DemKota Slowly Ramping Up, But Wall Street Hurting Local Beef Producers

DemKota Ranch Beef/New Angus is slowly bringing the scandal-born Northern Beef Packers slaughterhouse here in Aberdeen to life. In April, DemKota’s Dan DeHaan told the Brown County Commission the beef plant is slaughtering cattle eight hours a day. CEO Doug Cooper said at the same meeting that the plant will reach half of its advertised daily 1,500-head capacity later this year. Current slaughter is rumored to be around 400 head a day.

Last month, DemKota got certified for the USDA’s Quality System Assessment Program to export beef to Japan. At the end of April, DemKota joined the U.S. Meat Export Federation, whose mission is to make the rest of the world love American red meat.

Their slow expansion isn’t insulating local cattle producers from red ink:

Ross Ulmer, who runs a cattle operation near Frederick, said producers are getting the short end of the stick, while the packing industry is cashing in.

“The packers and the retailers are making extraordinary margins right now,” Kevin Larson, owner and auctioneer at Aberdeen Livestock, said. “The margins are higher than they’ve ever been in history. If you look at steak in the store, it buys for $12.99 per pound. For what theproducers are selling to the packers, it should be at about $7.99” [Shannon Marvel, “Declining Cattle Prices Pose Problem for Aberdeen-Area Producers,” Aberdeen American News, 2016.06.07].

But Ulmer, Larson, and Hub City Livestock owner Steve Hellwig (son of Dennis Hellwig, progenitor of the NBP building that New Angus/White Oak Global bought from bankruptcy for pennies on the dollar) and Kevin Larson don’t blame DemKota. Rather, they say cattlemen are suffering under a market failure foisted on them by Wall Street:

“A lot of it is is these hedge fund managers that are pushing our futures around and messing with our markets,” Ulmer said.

Frequent electronic trading on the futures markets drive cattle prices, but doesn’t require the actual delivery or sale of cattle.

…Steve Hellwig, owner of Hub City Livestock, agrees that the unstable market is a problem.

“The most frustrating thing is the volatility of the market,” he said, adding that the price fluctuations are caused by investment algorithms rather than actual supply and demand.

…Larson said big business and Wall Street are contributing to the poor cattle market.

“It looks like electronic trading and the big corporation packers have learned how to control the game,” he said [Marvel, 2016.06.07].

Big corporate packers—surely independent small corporate packer DemKota isn’t part of the problem. Surely DemKota is passing on to packers the savings its industry enjoys from its long-standing reliance on cheap immigrant/refugee labor.

By the way, despite the fact the Obama Administration has reversed the trend of Mexican immigration to the U.S., DemKota Ranch Beef held a recruiting event on May 16 at the Workforce Solutions Office in Welasco, Texas, just ten miles from the nearest border crossing. In Brown County, good help, like good cattle prices, must be hard to find.


6 Responses to DemKota Slowly Ramping Up, But Wall Street Hurting Local Beef Producers

  1. mike from iowa

    Damn hedge fund managers should be suing for a $1000 per hour minimum wage so us bums on the bottom earn enough to keep hedge fund managers living the life they are accustomed to.

    One hour’s labor could buy 76.98229407 pounds of $12.99 pound steak.

  2. Roger Elgersma

    Sooooo, if this packing plant was to help our economy, we should sell the beef in this country to flood the market to lower the price in the store so it would sell off the glut in the market so the prices would go up so everyone would do better including the farmer. But no, we sell it overseas to the status quo can continue.

  3. maybe this is still trickle-down voodoo economics like BHE/BLP’s new 5-6 story glass TIF castle at catron blvd (parkway, really) and HWY 16 (blighted land? where is les, btw?) on the way to mt. rushmore.

    still i’m happy that well intended commerce may be happening in Aberdeen. I guess we’ll see, long after rounds and daugaard are gone, presumably.

  4. Good help is hard to find. God forbid anyone puts in an honest day’s work anymore. This article is obviously written by someone who has no true understanding of the commodities market. They immediately assume the big bad packing house is raking in money hand over fist. Before you fire off skewed articles, do your research and know what you are talking about.

  5. So enlighten us, BH. Who spoke incorrectly in the above article? Ulmer? Larson? Hellwig?

  6. mike from iowa

    Honest day’s work went south right along with honest day’s pay.