Let’s be positive—here are a couple signs that the market may support New Angus/White Oak Global’s gambit to resurrect the bankrupt Northern Beef Packers slaughterhouse.
The USDA reports that, as of August 1, the number of cattle on feed in South Dakota was 210,000, up 20% from last year. (That’s 2.1% of the national beef stock of ten million head. Nebraska has 2.2 million head; Iowa, 630,000.)
The new ethanol plant coming to Onida may boost cattle numbers further. Ringneck Energy and Feed may encourage more wild irrigation of drier middle Dakota ground to corn fields, but it will also crank out distiller’s grain, which could supply expanding feedlots:
The proposal to build Ringneck Energy in Onida, 50 miles away, could be a source for additional feed for those looking to expand or relocate dairies. At a meeting in Aberdeen last week, Walt Wendland, president and chairman of Ringneck Energy amd Feed LLC, said the proposed ethanol plant could provide a quality feed for dairies and beef operations in the area. He said he realizes the importance of having a consistent product for dairy animals, and the distillers grains from the plant could be used to enhance the rations on dairy operations [Connie Sieh Groop, “Cheese Plant Boosts Local Economy,” Aberdeen American News, 2015.08.23].
More cattle on feedlots mean more concentrated pools of manure. But that’s not New Angus/White Oak’s concern. These investors just need 1,500 cattle a day to march across their chopping block and turn their Aberdeen beef plant into a salable property.
If local beef can’t support a restarted NBP, one of my ranch friends suggests that New Angus retool the plant for horse slaughter. Maybe they could lobby Rep. Kristi Noem to push her colleagues to lift the ban on the sale of horsemeat. Last year, the U.S. exported about 147,000 horses for slaughter, mostly in Mexico and Canada. Of course, at a processing rate of 1,500 head a day, that’s only 98 days of production for the Aberdeen plant.
Distillers grain has more downsides than upsides.
Ethanol is a waste of perfectly good corn.
The data from Dr Hatefield at USDA is showing our organic matter in soil is disappearing at record rates since we are producing record amounts of corn for ethanol. This creates more land erosion and creates less productive land.
Ethanol the biggest hidden eviromental disaster of the 21st Century.
As a retired white tablecloth chef, may I posit? Two things that are going away fast these days. Beef (especially beef from traditional feed lots) and ethanol additives. The first is too expensive and ecologically destructive to eat often. What beef that is consumed has been somehow overtaken in popularity by “grass-fed” when any ag backgrounded chef knows that ALL beef is grass fed and a proper finishing of corn, barley and molasses without added chemical nutrients is where beef’s flavor is enhanced. The beef that’s selling in the cities is from boutique feed lots with documented natural processes. Ethanol, without a gov’t subsidy is a dinosaur initiated by Bush to garner rural votes. There are other avenues for Sodak economic expansion without hitching the plow to things going away faster than Donald Trump and his TeaParty. (PS … What’s the top export to China from USA? soybeans)
South Dakota could make more moolah with renewable energy that would save the land rather than ethanol that destroys it. I do think that maybe the plant could provide for the horse slaughter though as there are many places that are not so squeamish about the meat they eat. Also, the hides make for durable leather goods along with the rest of the carcass for other industrial needs. Horse slaughter, along with all that goes with it, could give a real “kick” to the Aberdeen area.
Expecting NOem or Tehran John to support an economic idea though, is day dreaming. Now EB5 Rounds could be convinced if he thought it was corrupt enough for him.
If South Dakota fattens one million cattle and if New Angus slaughters five days a week at 1500 hd/day then they could handle 37% of the state’s fats. If they run seven days a week they will slaughter 50% of the states fat cattle. Will they be able to outbid the Big Four packers for these cattle?
Ringneck Energy and Feed, LLC’s pep talk about the opportunities that await us sounds like it came right out of Mike Round’s playbook.
Porter. I agree with your. Chef comments. DDG’s are not the same feed quality as corn since all the starch is removed. Using a protein source to fatten cattle is inefficient and cause more free N to be released, also known as ammonia.
The buyers for the Packers will tell you cattle that are fed DDG’s do not grade as well and Prime Cuts are difficult to find.
This is why you are seeing beef in the mess it is The same is true for bacon DDG equals poor quality bacon. The swine industry has done a better job of lowering DDG in swine diets.
Jerry, if South Dakota can buy into letting Joop Bollen skin foreign investors through the EB-5 program, it should have no problem hiding some horses for economic development.
Paul, does NBP/New Angus get any competitive advantage from proximity to SD ranchers? Or do the Big Four packers keep offering higher prices and eat the transportation costs just long enough to drive NBP/NA out of business again? And who pays for transportation, the ranch-seller or the packer-buyer?
The assessment above of feed and meat quality supports what David Newquist told us in an earlier comment thread: Rounds and NBP blew the “South Dakota Certified” branding program by not tying that certification to a product with a real taste difference. People can tell the difference between healthy grass-fed cattle and feedlot/factory beef. Even if there’s more beef, New Angus has to find uniquely good beef.
Curious: can New Angus skip the urban eaters Porter mentions and focus on an export market for cheap beef? Are foreign consumers less choosy?
Cory,
New Angus might have a small, albeit very small, advantage by being closer to South Dakota feedlots. The packers will buy the cattle in South Dakota and the packers will stand the cost of shipping to their plants.
