On a brilliant fall day at Afton Field Farm, Tyler Jones shows off his butchering shed. Jones' farm in Oregon's fertile Willamette Valley boasts an overgrown orchard, a rambling farmhouse and sheds filled with freezers. Jones and his crew will butcher and process between 8,000 and 9,000 chickens here this year, but despite the occasional scattered feathers, the butchering shed looks more like a greenhouse, with concrete floors, big windows and a clear plastic roof. Jones built this facility last year as a solution to a serious problem that stymies many small-scale poultry producers in the West: lack of legal and affordable slaughterhouses.

Nearly all the meat and poultry consumed in the U.S. today comes from just four companies that operate their own U.S. Department of Agriculture-inspected slaughterhouses. Of the few remaining USDA-inspected slaughterhouses that serve independent growers, only a handful process poultry. A federal exemption allows farmers who raise 20,000 birds or fewer annually to obtain a state license to butcher their poultry themselves and bypass USDA inspection. But that option is costly and time-consuming: The farmer has to navigate complex permitting requirements and meet both state and federal requirements.

The 30-year-old Jones is a leader in the movement for diversified, pasture-based animal farming for local markets. It's an increasingly attractive alternative to factory meat farms and their tremendous environmental and human health costs. But he's had great difficulty getting licensed by the Oregon Department of Agriculture (ODA) to do his own poultry butchering. The regulatory system is designed for large slaughterhouses that process thousands of animals daily. Regulatory compliance is expensive, and state and federal meat-processing laws are interpreted inconsistently. It all makes it hard for Jones and other small farmers to get their birds to local markets.

From the start, Jones planned to get licensed under the 20,000-bird exemption. After spending 2003 as an apprentice with holistic farming guru Joel Salatin, Jones began farming in Corvallis. He built a screened, mostly open-air butchering shed modeled on Salatin's Virginia-licensed facility, with plenty of sunlight and fresh air to make the process more sanitary and less smelly. In 2008, Jones got his license from the ODA, and soon began getting calls from other farmers interested in copying his design, which was inexpensive to build, energy-efficient and pleasant to work in.

But the following year, the ODA sent Jones a letter saying that his license had been issued "in error." According to Jim Postlewait, food program manager at the ODA, the U.S. Department of Agriculture informed his agency that it had incorrectly interpreted the 20,000-bird exemption: State-licensed facilities must still comply with federal construction and sanitation requirements, and Jones' butchering shed did not. The ODA then determined that slaughter must be done in a building with washable walls and screened glass windows.

At the time, Jones and his wife were buying a farm and planning to build a new open-air processing facility similar to his existing one. What followed was a prolonged struggle between the farmer and the ODA regulators over the new slaughterhouse's design. Jones eventually compromised by building a shed with huge windows that didn't extend all the way to the floor, a clear roof, and a covered cement-slab porch for butchering outside. He estimates he spent between $20,000 and $25,000 on building materials and equipment. He's glad he fought for his original design, he says; if he hadn't, he'd have spent at least twice as much on a less sanitary and more energy-consuming building.

A certain amount of meat-processing regulation is clearly necessary to protect public health. "Some small poultry producers know how to do it in such a way that they are not going to poison their customers," says Oregon State University researcher Lauren Gwin, co-coordinator of the Niche Meat Processor Assistance Network, a national association that assists small- to mid-sized livestock growers. "(But) regulations need to be written for the lowest common denominator." The cost of compliance can make a small poultry operation unprofitable, though, given the substantial expense of raising birds on pasture-based farms and the limit to how much local consumers will pay. (Pastured chickens cost three to four times what industrially raised chickens do.)