Beef plant progresses

Oct 5, 2012

A new processing plant in Aberdeen, SD, is one step closer to being up and running after a long history of delays.

David Palmer, president and chief executive officer, said the new plant, Northern Beef Packers (NBP), is the newest, most modern beef processing plant in the country. “Using the high-quality, family-farm-raised young cattle in the Dakota region, Northern Beef Packers will provide world-class prime beef, traceable from farm to finished product.”

The plant has been testing equipment the last five weeks in the 420,000-sq.-ft. facility. On Sept. 28, two head of cattle were process tested with the company’s lenders from the South Dakota Investment Fund LP6 present. The test slaughter allowed NBP to confirm the process performance and to verify the industry’s most advanced food safety process was working as designed.

In addition to the tests, a new round of financing has helped NBP reach this milestone, Palmer said.

According to a letter from Palmer, the funds paid $15 million worth of liens incurred during the initial general partner’s tenure with the company. The financing also provided NBP cash to pay its current venders and still have the working capital needed to start and operate the plant. The company also has in place its Packers & Stockyards Act security for $900,000 for cattle payments. This security will increase to $3,000,000 as volume increases.

The plant currently employs 258 people. Palmer said the company will continue to hire over the next seven months until they reach 560 people at full production.

Once running, the 420,000-sq.-ft. plant will process an estimated 200 cattle per day, eventually expanding to 1,500 head per day.

NBP has spent over $100 million to build the plant, which has created a significant economic benefit for the local economy during the national recession, Palmer said.

In full operation, the plant will be spending over $500 million every year in the local economy for cattle, supplies and wages. Palmer said this will offset the recent, local closings and layoffs in other companies within the community and create additional long-term economic growth.

The Economic Impact Study by Aberdeen Development Corporation determined that NBP will be the engine for $10 billion in economic growth in the tri-state area over the next five years.

Land for the plant was secured in 2006, but financial issues, lawsuits, local opposition, delinquent property taxes, flooding, an economic downturn and millions of dollars in liens have repeatedly pushed back the opening date. In 2012 alone, contractors filed 13 liens totaling $1,339,029 against the plant.

Just last month, the city commission of Huron solved another one of the plant’s problems by agreeing to accept paunch from the plant.

Brown County Commissioners sent a letter to beef plant officials asking them to explore options other than the Brown County Landfill to dispose of paunch, the undigested food in the belly of animals that remains after they are slaughtered.

A story in last Tuesday’s Huron Plainsman says the city will be paid $32.50 per ton from the beef plant, or a total of $24,183, plus $1,368, to take the waste. The six-month contract allows for 27 tons of waste per week.

The plant was also given a boost in 2009 when it was acquired by a group of Korean investors. Once locally owned, NBP is now owned by a number of Korean investors who have each given at least $500,000 under the federal EB-5 program that encourages foreign investment in exchange for permanent residency. — Traci Eatherton, WLJ Editor