A Canada/North Dakota beef co-operative that wants to build a producer-owned beef processing plant expects to fall short on investment shares.
Northern Plains Premium Beef, with members in the northern U.S. and Canadian prairie provinces, needed to raise 250,000 equity shares by June 1.
Instead, it has subscriptions from 1,100 cattle producers for 113,000 equity shares, representing commitments to deliver 113,000 fed cattle annually.
The share total was higher, but it dropped by nearly 5,000 in recent weeks as members opted out of the initiative and in some cases got out of the cattle business altogether.
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But producers behind the initiative are still optimistic.
“A four to five percent fallout is really quite small, considering everything farmers and ranchers have gone through this winter,” said Dean Meyer, a Watford City, N.D. rancher and chair of the Northern Plains board.
Determine to go ahead
Although far short of the share goal, a core group of farmer members still want to make the plan work, he said.
The co-operative will consider forming an alliance with an existing company, scaling the project down to a smaller system that would include a processing plant with a 125,000 head annual capacity and working with the South Dakota Department of Agriculture to put together a new business plan and prospectus for fall 1997.
Eldon Gibson, with the Moose Mountain economic development office in Kipling, Sask., has been working with Saskatchewan ranchers wanting to join the co-operative.
He wouldn’t say how many ranchers in Canada have invested, but noted 5,301 shares, or head of cattle, from Manitoba were committed to the project and 1,190 from Saskatchewan.
“The idea that they would bring production from the farmgate to the supermarket shelf will be a major challenge if you’re up against the Cargills and the ConAgras,” Gibson said, “but it could work.”
The success of the co-operative in the highly competitive U.S. meat packing business will hinge on the development of niche markets, he said.
With the failure of the original plan, Northern Plains members who pledged more than $11 million in equity funds to get the business started will not have to hand over money.
They will still hold memberships in the legally organized co-operative, Meyer said, and have a say in which other options to pursue.
