In the maze of meat production, processing and distribution challenges triggered by COVID-19, establishing a local meat processing business began to look more appealing to businessmen and women in the agriculture sector than ever before.

The initial investment in facilities can be one of the most daunting aspects of establishing a meat processing outlet, and for many people, navigating the legal maze of inspection guidelines is a close second. In a June 3 webinar by the National Agricultural Law Center, a unit of the University of Arkansas, senior staff attorney Elizabeth Rumley gave an in-depth look at the legality of inspection requirements and funding for processing operations of all sizes.

Federal Inspections

The United States Department of Agriculture Food Safety and Inspection Service is the head department for processing facility inspections. In the 50 continental states, Puerto Rico, Guam and the Virgin Islands, FSIS oversees 6,458 federally inspected facilities. Of that number, 670 are beef processing plants, 611 pork plants, 252 chicken plants and 112 turkey plants.

When someone refers to meat being “USDA Inspected,” it falls under the authority of FSIS, specifically one office under the main branch.

“When you’re looking at the direct responsibility for slaughter, it would be under the requirements of the Office of Field Operations,” Rumley said.

One of the first questions for parties interested in opening a plant or interested in the overall economics of processing would be — “What’s it cost?” In many places, producers would pay a premium to have their beef or pork processed in a federally inspected facility, so the inspection itself must be the source of the added costs — but that assumption would be wrong in this case.

“One of the big questions everyone wants answered is where the money comes from,” Rumley said. “In this case, FSIS, as well as inspection, is funded by congressional appropriations.”

Inspectors themselves are paid through federal funds and not directly by the processing plant. Because inspectors in federally inspected plants have to be present at all times when the plant is running in order for the meat to receive their stamp of approval, there are some costs associated in special circumstances. Inspections have no costs associated for the owners of the processing plants, unless they want to the inspectors to be present for overtime or holiday hours, in which case there are some charges associated.

“There are user fees that are put into place for plants when they’re looking at overtime or holiday inspection,” Rumley said. “It’s when they’re going above and beyond that basic element of inspection that there are some user fees involved.”

For many producers hoping to market their beef directly to consumers, processing in a federally inspected plant has the benefit of producing an end product that can be sold to individuals interstate or internationally. This feature is especially ideal in the Four State area where commerce across state lines is typical.

“In order to become a federally inspected plant, you have to meet the appropriate facility standards in terms of sanitation, building and maintenance requirements as well as food safety standards,” Rumley said. “As well as meeting those requirements, the next part of eligibility is based on whether or not your state has a Meat and Poultry Inspection program.”

The Meat and Poultry Inspection program is a state-level inspection program. Kansas, Oklahoma and Missouri all have an MPI program, while Arkansas does not. If the state has an MPI program, the processing facility owner must specifically request federal inspection.

In states without MPI, the processor just needs to be a plant interested in selling products across and make FSIS their default inspector.

State Inspections

FSIS also has a hand in state Meat and Poultry Inspection programs. The Federal Meat Inspection Act allows FSIS to delegate inspection authority to state agencies. This sharing of responsibility also comes with some sharing of funds, requirements and some benefits.

“Meat and Poultry Inspection programs are set up through a cooperative agreement with FSIS and the state together,” Rumley said. “They are reviewed annually to ensure the state still meets the “at least” requirement and holds the same standard.”

State inspection requirements have to be ‘at least equal to’ federal requirements. The wording in this case is critical, as some specialized programs require state inspecting to be the “same as” federal requirements.

“It’s important to note that states do not have to have that identical MPI program — it just has to be equal to,” Rumley said. “If they want to go above and beyond what the FSIS requires, that’s a possibility, but they cannot go below that initial standard.”

Products inspected under a state program may only be sold or distributed within the state in which they were processed. Despite the similarity of the inspection guidelines, state-inspected products do not have access to outlets across state lines or internationally.

“Products that are inspected on a state-level by a state inspector may only be sold through intrastate commerce, which means only within the state itself,” Rumley said. “In order to be a state-inspected establishment, you have to meet the state requirements for facility and food safety standards.”