However, I totally agree with Nick Nemec in that although the Big Four control 84% of the market they will not allow anyone to cut cut into that 84% market share. They would control 99+ percent if they could. They will break anyone that dare compete with them. I feel that the only hope for New Angus is to find some niche market, whatever that niche may be. I would suggest antibiotic free and grass fed. I know, the numbers just aren’t there. Ask Mike Rounds, he evidently has given this subject much thought.
Why not have this plant process dog, horse and Cattle meat if the focus of it’s market is Asia? They would have a niche and diverse supply to keep the assembly lines running helping to keep this plant finally be profitable if it remains a meat processing plant with steady employment opportunities. Dog and Horse meat is not desired here in North America but it is in demand in other parts of the world especially Asia.
My knowledgeable friends in agriculture here are making it clear that New Angus’s only hope is to identify a market that the Big Four are not serving.
Related Reading: The Big Four—Tyson, JBS, Cargill, and Smithfield—have apparently destroyed the free market in meat. They want nothing to do with non-CAFO meat…
…and neither does New Angus. Look at NBP. The facility is built around the presumption of feedlot supply. No factory built to slaughter 1,500 head a day is interested in piddling around with small producers and their grass-fed cattle. The racket here is that White Oak Global thinks it can get NBP running again just long enough to prove useful or vaguely threatening to the Big Four. Either White Oakl wants to coax the Big Four into thinking NBP is a nice enough bauble to buy and process beef in themselves or that it is enough of a pain in their necks to shut down by buying it outright instead of engaging in market warfare. Either way, it won’t take much for White Oak to make its money back. They have $39.5M in previous investment, $4.8M in cash, and maybe a few million in the tiddlywink repairs, marketing, and personnel they’ve been paying for over the last 16 months. They get someone in the Big Four to offer $76M (half what the EB-5 investors, the state of South Dakota, and other sources spent to build this boondoggle), and the San Francisco moguls walk away green.
Hmmm… in its online portfolio, White Oak Global lists “Beef Packing Plant,” Sep 2012, worth $28M.
I wonder how many degrees of Kevin Bacon we have to go through to connect someone on White Oak’s corporate team with Joop Bollen?
With crude oil at $39.00 the Onida ethanol plant might not be built because of lack of investors. To me it looks like a poor time to invest in an ethanol plant anywhere.
Good point, Greg. We’ve talked about the break-even point for tar sands and Bakken oil; is there a magic oil price that marks a break-even point for ethanol? What oil price should bring those investors back to ethanol?
Horse, dog, cat meat? Lynn- North Sioux City South Dakotan inventor extraordinaire/NBP partner Eldon’s (forgot his last name) family already took up some of that slack by taking previously dog-food level carcass scraps sent to Stockton puppy chow mills, and home-cooking, spinning and flash-freezing them daily, into tens of thousands of pounds of LFTB (pink slime he is suing ABC $1-2Billion for, for defamation). I am hoping a connection between payday lenders’ lisa furlong/IBP/NBP and Jackley’s SDGOP can be shown.
Leslie,
Why not? Many cultures in the world eat insects that are prepared to be quite tasty and a good source of an inexpensive and environmentally friendly protein but in North America certain foods are considered taboo. I’m not talking about using that white elephant of a processing plant up in Aberdeen to package insects or Soylent Green but if they need to diversify to make that plant run efficient, thrive economically providing good paying jobs, with benefits with security and sell to niche markets outside the US and Canada then go for it! :)
I definitely do not feel investing in this or another new ethanol plant would be a good idea. Isn’t there already over capacity in ethanol production? This current method for making corn based ethanol was only supposed to be temporary anyways right? I feel ethanol’s days are numbered. Precious water consumption to produce ethanol, chemical input in which we now have our rain water containing Glysophate, surface and ground water pollution increasing due to AG runoff and more marginal land taken out of habitat protection and put into producing Corn.
When I fill up at the gas station I try to go ethanol free as much as possible.
Lynn, I share your concern about all the externalities of ethanol. Increased water usage, crowding out food crops, loss of grassland, worse erosion and pollution.
But I do notice that this year’s drop in gas prices has produced a much wider spread in blends at the pump. E-10 used to have only a five-cent discount from equal-octane pure gasoline. Now I see a 30-cent difference at some pumps. What prices diffs are you seeing between pure gasoline and ethanol mixes?
Cory,
Sorry I don’t even keep track of the difference in price. I know which stations have a non-ethanol choice and go with that. Just visited with the owner of a repair shop while my vehicle was getting preventative maintenance yesterday and shared how we avoid ethanol and what mechanical issues that can develop by using it and decrease in fuel economy. Ironically he really would like to get a used version of the more economical Tesla coming out or the Model S if it can be purchased at the right price.
Putting an ethanol blend in small engines such as lawn mowers is definitely not a good idea.
If these investors have some money to lose and roll the dice on that plant in Onida then so be it. I sure wouldn’t.
People just love to complain about clean-burning ethanol,
it’s the whipping boy for the intellectually lazy.
OK, what’s the alternative?
Pure gas! More toxic benzene in the air we breathe and more oil spills, sure our children may die of cancer, but at least my mileage won’t drop!
The alternative? Bicycles. Most emissions during manufacture, followed by a little extra bike exhaust from my personal tailpipe as I zip around Aberdeen. :-)