Reducing Federal Barriers for the Sale of Meat

June 1, 2020 14 min read Download Report

Authors: Daren Bakst and Jeremy Dalrymple

Summary

Federal meat-inspection laws have created barriers for farmers to find meat-processing plants whose products can be sold in interstate and foreign commerce—and even in intrastate commerce. Meat and poultry products from state-inspected facilities are generally prohibited from being sold across state lines. Custom-slaughtered meat is prohibited from being sold even in intrastate commerce. Congress should remove these prohibitions. The New Markets for State-Inspected Meat and Poultry Act would address the state-inspected prohibition, and the Processing Revival and Intrastate Meat Exemption Act (PRIME) Act would address the custom-slaughtered meat prohibition. These reforms would likely create more options for farmers, increase meat-processing capacity, and help to address any meat-supply problems connected to a possible second wave of COVID-19 or future pandemics.

Key Takeaways

Meat-supply disruptions caused by the coronavirus have helped expose the federal barriers to the sale of meat.

The federal meat inspection system generally prohibits interstate sale of state-inspected meat and intrastate sale of custom-slaughtered meat.

Congress should remove these barriers to give farmers and consumers more options and mitigate potential meat-supply shortages if there is a second wave of COVID-19.

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Due to worker illnesses and even deaths, there is a bottleneck at meat-processing plants impacting the entire meat supply. Livestock and poultry farmers have been faced with the problem of not having a destination for their animals. Unfortunately, this has led to farmers euthanizing animals. In addition, consumers have been seeing fewer meat and poultry options—and higher prices.REF While it remains a fluid situation, some plants have reopened,REF and there is a proactive effort, both within the government and the private sector, to address this problem.REF This bottleneck problem, though, has put the meat supply chain in the public spotlight.REF

In examining the meat supply chain, one of the most glaring issues is the federal meat-inspection system. Federal meat-inspection laws have created significant obstacles for farmers to find meat-processing plantsREF whose products can be sold in interstate and foreign commerce, and—in some instances—even in intrastate commerce. This Issue Brief examines these barriers and provides recommendations that would free up the market to offer additional meat-processing options for farmers.

Three Types of Meat-Processing Facilities

There are three different types of meat-processing facilities,REF all of which are regulated by federal law:REF

Federally inspected facilities. The animals can be processed at a U.S. Department of Agriculture (USDA)–inspected facility. The meat from these facilities can then be sold in interstate and foreign commerce.REF
State-inspected facilities. There are 27 states that operate USDA-approved state meat and poultry inspection programs.REF As explained by the USDA, this means the state programs meet and enforce requirements “at least equal to” those imposed under the Federal Meat Inspection Act, Poultry Products Inspection Act, and Humane Methods of Slaughter Act of 1978.REF However, despite this equivalency, meat from these state-inspected facilities may only be sold in intrastate commerce (i.e., within the state).REF The USDA runs the Cooperative Interstate Shipment Program that allows some facilities in participating states to sell their meat in interstate and foreign commerce.REF This program, however, is very narrow in scope, covering employers with fewer than 25 employees.REF Only seven states participate, and there are fewer than 70 plants within those states. (On May 20, 2020, Iowa became the seventh state.)REF
Custom slaughterhouses. These are facilities that are not subject to the same level of inspection as the federal and state facilities. Nonetheless, they do have to meet federal sanitation and facility maintenance requirements, along with the federal law on humane slaughter.REF Currently, custom slaughter facilities offer services to those who want an animal slaughtered or processed for their own personal use.REF Meat cannot be sold commercially from these facilities, even in intrastate commerce.

As can be seen, farmers have no choice but to get their animals slaughtered at a federally inspected facility for the meat to be sold beyond state lines. Even getting meat sold intrastate can be a challenge, since federally inspected facilities and state-inspected facilities can be several hours away from some farmers.REF This long-distance traveling can be costly, time-consuming, and stressful for the animals.REF Further, there are 23 states that do not have state-inspected facilities.REF

State-Inspected Meat Reform

The USDA deems state-inspected facilities to have equivalent inspection schemes to federally inspected facilities.REF Therefore, there should be no prohibition on the sale of state-inspected meat and poultry products in interstate commerce.

