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Eight years ago, North Bay ranchers got their first scare that the region's only slaughterhouse was preparing to close its doors.

In 2006, the owners of Rancho Feeding Corp. announced plans to sell their Petaluma processing plant to make way for a housing subdivision. A historic housing market crash eventually scuttled those plans, but not before local farm leaders discovered how hard it would be to replace the processing plant.

Now, Rancho faces a two-pronged federal investigation and has recalled 8.7 million pounds of beef — a whole year's worth of production. The company voluntarily ceased operations last week and began compiling a lengthy list of food suppliers that had received its meat.

Both the plant's owners and the local cattle industry — including niche, grass-fed beef ranchers — face an uphill struggle to reopen the plant and avoid a major shakeup to their businesses.

The outlook isn't promising. Those who watch the meat industry say small plant owners have been hard-pressed to survive such massive recalls.

"In our experience, a large percentage of these very small slaughter plants end up going out of business because they can't survive a big shutdown for an extended period of time or (lack) the money to bring them into compliance," said Dena Jones, the farm animal program manager with the Animal Welfare Institute in Washington, D.C.

John Munsell, a former meat plant owner and a consultant in Miles City, Mont., said he shares that view. He maintained that Rancho's owners already face major costs to collect any recalled meat still held by wholesalers and retailers, then send the products to landfills and reimburse the purchasers.

Munsell, founder of the advocacy group Foundation for Accountability in Regulatory Enforcement, said Rancho's predicament looks all the more serious because the U.S. Department of Agriculture has directed its Office of the Inspector General to investigate the Petaluma processor. That office typically doesn't get involved in meat recalls, he and others said.

"That's a whole different ballgame," Munsell said.

The USDA investigation came to light Jan. 10, when federal agents and Petaluma police converged on the Petaluma slaughterhouse. Three days later, the federal agency announced that Rancho was recalling 41,683 pounds of meat — all processed on Jan. 8 — because it allegedly had not received a full federal inspection.

The recall expanded dramatically Feb. 8, when the USDA announced that Rancho was attempting to retrieve all meat processed at the plant in 2013.

The agency's news release asserted that Rancho "processed diseased and unsound animals" without a full inspection. The meat products, the USDA said, are "unsound, unwholesome or otherwise are unfit for human food" and must be removed from commerce.

Last week, the agency revealed its Office of the Inspector General was investigating Rancho. The USDA's Food Safety and Inspection Service continues its own separate probe.

By Saturday afternoon, the USDA had expanded the recall list to 74 sites in California and 18 in Alabama, Mississippi, Oregon, Washington and Florida. They include small and large retailers, Latino butcher shops, grass-fed beef suppliers, churches and nonprofit agencies.

Both federal officials and Rancho's owners have been tight-lipped about what went on during the past year at the plant on Petaluma Boulevard North. A key question is how the meat left the plant without a full inspection, even though a federal inspector is supposed to be present whenever animals are slaughtered.

Robert Singleton, 77, who owns the plant with Jesse "Babe" Amaral, 76, on Monday said Rancho had ceased operations and had undertaken the recall out of "an abundance of caution." Singleton declined to answer further questions.

Neither owner has responded since to repeated calls for additional comment.

In contrast, plenty of local ranchers, farm leaders and others have spoken out on the matter. Many have defended Rancho. Virtually all have expressed concern that cattle producers would suffer a significant blow if Rancho doesn't reopen.

"It's the small-scale operators that it's really going to hurt," said Tim Tesconi, executive director of the Sonoma County Farm Bureau.

Many of the custom, grass-fed-beef producers "were able to start their businesses because Rancho was here," Tesconi said.

In Wine Country, beef cattle represent a sliver of agricultural production. In 2012, Sonoma County ranchers sold $12.3 million worth of beef cattle and calves, compared to a total farm crop worth $821 million.

For decades, the industry had seen a steady decline. When adjusted for inflation, cattle sales in 1972 today would have a value worth $45.9 million.

However, since 2007 annual cattle sales have held steady. One of the reasons appears to be the growth of custom operations featuring grass-fed beef that is sold to high-end restaurants and markets, as well as at farmers markets.

Farm leaders and others don't offer much hope for a new processing plant to be built in the region.

Jeremy Russell, a spokesman in Oakland for the North American Meat Association, of which Rancho is a member, said he couldn't speak about the receptivity of local governments to a new plant, but "you don't hear about a lot of new ones opening up."

"There's a cost of entry that's very high," Russell said.

Local farm leaders learned that firsthand eight years ago. After Rancho announced plans to sell to the plant to a housing developer, ranchers came together to encourage construction of a new facility. Their eyes soon were opened to the immense obstacles a new processor would face, including water treatment and waste disposal.

"It's completely cost-prohibitive," said Stephanie Larson of the UC Cooperative Extension. Besides the expense, she said, ranchers found any processor could expect strong opposition from those saying "I don't want a slaughterhouse in my backyard."

Even if Rancho should permanently close, the plant is still the region's most likely site for a new meat processor, Larson said. However, she acknowledged that a housing developer probably could pay more for the land than could a meat company.

If Rancho permanently closes, ranchers will have to truck their cattle to processors three to five hours away in Eureka and the Central Valley. The custom beef operations then will have to return later to pick up the processed meat.

Some already have started that long trek, which is both costly and time-consuming.

"It will change the whole complexity of that industry," Larson said.

Rancho co-owner Amaral said in a rare 2004 interview that he wasn't sure what would happen to the plant when he was ready to retire. But he suggested the most valuable thing about the business was the land on which the plant sits.

"This area's too expensive for the help to work here," Amaral said at the time. "It's becoming more houses, less dairy and less farmland."

You can reach Staff Writer Robert Digitale at 521-5285 or robert.digitale@pressdemocrat.com.

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