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.