News
Ranchers still dream of beef processing plant, with new approach
BISMARCK, N.D. (AP) – Ranchers in the Dakotas are still chasing the dream of a cattle processing venture, but the chase is taking a different route.
Associated Press Billings Gazette
The new approach emphasizes developing products and finding markets rather than building a rancher-owned plant. A key part of the strategy is a research packing plant at North Dakota State University.
"We need to be creative and take a look at some different things," said Wade Moser, executive vice president of the North Dakota Stockmen’s Association. "We’ve shot at the same target for so long, maybe we need to step back … and approach it from a different angle."
Efforts to start a beef processing plant in the region have failed miserably in recent years.
The Northern Plains Premium Beef cooperative dissolved in October 1998, after two failed attempts to get ranchers to invest in a proposed plant in Belle Fourche, S.D.
About three years later, Dakota Beef Cooperative, which grew out of Northern Plains, gave up after failing to generate enough interest among ranchers. Earlier this year, the co-op’s plans to partner with a Nebraska meatpacking company also fell through.
Now, a study commissioned by a South Dakota group has reiterated what Dakota Beef chairman Dwight Bassingthwaite knows all too well from experience: building a meatpacking plant in the Upper Midwest will be no easy task.
"A lot of hours, a lot of work has been put into it over the last 10 years," the Sarles rancher said.
South Dakota Ag Producers Ventures, a group that helps farmers and ranchers develop processing projects, received a state loan and a federal grant this year to study beef processing and marketing opportunities.
"(A plant) doesn’t appear to us to be a good investment," said Joel Dykstra, chief executive officer of the farm group. "It would be very expensive to build, and you would be entering a low-margin, cutthroat business. You would not have a competitive advantage or niche that would make a Dakota packing plant more successful than any other plant."
A more feasible approach would be to "find a niche market … on the retail side and then start to build the supply system back," he said. That approach would not necessarily involve building a rancher-owned plant right away.
Developing niche markets was part of the plan for Northern Plains Premium Beef and Dakota Beef, but those groups also wanted to put up their own plant.
"Most (ranchers) would like to see a packing plant in the Dakotas, but they don’t necessarily want to own it and they don’t want it to make money," Dykstra said. "They just want to reduce their transportation costs.
"There’s no reason to believe you can just start killing cattle (at a plant) and the money will start rolling in," he said.
"Maybe we’ve approached this on too large of a scale," Moser said. "What we’ve done in the past, we’ve tried to be the big packer. Maybe the commodity-type business is not going to be there, and we need to look at more of a specialty-type market."
NDSU is working with the North Dakota Rural Electric Cooperatives and other groups to pursue a federal grant for a small research meat processing plant on campus. The grant program, which is part of the new farm bill, offers up to $1 million for such projects.
Officials describe the proposed NDSU plant as a training ground for students, a testing place for new technology and a template for producer-owned processing plants.
Moser said the plant could help work the bugs out of potential beef marketing or processing projects before ranchers attempt them.
"We spend in agriculture … millions of dollars on feasibility projects," he said. "There’s no reason NDSU can’t do that. Let them make a mistake or two so the industry doesn’t have to."
Bassingthwaite said the Dakota Beef board, which has not yet disbanded, is willing to share information that the co-op and Northern Plains gathered through the years.
Moser, who is involved with planning for the NDSU plant, said that can only help.
"A lot of things you learn from those studies are not necessarily what you should do, but what you shouldn’t do," he said.
Copyright 2002 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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