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Published August 29, 2013, 02:09 PM

Cattle ranchers hope SD beef plant will reopen

SIOUX FALLS, S.D. (AP) — North Dakota feedlot operator Jeff Kvamme finishes loading cattle onto a truck and bemoans the animals' 450-mile one-way commute to Dakota City in Nebraska.

By: DIRK LAMMERS, Associated Press, DIRK LAMMERS, Associated Press

SIOUX FALLS, S.D. (AP) — North Dakota feedlot operator Jeff Kvamme finishes loading cattle onto a truck and bemoans the animals' 450-mile one-way commute to Dakota City in Nebraska.

If the long-troubled Northern Beef Packers beef processing plant had achieved its grand plans of processing 1,500 head a day, the trip would be a 150-mile jaunt down to the South Dakota city of Aberdeen.

"It'd be nice to see it reopen under someone else so we still have that option of sending cattle there," Kvamme said.

Northern Beef Packers opened its $109 million state-of-the-art facility on a limited basis in 2012 after years of delays. But its owners filed for bankruptcy protection less than a year later saying they didn't have enough money to buy cattle to slaughter.

Now, as creditors grapple with who will get paid in the case, which could be headed to liquidation, the region's feedlot operators are hoping someone can buy and reopen the plant.

The tight economic times make it even more important to have a closer facility, said Todd Wilkinson, vice president of the South Dakota Cattlemen's Association and owner of a feedlot west of DeSmet.

"Our biggest concern, however this whole thing plays out, is to have an operating facility in Aberdeen, South Dakota, that can process our cattle," Wilkinson said. "There's a huge need."

Land for the Aberdeen plant was first secured in 2006, but the company wasn't able to slaughter its first animal until late in 2012. Since then, it has struggled to reach anywhere near its production target of 1,500 head per day from the Dakotas, Nebraska, Iowa and Minnesota.

With $138.8 million in liabilities and just $79.3 million in assets, according to court documents, the plant has laid off most of its employees and halted production.

Still, the shutdown shouldn't have a significant influence on an industry already dealing with a cattle shortage and production overcapacity, said Duane Lenz, analyst and general manager with CattleFax, which tracks the industry.

"They never did get much slaughter going," he said. "If they had been in there killing 1,500 a day then it'd sure have more impact."

But the idled plant has value, Lenz noted. He said a buyer could step in and revive it like one did for Future Beef Operations in Arkansas City, Kan.

That plant opened in August 2001 as a pioneer in the industry for using modern technology, a more humane method of slaughtering cows and innovations in food safety. But it filed for bankruptcy just seven months later and lost more than $200 million before closing in 2002. The company was more than $160 million indebted to a Canadian Bank, which bought the plant for only $28.7 million and turned over operations to Creekstone Farms.

"It's been humming ever since," Lenz said.

Northern Beef Packers was initially locally owned, but Korean businessman Oshik Song now owns 41 percent of the company with the rest divided among 69 other Korean investors under a federal program that encourages foreign investment. Messages left for company officials Thursday by The Associated Press weren't immediately returned.

The plant was pitched in 2006 in response to then-Gov. Mike Rounds' South Dakota Certified Beef initiative. Rounds hoped to get the state's ranchers premium prices by allowing consumers to track animals from birth, through a feedlot and to a meatpacking plant.

For that program to move forward, Wilkinson said, an operating processing plant in Aberdeen is crucial.

"It's been a long struggle with this facility but we'd sure love to see it open," he said.

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