On May 11, 2020, a bipartisan group of Senators sent a letterREF to Senate Majority Leader Mitch McConnell (R–KY) and Senate Minority Leader Chuck Schumer (D–NY) in support of legislation introduced by Senator Mike Rounds (R–SD), the New Markets for State-Inspected Meat and Poultry Act, which would allow for the interstate sale of state-inspected meat.REF

Additionally, some state and federal policymakers are asking for temporary pandemic-related exemptions from the USDA to allow state-inspected meat to be sold or donated across state lines. Recently, Wisconsin Interim Agriculture Secretary Randy Romanski sent a letter to USDA Regional Director Joseph Priore asking for a temporary waiver on the restriction that prohibits the sale of state-inspected meat across state lines.REF Similarly, the South Dakota congressional delegation wrote Agriculture Secretary Sonny Perdue, urging him to “consider allowing state-inspected meat and poultry products to be donated or sold across state lines during this crisis.”REF

Custom-Slaughtered Meat Reform

This congressional session, even before the pandemic, Representative Thomas Massie (R–KY) and Representative Chellie Pingree (D–ME) reintroduced the Processing Revival and Intrastate Meat Exemption Act (PRIME Act).REF This bill would allow farmers to use custom slaughterhouses as a way to sell their meat in intrastate commerce.REF

Critics of this reform make general allegations that it would threaten food safety.REF There are different ways to effectively protect food safety, and it could vary depending on the size and nature of the facility. These differences are something the current system does not take into account.REF There also should not be an underlying assumption that once custom-slaughtered meat is allowed to be sold commercially, the same regulatory regime within the state would still remain in place. In fact, many states would likely make regulatory changes to address any health and safety concerns regarding custom slaughterhouses.REF In addition, beyond regulation, private businesses have significant incentive to ensure meat safety due to liability concerns and potential long-term damage to a company’s reputation and profitability.REF

One of the major responsibilities of states is to protect the health and safety of its citizens. There is no reason to assume that the federal government is the only way to protect the health and safety of in-state residents engaged in intrastate commerce.REF States are more than capable of taking appropriate action. For those legislators who believe even slightly in principles of federalism, the commercial intrastate sale of custom-slaughtered meat should be easy to support.

Recommendations

It is not clear whether allowing state-inspected meat to be sold across state lines or allowing custom-slaughtered meat to be sold in intrastate commerce would significantly increase the meat-processing capacity in the U.S. during the pandemic. However, over time, these reforms would likely change market dynamics, create more options for farmers, and increase meat-processing capacity.

Specific recommendations include:

Congress should examine how existing federal regulations limit meat-processing capacity, hurting both farmers and consumers. This will help to address any meat-supply problems connected to a possible second wave of COVID-19 or future pandemics and to develop sound policy regardless of pandemics.
Congress should allow meat from state-inspected facilities to be sold in interstate commerce. This reform has already been included in the New Markets for State-Inspected Meat and Poultry Act.
Congress should allow custom-slaughtered meat to be sold in intrastate commerce. This is a reform made in the PRIME Act.
Ideally, Congress should revisit the entire meat-inspection system. In doing so, Congress should develop a regulatory system that accounts for the different types of processing plants. Regulations should not inherently favor large processing facilities and serve as barriers to entry for smaller facilities. Further, Congress should provide much greater respect for states.

Conclusion

The federal meat inspection system has created an inflexible system that makes it unnecessarily costly and burdensome for some farmers—and severely limits how meat can be processed for interstate and intrastate sale. If meat and poultry products from state-inspected facilities and custom slaughterhouses are allowed to be sold more widely, this will make a real difference for American consumers. Regardless, the structure of the meat-processing industry would better reflect a response to market forces—not to federally imposed restrictions.

Daren Bakst is Senior Research Fellow in Agricultural Policy in the Thomas A. Roe Institute for Economic Policy Studies, of the Institute for Economic Freedom, at The Heritage Foundation. Jeremy Dalrymple is a Research Associate in the Roe Institute.