Processing and marketing costs for local beef are higher than for commodity beef
Locally produced and processed beef—defined as product marketed direct-to-consumer or direct-to-restaurant/grocer within 400 miles of its origin—is a small, but growing segment of the U.S. beef market. Evidence indicates that firms marketing local beef face substantially higher costs, particularly processing and marketing costs, than the large-scale sellers of conventional commodity beef. Local beef producers are typically unable to access the facilities of large commodity beef processors, and are unable to offset processing costs with byproduct sales to the same extent as commodity processors. Small, fee-for-service processors lack the scale to refine and effectively market byproducts, generate relatively little from byproduct sales and, therefore, have higher net processing costs. Local beef purveyors also face higher marketing and distribution costs than larger, vertically integrated processors of commodity beef. This chart is based on table 5 in Local Meat and Poultry Processing: The Importance of Business Commitments for Long-Term Viability, ERR-150, June 2013.
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