Western innovator: Facility supports direct marketers
'I joke that I had to build a packing plant to support my farming habit'
By MATEUSZ PERKOWSKI
To gain more control over the processing of his beef, cattle producer Mike Kloft decided to take a bold step.
Kloft invested more than $500,000 to retrofit an old barn on his family's property near Mount Angel, Ore., into a USDA-inspected meat-processing plant.
Because the facility has more than enough capacity for Kloft's beef, it can also process meat for other local livestock producers -- adding another source of revenue to his business.
"I joke that I had to build a packing plant to support my farming habit," Kloft said.
The idea behind the Century Oak Packing Co. is cutting whole carcasses into portions suitable for direct marketing, with labeling and packaging operations that emphasize eye appeal.
The facility doesn't currently have a slaughter component, but Kloft may build one in the future.
The approach is different from plants that focus on basic cuts that must be further portioned, he said.
"This facility was built for producers marketing to restaurants, retail stores and farmers' markets," he said. "It was built for the community."
Existing slaughterhouses often get jammed up during autumn, when many small livestock producers harvest their animals, said Lauren Gwin, a niche meat market researcher at Oregon State University.
Processing carcasses into retail cuts, rather than just primal and subprimal cuts, slows down the slaughterhouse's operations, she said.
Kloft's operation will hopefully help fill the demand for retail cutting, which will allow slaughterhouses to optimize the flow of animals through their facilities, Gwin said.
"What Mike has done is solved a problem for himself and created infrastructure that will also be valuable to other people," she said. "Getting that retail cutting piece has been really challenging."
Kloft is in a somewhat unusual position in that his processing company's clients are rival small livestock producers who also sell meat in niche markets.
However, Kloft thinks the demand for local meats is growing strongly enough that he won't butt heads with customers.
"We are technically processing for competitors but we don't view it that way," he said.
Though the processing company is treated as a separate operation from livestock production, Kloft said his beef-raising experience provides him with insights about what small producers need.
"We sell to the same markets," he said.
Meat processing facilities pose a "chicken or the egg" conundrum for small livestock producers, Kloft said.
"You've got to get the market to get a facility, but you need a facility to generate a market," he said.
Kloft's introduction to the niche meat market occurred more than a decade ago, while he was a crop and soil science student at Oregon State University in Corvallis, Ore.
He realized that the cattle being raised at his family's 160-acre farm fit the niche for antibiotic-free, grass-fed beef.
In 2001, the farm began direct marketing to a grocery cooperative in Corvallis. The operation soon began adding other customers in Oregon's Willamette Valley, and Kloft eventually left school to devote his energy to the business.
Direct marketing has offered stability over the past decade compared to the fluctuations of the commodity beef market, Kloft said.
Around 2006, he began toying with the idea of owning a processing facility. The plan was initially to buy an existing plant, but Kloft couldn't find one that fit his needs.
Constructing a plant from scratch would be too expensive, so in mid-2010 he set upon converting a barn on the family's property.
Tearing out old livestock pens, pouring concrete, installing walls and building a rail-and-hook system to move carcasses was a intense process that took until early 2012 to complete.
Kloft and his wife, Patty, expect the processing plant to generate enough revenue to pay off the debt for the remodel within five to eight years.
"We saw it as a long term investment from the beginning," Patty said.
Occupation: Cattle producer and meat processor
Hometown: Mount Angel, Ore.
Family: Wife, Patty
Education: Three years at Oregon State University studying crop and soil science