For MPI programs, FSIS provides up to 50 percent of the state’s operating funds for inspectors. State programs and the state agency also supply some state funds for the state inspectors, at least 50 percent of funds for MPI inspectors comes from the state itself. Currently, federal funds are provided at a rate between 48 and 49 percent.

“Twenty-seven states as of fiscal year 2019 have state-inspected MPI programs,” Rumley said. “Throughout those states they provide inspections at about 1,300 small or very small processing facilities.”

A small processing facility has 10 to 499 employees, while a very small plant has less than 10 employees or less than $2.5 million in annual sales. Similarly to the way processing plants have to request federal inspection, they also have to directly request state inspection through MPI.

Once inspection is granted, the state inspector also has to be there at all times to give the state stamp of inspection. Earlier, “same as” and “equal to” requirements were discussed between FSIS and MPI processors.The “same as” requirement applies to state-inspected Talmadge Aiken plants.

Talmadge-Aiken plants, or cross-utilization plants, use agreements between FSIS and MPI also called the Federal-State Cross utilization program Effectively, these plants are under federal inspection but operating with state inspection personnel and their products can be sold interstate rather than intrastate.

Inspectors for Talmadge-Aiken plants are employed by the state and paid with state funds but up to 100 percent reimbursed through federal funding. There are only 412 Talmadge-Aiken plants in the United States. The state as a whole has to have entered an agreement between their state MPI and FSIS in order for plants to apply for Talmadge-Aiken status. Oklahoma is the only state in the Four States with a Talmadge-Aiken agreement.

Processors with fewer than 25 employees in MPI programs can apply for Cooperative Interstate Shipment where the state enters into additional cooperative agreement with FSIS, and must meet “same as” federal requirements. In this instance, the agreement is made on an individual plant-by-plant basis rather than statewide. Missouri has a handful of plants utilizing this style of agreement.

Custom Processors

Federal and state inspections are both great ways to merchandise products coming out of a processor, but for producers looking for an outlet for processing meat for personal consumption might find custom processing less restrictive.

“When you’re talking about custom slaughter, in practice this means there are very limited requirements that apply when a facility slaughters and processes animals for the owner’s personal use,” Rumley said. “Obviously, not everybody has the skillset to slaughter and process their own beef, their own poultry, their own animals of any kind.”

Custom slaughter works for both livestock and poultry, however, the only people eligible to consume meat processed in these facilities are the animals’ owners, members of their household, non-paying guests and household employees.

“One of the requirements is that the slaughter or processing has to be performed by the custom-exempt facility acting on behalf of the owner of the animal,” Rumley said. “One way to look at it is to consider the facility as performing a service rather than selling a product.”

In this scenario, there may be more than one owner of a live animal delivered to the plant — for instance, four people could join forces and each pay for a quarter. Products processed this way may not be sold or donated and they have to be stamped as “not for sale.” Initial determination on what kind of inspection to pursue is made by the business owner, and after that there will be a periodic review to make sure requirements are met either by FSIS or state agency.

While requirements are more relaxed for custom processors, they still have to meet sanitary, labeling and record-keeping guidelines. State or federally inspected plants can combine slaughter types where specific days or weeks are designated custom and inspectors don’t have to be present. In these cases they must halt production and completely clean and sanitize the plant between runs of custom or inspected processing.

New Legislation

New processing legislation was proposed June 2 in the form of the Processing Revival and Interstate Meat Exemption Act, or the PRIME Act, sponsored by Sen. Angus King and Rep. Thomas Massie.

“The effect of this PRIME act would be to allow meat that is processed at a custom exempt facility… to be sold to consumers and businesses within the state,” Rumley said. “There are some questions remaining if this bill were to pass. One of them would be based on the language itself since it’s unclear if you have to have a specific state law allowing custom slaughter.”

FSIS and custom requirements are inherently different and Rumley anticipated that if passed, the act could have an impact on trade. Currently, the United States cannot impose restrictions on foreign goods that are higher than required on goods produced in the United States. If the inspection requirements for meat sold within a state were lifted, the international restrictions might have to be treated in kind.

Now, other countries have to meat FSIS standards before imports are allowed. The legality of meat processing nationally and abroad is a very difficult arena to navigate. For more information on processing requirements state by state, the National Agricultural Law Center’s guide can be found here

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