
Commissioner Day said the county will help existing or start-up processing businesses in any way possible, such as providing information about available governmental assistance or New Mexico Local Economic Development Act grants.