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Cut and Wrap: A Solution to Dufferin County’s Livestock Processing Problem?

Dufferin livestock producers have had a long-standing dilemma. Once they raise their animals, there are limited options on how to harvest the meat. As a result, it has become hard for local small-scale farmers to expand at the same rate as their larger corporate competitors.

At a Dufferin County Community Development and Tourism Committee meeting held on March 25, 2021, Mallot Creek Group, which has been designing and building food plants across North America for over twenty years, presented a possible solution to this predicament.

“Where we are seeing the opportunity would be [for local livestock producers] to partner with local abattoirs for ‘kill and chill’, and then to construct a processing facility, which would age beef, process multiple species, and package, at a different location,” explained Kale Cowper of Mallot Creek.

This operation, as defined by Mallot Creek, is known as a ‘cut and wrap’ facility.

“The definition of ‘cut and wrap’ is just taking primal pieces of meat, and cutting and wrapping into steaks and burgers and sausages and things like that,” says Bruce Cowper, President of the Mallot Creek Group.

The specific problem that Mallot Creek identified was that local farmers ‘do not have access to close, timely, quality custom slaughter, fabrication, and processing services for the animals they raise.’ In this context, ‘custom’ means that the farmers can retain ownership of the finished product and sell through whatever methods they decide.

“The shortage in the abattoir space is their ability to ‘cut and wrap’, the ability to ‘kill and chill’ is there,” describes Bruce Cowper. He says that beef is ‘definitely a problem’ because the abattoirs that work with the farmers to cut and wrap their product have to age it in their coolers first. “The facilities that are available now are getting old, their coolers are not large, so they do not have space to keep the product to cut and wrap it.”

Mallot Creek revealed that while the number of slaughtered livestock has increased, the number of federally licensed abattoirs has remained constant. Owning and operating abattoirs, better known as a slaughterhouse, is known to be a low-margin, high-cost, and high-risk business that has been on the decline for years. Additionally, it has become increasingly difficult for small-scale farmers to gain access to these facilities. Due to the investment requirements required to stay current with regulations, most small, Ontario-based abattoirs generally do not have the ability or space to provide high-quality processing and packaging for livestock products.

“The government has put on so many regulations in front of the small abattoirs, that that’s why a lot of them have quit,” told Dufferin County Councillor and Amaranth’s Mayor Bob Currie. “You just have to keep jumping through hoops and hurdles every few years.”

Mallot Creek’s solution would be for Dufferin’s livestock producers to continue sending their animals to the ‘kill and chill’ facilities. Once complete, the change would be that trucks would transport the meat to a newly-established processing facility, where it would be aged, cut, and wrapped. The finished product would then be returned to the producer or marketed through a retail store affiliated with the farmers or the processor. It was further recommended that the ‘cut and wrap’ facility be located within an existing industrial building in a populated area such as Orangeville. Bruce Cowper delineated that this would be more cost-efficient than constructing a new building while providing increased access to labour. For a 5,000 square foot facility, Mallot Creek suggested an initial price just shy of a million dollars.

“The thing I like about this is that you take away the piece of the puzzle that is most objectionable to the neighbours, and that’s the ‘kill and chill’ piece,” expressed Janet Horner, Mayor of Mulmur and Chair of the Dufferin County Community Development and Tourism Committee. “You could look at this building, it would be like any other building in an industrial park.”

Three ways to finance the ‘cut and wrap’ food processing facility were proposed by Mallot Creek. The first would be for the local producers to fund it themselves entirely, with a mix of equity and debt, leaving them with the financial risk and the challenges of managing the facility. Another alternative is for Dufferin’s farmers to partner with a processor, reducing the financial risk while equipping them with experienced management. Through the first two methods, producers buy shares based on the number of animals they plan to ship to the facility in one year. The one-time purchase would give the shareholder the right to supply their livestock to the facility and receive a dividend.

“How do the producer-members buy shares? Well, they actually buy hooks. So it’s the amount of animals they supply on a yearly basis,” said Bruce Cowper. Steers and cows would constitute one share, while hogs, chickens, lambs, and other livestock would comprise fractions of stock.

Bruce Cowper mentioned Conestoga Packers, which is 100% producer-owned and has over 250 members, follows a similar model. According to Bruce, it has developed into Canada’s largest pork processor, growing from ‘12,000 hogs a week’ to nearly 40,000.

The third option is to have a processor take complete ownership of the facility, assuming all the risks and paying all costs.

“We’ve talked to local processors, a main local processor, that would be very interested in partnering with producers to build this,” shared Bruce Cowper. He also informed the committee that the processor, apparently close to Orangeville, would be comfortable financing the project independently. The result of this would leave Dufferin’s livestock producers with no control of supply and price.

Another part of this vision would be for local producers to form a cooperative, which Mallot Creek referred to as the ‘Dufferin County Producer Assocation’ (DCPA). Bruce Cowper emphasized that this is important, regardless of how the facility was funded, as it would allow for Dufferin’s smaller-scale farmers to represent their supply in volume with the abattoirs, providing them with more leverage.

“It sounds great, but it’ll never work. Producers have tried before to get these cooperatives going and they never work,” said Councillor Bob Currie. “There was a hog outfit back years ago, they wanted to get going, they bought some land, and they had a bunch of farmers buy shares and the thing crashed. They never killed one hog.”

Out of 64 livestock producers surveyed in Dufferin County by Mallot Creek, 47 of them said they would be interested in partnering to improve access to custom slaughter and processing.

“If you dot the ‘i’s’ and cross the ‘t’s’, I think it is doable,” said Bruce Cowper after citing his track record of implementing similar projects that have been deemed successful.

Reference Links: Cut and Wrap: A Solution to Dufferin County’s Meat Processing Problem

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