Black Markets for Local Meat
New vendors of cannabis and farm-raised meat share a common challenge: a substantial portion of customers choose to buy on the black market.
When it comes to switching from grocery store meat to local farm-raised animals, consumers do so for 1 of 2 reasons. Either they are seeking a lower price by going direct to the source, or they are looking for a premium experience and to support local food systems.
The factors driving demand in the latter category are covered brilliantly in this new book, Raw Deal by Chloe Sorvino. A seasoned Forbes business reporter, Sorvino carefully lays out how, since the first wave of pandemic lockdowns, North America’s industrial meat production and processing system faced one challenge after another.
To recap:
First it was outbreaks of the virus among meat plant employees working and living together in close quarters.
Then, staffing shortages and new equipment needing to be installed, to separate individual stations and protect workers.
Restaurant closures shuttered that sales channel, and grocery sales picked up. Meat products had to be redirected quickly or were lost.
The livestock production supply chain - built on large-scale, razor-thin, just-in-time shipping of animals - was unable to slow down production. As retail supplies thinned, farms were dumping livestock and forfeiting revenues.
Locally, farmers and consumers responded by attempting to go direct, but still run into short regional capacity for custom meat slaughter, cut and wrap.
Sorvino’s book does an excellent job of covering all the moving parts that make up North America’s incredibly efficient, yet strained industrial meat system. It could have performed much worse during the pandemic, to be sure, but those who argue that there’s nothing wrong with industrial meat are ignoring the opportunity for new value chain creation.
Raw Deal closes with an appeal for new short cold-chain distribution infrastructure, to overcome the bottlenecks that prevent regional meat-sheds from efficiently connecting farmers and consumers. Butcher Box, White Oak Farms and Force of Nature are just three of many new farm/distribution businesses set up to increase the supply of local meat. These startups are also providing thought leadership and food security along with important information about infrastructure gaps, ecological farming, and the differences between their products and industrial meat.
Unfortunately, there are unseen barriers to business success for startups in regional meat processing. This report brings to light how black markets hurt farmers’ ability to tap into new local demand for their meat.
The barrier to growth is the same as in legalized cannabis. New licensed retail businesses are struggling to convert customers away from illicit dealers who can offer lower prices by avoiding costs in regulation and packaging.
Unpacking Local Meat Marketing
In order to sell meat commercially, health and agriculture regulations state that farms must have the kill witnessed by a meat inspector, and hire butchers with food handling certifications in place. The fees related to compliance with the regulations, around transportation and packaging, get expensive. These end up in the price, making local meat that comes through the regulated supply channel more expensive than meat that doesn’t.
The black market in meat is supplied by farms that sell directly to customers, without taking the animals to inspected abattoirs and meat shops. They slaughter and butcher the animals on the farms instead. Given the lack of resources in agriculture and health departments, and the distances between farms, the risk of getting caught and fined for this is fairly low, although it does happen.
Suffice it to say, the bulk of illicit meat supplies in rural communities does not stem from 4H cows or deer hunting – the volume of meat sold on the black market has grown to significantly larger proportions. In Canada, Hutterite colonies make use of an exemption of the regulations for a farm’s own-use consumption, which fits their philosophy of self-sufficiency. Colonies sometimes also sell meat that they process themselves to low-price consumers and immigrant communities looking for alternatives to grocery meat.
Disclaimer: just like the instances of individual farmers selling uninspected beef and deer meat to customers without following all the rules, sales off of Hutterite colonies directly to consumers are, for now, just ‘stories’ that circulate. It can’t be proven or quantified without the government providing public data on inspections, penalties and compliance… and today that does not exist for analysts to base economic estimates off of.
That being said, given modern urban demographics, and discrepancies in meat processing infrastructure, it would seem that uninspected meat sales are fulfilling a significant portion of consumer demand in regional supply chains. This would help to explain the struggle for commercial farmers that follow the regulations to sell enough meat to justify the work.
Competition from black market suppliers is one of the major financial barriers to growth for the newly-legalized cannabis industry also. Yet another example can be found in the well-document problems with fraud in the certified organic grain trade. When its brought into markets cheaper than locally-produced organic grain, fraudulently-labeled certified shipments undercut prices and demand from farmers that follow the rules.
Summary
In conclusion, the motivations behind black market trading in agricultural goods are easy to comprehend. Sellers gain and maintain market share through lower prices by avoiding fees related to attributes that some customers:
Aren’t accustomed to (weed),
Can’t see (organic), and/or
Don’t care about (meat).
Establishing strong and transparent markets, as a foundation for food security, is fast becoming a regional political priority. Progress will require authorities to come to the table and address the gaps and bottlenecks that their sometimes-outdated regulations contribute to the existence of black markets.
Farmers are now in a strong position to argue the many benefits of on-farm and regional livestock slaughter and processing. Food consumers will benefit tremendously if the industry can find a way to oversee food safety and animal welfare, and to expand sourcing options for buyers of local meat.