Ron Frederick knew something was amiss when he visited the Northern Beef Packers plant in Aberdeen, South Dakota, this summer.
Even though the $110 million facility opened last fall, plant employees weren’t slaughtering cattle when Frederick, the South Dakota Beef Industry Council executive director, toured the plant in late June.
“They processed cattle the day before we got there and the day we got there they didn’t. I knew something wasn’t right. A plant like that you’ve got to be running the cattle through it (every day).”
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Frederick’s instincts were correct because the owners of Northern Beef Packers, a plant with a capacity of 1,500 head per day, filed for bankruptcy in late July.
Shortly after entering bankruptcy protection the company laid off its remaining 260 workers and ceased operations.
Now that the plant is shuttered, South Dakota beef industry representatives and analysts expect a major meat packer to step in and buy the plant.
“It’s a state of the art facility. That plant will not sit idle long. Somebody will buy that plant,” Frederick said.
Matthew Diersen, South Dakota State agricultural economics professor, agreed it makes economic sense for a multinational meat packer to take over.
“It should be attractive to a buyer, if the price is right,” he said from his office in Brookings, S.D. “(Do) one of the larger packers want this facility? Could they use this facility? Probably.”
Diersen said a major meat packer might have an out of date facility in a nearby region and could buy Northern Beef Packers instead of upgrading the old plant. Another factor is that cattle production in the U.S. is shifting from south to north.
“There have been rumours that (slaughter plants) in the southern plains don’t have enough cattle in the region.”
Since cattle numbers are relatively steady in the northern plains and South Dakota is well located to serve Southeastern Asia, the fastest growing market for beef exports from North America, the economic arguments supporting a plant in the Dakotas are solid, Diersen said.
“Those two parts of the equation have not changed.”
After opening the packing plant last fall, the Korean investors who own Northern Beef Packers failed to increase the number of cattle killed at the plant.
Citing a lack of working capital to buy cattle, Northern Beef Packers laid of workers this spring and reduced its slaughter to 200 head per day.
“From an investor side they didn’t understand the scope of what it takes to run a plant like that, the operating capital that is required,” Frederick said.
If one of the ‘Big Four’ meat processors, JBS, Cargill, Tyson or National Beef, purchases Northern Beef Packers, it would become the nearest beef plant for cattle producers in Manitoba and southeastern Saskatchewan.
Aberdeen is about 550 kilometres from the U.S.-Canada border, directly south of Portage la Prairie, Man.
