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040401 Illinois Pork Plant Aims for New Markets

April 1, 2004

Rantoul, IL - A new farmer-owned packing plant aims to be the hog butcher to a very select crowd -- from the New York restaurant owner who wants every pork chop cut exactly the same to customers in Asia who want to trace the meat they eat all the way back to the barn.

The $28 million plant, just two months old, is being closely watched to see whether it might become a model for improving Illinois' declining pork industry.

By operating its own plant and taking hogs only from the 200 members of its cooperative, Meadowbrook Farms brings farmers closer to consumers willing to pay premium prices for high-quality meat, said Art Lehman, president of the Illinois Pork Producers Association and a member of the cooperative.

Farmers are paid according to the quality and quantity of meat their animals produce, not by total weight of a live hog, the traditional method.

"We think we can do as good or better job at policing ourselves, raising the right kind of animal, feeding it right," Lehman said. "If there is a demand for a certain type of product, we think we can do that because there is nobody between us and the packing plant."

A meatpacking plant wasn't necessarily what hog producers had in mind when they began searching for new markets after hog prices plummeted in the late 1990s, said James L. Burke, president and chief executive officer of the cooperative.

"We actually kind of got dragged kicking and screaming into the packing business because we had no way of producing that end product and we couldn't get anybody to do it for us under a contract arrangement," he said.

Rather than buy an existing plant, Meadowbrook Farms asked its farmer-owners to put up $13 million in equity to help finance a new operation with the latest technology.

It was a significant investment for farmers who had seen prices fall to only six cents per pound in 1998, compared to current live-hog prices of about 45 cents per pound. The payoff, cooperative officials say, will come when customers consistently pay prices higher than industry averages for the meat the plant produces.

Automation provides precise cuts and reduces labor costs. Computer technology tracks carcasses through each stop on the meat-cutting line.

The bad smells associated with meatpacking aren't obvious when driving past the Meadowbrook Farms plant.

Manure is immediately sent to the plant's own sewer system tanks, not allowed to pool in tanks under a floor. Animals are generally killed less than 24 hours after arrival and all non-meat byproducts are hauled away for rendering, Burke said.

"I think they're trying hard to be sure people out here are happy," said Cheryl Freese, who lives about a half-mile north of the plant. Another neighbor said her only complaint was the clods of mud left on the highway by trucks on a rainy day.

But it's the cooperative's search for niche markets that has pork industry observers intrigued.

"The livestock industry is a competitive place," said Robert Easter, dean of the College of Agriculture, Consumer and Environmental Sciences at the University of Illinois. "At the same time, there's growth in markets where somebody is looking for something besides commodity product. What I see is people recognizing those opportunities and finding systems to work."

Success in the market for high-quality meat requires a plant to have a tightly controlled supply of animals and consistent feedback from producers on questions of feed management or genetics, said Peter Goldsmith, an assistant professor of agribusiness and farm management at the University of Illinois.

"Niches are there," he said "Whether they're enough to sustain a dedicated plant is what people are wondering."

Meadowbrook Farms is not the first cooperative to tackle meat processing but others failed, mostly because they tried to restart outdated plants, Burke said.

Illinois' two other pork processing plants, in Beardstown and Monmouth, are owned by traditional commodity packers Excel Corp. and Smithfield Foods. Rantoul provides an example of another option for producers, Burke said.

"We know there are independent pork producers all over the country that are watching this process very closely and want to know whether or not a producer-owned meat supplier is a realistic possibility for the future," Burke said. "We'd like to prove that it is."


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