Ranchers wait for the opening of Northern Beef Packers in Aberdeen, SD, but there are more hurdles to jump for the packing company.
The cow-calf industry looks much the same today as it did 100 years ago. Horses are still largely used to round up the cattle that graze on rolling pastures and miles of wide-open spaces. The cowboy may carry a smart phone, and his beef cows might be more efficient, but the concept is still the same -- cattle convert grass into protein that humans can consume.
On the other end of the beef industry chain – at the packer level - things have changed a little bit. As the industry becomes more consolidated, the tight-margin business of packing plants has eliminated many companies, leaving four major players -- Tyson, Cargill, JBS and National Beef.
According to High Country News, “About 35 million cattle are slaughtered in the U.S. annually by 60 major beef-packing operations processing around 26 billion lbs. of beef. Four firms control over 80% of all the beef slaughtered."
Read about these four major players here.
Knowing how tough the processing and retail end of the cattle business is, it’s rare to see a smaller company attempt to enter the scene, and many have tried and failed. However, that’s exactly what Northern Beef Packers in Aberdeen, SD, is trying to do. The grand opening has been pushed back multiple times over several years, but producers who signed up to be a part of the South Dakota Certified Program have patiently waited to be able to market their cattle through this value-added, age-and-sourced verified program.
These producers' hopes were buoyed this week when the The Jamestown Sun reported some progress in the right direction for Northern Beef Packers.
“The Northern Beef Packers plant in Aberdeen is being allowed to slaughter more cattle after passing a city inspection. The long-delayed plant earlier received permission to slaughter up to five cattle to test equipment. The American News reports that the city is allowing the plant to ramp up to slaughtering 200 cattle on both Thursday and Friday. Plant officials have not said how many cattle they are actually slaughtering.”
According to the report, the plant cost more than $109 million to build, and construction started in 2007. There have been several problems that have delayed the opening, including financial issues with investors, flooding and lawsuits. If opened, Northern Beef Packers will be able to process 1,500 cattle/day, with cattle coming in from the Dakotas, Nebraska, Iowa and Minnesota.
If opened, what do you think of Northern Beef Packers chances of success in this tight-margin business? If so, would a value-added program like South Dakota Certified benefit producers in the area? Any bets on if the plant will open before 2012 concludes?