by Deborah Jeanne Sergeant
Bigger isn’t always better but staying small has its challenges. Nathan Henderson, founder of Reber Rock Farm Processing Facility in Essex, NY, presented “Logistics of Small Scale Meat Processing Licenses: NYS 5-A Poultry Processing, FSIS Custom Exempt Processing” at the recent NOFA-NY conference.
“The intention starting out on this project was different than what we ended up,” Henderson said of his meat processing facility.
His layout was simple: a 18×42-foot building that includes a 12×18-foot cooler, an 18×18-foot cutting room and a 10×18-foot kill/evisceration room.
“We wanted control over what we do,” Henderson said. “It would be cheaper if we built our own facility. Then everything would be hunky-dory.”
Those lines of thought went into the planning in 2016. The farm was operating its own freezer meat business and Henderson processed in his neighbor’s deer processing facility. As a butcher, Henderson wanted more control over the process. “We were passionate about the animal welfare of on-farm slaughter,” he added.
He’d heard horror stories about slaughterhouses but lacked experience with other processors. He thought that building his own facility would represent a huge cost savings.
Since Henderson had already built a 40×100-foot truss barn and his own family’s home, he felt well-equipped to build his processing facility. He’d installed and designed utilities and even owned an excavator. While the timing was not perfect – his wife was seven months pregnant at the time and he was operating the farm – he plunged forward to build his processing facility.
He hired a flatwork concrete contractor for pouring and surfacing the floor, a refrigeration contractor for the walk-in cooler installation and a dump truck and skid steer contractor for the road finish work. Even with those hires, the cost of labor was only 10% of the total project. He figures that if he had hired someone to build it entirely, labor costs would equal 50% of the total project cost.
To further reduce costs, Henderson purchased much of his equipment used from sources like Craigslist and eBay, “which means less money upfront, but more ongoing maintenance and repair costs plus downtime,” Henderson said. He also purchased new refrigeration equipment, three-phase inverter, printer scale and vacuum packaging machine.
The facility was a state-inspected, 5-A poultry facility, which may process up to 20,000 birds. The farm also has a state-inspected 20-C kitchen which can produce value-added processing like bone broth, sausage or rendered fats. The farm may process large animals for sale by whole or halve but not by the cut.
“All those products need to come from a licensed source,” Henderson said. “Beef or pork sausage would need to come from a USDA facility. The regulations are clear as to how you sell those animals and that ended up being a limiting factor later on.”
The 5-A New York State license costs $200 annually and requires a quarterly inspection by a local state inspector. Henderson keeps water quality testing, sanitation and processing logs. He also posts his Sanitation Standard Operating Procedures (SSOPs). For the 20-C license and inspection, he performs much of the same work as for the 5-A license and pays an additional fee. For his Federal Custom Exempt license, his facility undergoes an annual inspection, and he must keep processing and billing logs. The billing information is regarding customers buying quarters or processing services.
He’s found that his biggest bottleneck is the freezer space. “I quickly realized that with great systems, I, as a butcher, can only process so much,” Henderson said. “In hiring folks to help me do this, I realized I’m a full-time butcher running a farm business. It made sense to train a full-time butcher so I can run the farm business. All of a sudden, the processing facility is running on its own, so I started treating it as a business rather than equipment that brought value to the farm.”
He also built the facility to accommodate the seasonal processing of the farm’s freezer meat and some outside work; however, this was not enough workflow to keep employees working year-round.
“Labor is always a tough one,” Henderson said. “The original labor solution was that I was going to do everything.”
Finding people willing to work September through February was difficult. By the time he had people working out well in the shop, it was time to shut down. Employees seldom returned the subsequent season.
He contemplated if the farm would be better off paying for processing off the farm. “A lot of processing facilities in the area charge about the same prices,” Henderson said. “For the most part, the services we were providing were about the same.”
His estimated annual payments are $16,000 and the cost of off-farm slaughter and processing is $18,000. “Can we justify this investment with so little to no net income and only generating $30,000 to $50,000 in revenue?” he posed.
After four years of trying to make the business work, Henderson had yet to generate income from the investment in the meat processing facility. He views the work volume and seasonality as the major roadblocks.
He began renting the shop to another farmer developing a custom butchering business. He also started sending out his beef and pork to a USDA plant in Vermont for more flexibility in outlets.
“One of the things we’ve considered is what would it take to cut USDA meat under our 20-C licenses … or obtain a USDA license to cut and wrap meat that was killed off-site?” he said. “There’s a lot more to making this investment work for our business than just having a shop.”
Ultimately, it didn’t work out for Henderson. He eventually sold the processing business and returned to full-time dairying.