"meanwhile a local farm has to hire a local butcher."

That depends. If you're selling the meat openly, it has to go through a USDA inspected facility. Most local butchers are not USDA inspected. The alternative is the sell "the animal". This typically means the customer buys the animal, the farmer takes it to the butcher of your choice, then you pay the butcher.

The butchering is the expensive part no matter what, but the individual farms can't compete with the assembly line style processing of the the giants to sell the meat directly. So they're only competitive on the meat price with the customer using a local butcher. Local butchers don't have the scale to be cheap, so the customer has to do the work if they want to save any money.

All that said, there's still a cost issue. The small producers just don't have the scale. They often treat their animals better too. I can get local pork for $1.80 hanging weight, plus a $30 processing fee on a half or whole hog. That's close to store prices for the raw cuts (shoulder, loin, etc). You really only get into the money savings if you cure your own bacon, corn your own ham, make your own sausage, etc. But most people aren't willing to do that level of work to save almost nothing. I do it because it's usually a superior product, I'm supporting local, and I know how my meat was raised.

You also have the issue that if you want the whole hog (or cow) you get a decent price; but if you ONLY want a specific cut, you don't care about the rest, so you pay more. Any attempt to fix that issue results in a larger operation and you're close to the big packers again.

It has lasted for several decades, and the core of it dates back over a century.

That reckoning may yet come but nobody expects it any time soon.

AI butchers going after consumers keeps me up at night too

What are you talking about? I'm referring to hidden inflation that is suppressed by this activity.