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Published November 29, 2012, 09:07 AM

Production started at SD beef processing plant

HURON, S.D. — After years of delay and numerous problems, production at an Aberdeen beef processing plant is under way.

By: Tom Lawrence, Forum Communications

HURON, S.D. — After years of delay and numerous problems, production at an Aberdeen beef processing plant is under way.

It started small, with just one cow processed on Oct. 16. But after that cow was slaughtered, the Northern Beef Packers plant in Aberdeen aims to harvest 1,500 head per day by next year, according to Laure Swanson, NBP’s marketing and public relations director.

“With some history and trials and tribulations, we are up and running at this point,” Swanson said. “I think it is benefitting all of South Dakota.”

She delivered a pair of presentations Wednesday morning at the South Dakota Cattlemen’s Association 64th annual convention and trade show at the Crossroads Hotel in Huron. The three-day conference concludes today.

Sarah Caslin, a South Dakota Department of Agriculture livestock and development program specialist, discussed the South Dakota Certified Beef program during the same presentations. Both the plant and the certified beef program were launched during the administration of former Gov. Mike Rounds.

Plans for the NBP plant were announced in 2006, and it has endured multiple delays and a change in primary ownership. Investors have poured more than $109 million into what Swanson said is the first complete beef processing plant to be built in the country in 35 years.

It’s been worth the investment, for them and for the region, she said.

In 2011, Rod Bowling, of the Texas-based AgriFood Solutions International, predicted the plant would have a $10.1 billion impact over its first five years and would then have a $2.5 billion impact annually.

“Some people say that is over-inflated,” Swanson said. “I’ll take half that, wouldn’t you?”

Bowling said the economic boost will come from finished cattle being processed in South Dakota, as well as the additional corn that will be grown to feed them.

When it is fully operational, 240 head of cattle could be slaughtered and processed per hour, with a 35-minute lapse from the stunning of the animal to when the meat is hung in a room called a hot box.

Right now, the employees are processing some cattle while also learning what will be expected of them, she said.

“Many of those people take their jobs very seriously,” Swanson said. “It is an art to them.”

The plant, which is 420,000 square feet on 101 acres, employs 330 people and will have almost 600 workers when it as at full capacity, she said.

“We’ve had to go out of the area to recruit people, and that is what we are doing right now.”

South Dakota has a low unemployment rate, so it’s difficult to find workers. Since the nearest cattle processing plants are both in Nebraska and are more than 300 miles away, there are not a lot of people in the area who have the needed skills, Swanson said.

The workers are being instructed on humane handling of the animals, she said, both because it’s the right thing to do and because it’s good for the bottom line.

“We take food safety very serious in our business.”

Abundance of cattle

While workers are scarce, the cattle supply is plentiful, according to NBP. Swanson said there are 350,000 cattle on feed within 150 miles of the plant, and 750,000 cattle within 200 miles of the Aberdeen operation.

The company says there are 3.8 million beef cows and calves raised on 23 million acres of pastureland and rangeland in the state. They are fed, in part, by 4.6 million acres of corn and 3.8 million acres of hay that are grown on 31,500 family farms and ranches.

The cattle must be 30 months old or younger to be accepted at the plant. Since they will be hauled a shorter distance than before, they should arrive less stressed, Swanson said. Both of those factors should provide tastier beef.

The NBP staff will operate a slower line than most plants to ensure quality workmanship and to produce a top-notch product, according to the firm.

The beef will be shipped around the world, Swanson said, but 66 percent of it will be sold to an Austin, Texas, company. Much of that beef will go to South Korea, but it will also be eaten in upscale restaurants and homes around the globe.

The meat isn’t the only product, she said during the one-hour presentation. The hides will be used to make Red Wing shoes.

Several U.S. Department of Agriculture inspectors will be assigned to the plant to ensure proper handling and food safety.

A slide presentation Swanson showed was graphic, but it didn’t seem to cause any distress for the 30 or so people who attended the first presentation. One man drew laughter when he said if anyone was bothered by it, they were at the wrong convention.

The annual conference drew scores of people, many of them wearing cowboy hats. There was also an abundance of blue jeans, large belt buckles and boots on display. That’s a bit different than the usual attire of the man behind the new plant.

NBP’s major investor is Oshik Song, a South Korean businessman who owns 41 percent of the company. Song was an early investor in the MP3 audio format.

The chief executive officer and president, David Palmer, and other corporate officers also have extensive business experience, Swanson said, many in the food industry.

They have had to overcome many hurdles. NBP has struggled with financing, floods and severe weather slowing the construction process, and liens were filed over $12 million in unpaid contractor bills.

But the plant, which had announced prospective openings repeatedly and then had to withdraw the claim, is finally open, and she said full-time operations will commence within six to seven months.

Dennis Hellwig, the former owner of Hub City Livestock Auction in Aberdeen, was the first major investor, but he sold out in 2009 and Song stepped to the fore, along with 69 other investors, many of whom are also from South Korea.

Song was not at the seminar Wednesday.

“He likes to be behind the scenes,” Swanson said.

Song is sensitive about his English, she said, so he likes to keep a low profile.

Swanson is also an Aberdeen city commissioner, and she said the plant is a major economic boost to the city, the region and the state.

Aberdeen has not seen a lot of economic growth in several years, she said, and some are hesitant to support this plant.

“People just cannot wrap their arms around a food manufacturing plant,” Swanson said.

Complaints about smells from the plant were lodged even before slaughter began, she said. But Swanson also noted that a proposed tax increment financing (TIF) district to help build the plant was approved by a 2-1 majority by Aberdeen voters in 2007.

She welcomed questions from the audience and met with producers and others after the meeting.

Certified Beef hopes grow

Caslin said South Dakota Certified Beef, which was launched in 2004, has also faced an uphill climb.

It now has 63 producers signed up for it. Dozens of members have dropped out, she said, since 240 producers have belonged over the years.

“We’ve had tough times at times in the past,” Caslin said. “South Dakota Certified is ready to rock and roll, I guess you could say.”

The phrase “World’s Best Beef” is being eyed as a motto.

“We’re going to try to trademark that,” she said.

Certified Angus started in 1979 and is now known across the globe. South Dakota Certified Beef aims to match that level of success, Caslin said.

The cattle must be born, raised and slaughtered in the state to qualify for the program, which includes South Dakota Certified Beef and the South Dakota Certified and Enrolled Cattle Program.

“This is just a tool,” she said. “It’s a marketing tool.”

It could boost the price of a cow by $15, some say.

“Consumers are demanding that information, and they will pay a little more for that information,” Swanson said.

Restaurants promote the fact they are selling Angus beef, she said, and they will do the same with South Dakota beef. The people at the seminars listened closely, and then asked several questions.

John Reisch raises beef cattle by Howard. He attended the second of the two seminars and said he’s willing to consider sending his cattle to NBP.

“Anything’s a possibility,” Reisch said. “I came to hear their startup plans.”

Garret Bischoff, South Dakota Farmers Union’s membership director, said he was also eager for an update.

“I’d like to see them succeed,” Bischoff said. “I wanted to hear what they had to say about it.”

Julie Walker said she attended the seminar for an update on NBP. She said she wishes it well.

Walker, a South Dakota State University Extension beef cattle specialist, said it’s been a long wait for the state’s beef industry.

“I’m hoping they’re ready to go,” she said. “I have a wait-and-see attitude. But it was good to see what they’re doing.”

Walker said she is also pulling for South Dakota Certified Beef to grow.

She said the fact that there were no processing plants in the state was a major reason people left the program. The Aberdeen plant answers that problem, Walker said.