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GOED to Study Meatpacking: EB-5/Northern Beef Packers All Over Again?

During its August 9 meeting, the Board of Economic Development greenlit the Governor’s Office of Economic Development’s plan to offer up to $100,000 for some private consultant to come study whether the market would support new small and midsized meatpacking operations in South Dakota. The request for proposals (in the BED meeting agenda packet) tells bidders they should to study these market factors:

  • available cattle supply
  • sales and marketing, both on the procurement and finished product side
  • processing economics, both direct and overhead costs
  • a reasonable capital stack—i.e., debt-to-equity ratio at startup
  • costs associated with rural construction and rural residual values of MPP facilities [MPP usually stands for Meat and Poultry Products, but this RFP mentions only meat and pork, not poultry]
  • the small packing industry as it exists today in SD
  • true workforce availability

But watch out, newly appointed GOED chief Chris Schilken. The last time the state invested in meatpacking, with Korean and Chinese investors buying green cards to fund a state-subsidized beef plant in Aberdeen, the project shut down and went bankrupt, and the former economic development chief who pushed the project ended up dead. Bob Mercer summarizes the EB-5/Northern Beef Packers fiasco:

South Dakota state government became deeply snarled in efforts to open a beef plant in Aberdeen that began during the mid-2000s, when U.S. Senator Mike Rounds served as governor and Richard Benda was state commissioner of tourism and development.

Foreign investors put money into the project, known as Northern Beef Packers, through the federal EB-5 program, and some of them later sued. The company filed for bankruptcy, Benda died in 2013 by what was officially ruled a shotgun suicide, and Joop Bollen of Aberdeen in 2016 pleaded guilty to a Class 6 felony for his role and was sentenced to two years of probation and a fine. The resurrected plant now operates as DemKota Ranch Beef [Bob Mercer, “GOED Seeks Meatpacking Study,” KELO-TV, 2023.08.15].

That fiasco included Governor M. Michael Rounds’s attempt to create a “South Dakota Certified Beef” program, which flopped and disappeared.

The USDA defines “small” meatpackers as those with fewer than 500 employees. Demkota thus qualifies as a small packer. GOED’s study of the small packing industry as it exists today in South Dakota will thus need to look closely at Demkota and perhaps talk about why it initially failed in its state-subsidized and EB-5-visa-backed form, how Demkota has managed to steer clear of such failure, and how the state can avoid stepping in cowpies in any future promotion of meatpacking… if the study finds the market can bear any more small slaughterhouses.

GOED is taking bids until September 8. They expect to award the contract by October 11 and get study results by the end of this fiscal year, June 30, 2024.

8 Comments

  1. e platypus onion 2023-08-16

    GOED is taking bids until September 8. They expect to award the contract by October 11 and get study results by the end of this fiscal year, June 30, 2024.

    Local entities ne not apply as virtually all contracts head out of state to build Noem’s profile.

  2. John 2023-08-16

    ROTFLMAO. South Dakota GOED is saying, ‘let’s throw away more money!’
    The size of the US cattle herd is on par with the level it was in the 1980s. Meanwhile the US population nearly doubled. Let. That. Sink. In.
    People are eating healthier than big servings of steroid and chemically infused livestock.
    All that occurred BEFORE plant-based meat and fermented meat.

    GOED’s study would also likely whistle past the South Dakota labor shortage. No problem. Just follow the examples of Nebraska, Iowa, Arkansas, and Alabama – hire 12 year olds. (After all, if one is not going to educate them, then one ought to put them to work.) https://www.reuters.com/investigates/special-report/usa-immigration-hyundai/

  3. P. Aitch 2023-08-16

    Good luck, South Dakota. Helping business is good. Spending money to make money is good. Stopping the “brain drain” of young, brilliant economic advisors would be very good.

    Cory’s blog serves a valuable purpose in South Dakota. Even when he dumps negativity on something that hasn’t even happened yet. A positive attitude is the first stage toward developing innovation skills. There’s no reason to be afraid to fail. There’s no benefit in predicting failure, though.

  4. Jake Kammerer 2023-08-16

    P. Aitch; what you really miss is the point that blog creators like Cory, and SD Standard and others is alerting the citizens of the forthcoming raids on the state treasury (our tax money) before they happen. You don’t get as much from the main media becuase they are more into the “fluff and smoke and mirrors” put forth by politicians. Being “negative” about raids on our treasury is a positive!

  5. P. Aitch 2023-08-16

    @JakeKammerer – The best advice currently is for every state to spend more money on their election process, election workers, and especially on their election security.
    – We blue states take advice from the Massachusetts Institute of Technology Election Data and Science Lab seriously and are already providing legislative direction to approve massive amounts of new election process funding.
    *see link below for the advice
    Thank you for your concern, Jake Kammerer
    LYIY (last word is yours)
    https://www.axios.com/2023/08/15/2024-election-security-underfunded-mit

  6. grudznick 2023-08-16

    Mr. H mostly just dumps negatives on things.

    I hope if he is a resident eligible to take on Mr. Novstrup, the elder, again he brings some good positive and constructive ideas and doesn’t just try to tear Al down because of his self-barbering.

  7. larry kurtz 2023-08-16

    Every ag product, meats both wild and domestic not grown organically in the United States is contaminated with atrazine, neonicotinoids, glyphosate, dicamba, DDT, mercury, lead, cadmium, PFAS, E. coli, Imazalil plus other toxins and pathogens.

    South Dakota’s current Republican governor wants to restrict land ownership by “countries that hate us.” Fact is, of the 195 countries on the planet most them probably hate us but many have parts of the trillions stashed in the state’s banks and trusts anyway.

    Kristi Noem’s target is China even after her predecessors sold green cards to Chinese investors through the EB-5 program and the cash funneled into some 90 dairies, a cheese factory, a slaughterhouse and even into the Deadwood Mountain Grand resort. They’re all struggling to find help right now because of the crappy pay, the worse weather and the governor’s lackadaisical attitude about pandemic protocols threatening human life. Recall she called Georgia’s two Democratic US Senators, Communists from the state that controls much of the means of production.

    Probing the undercurrent that ties the unsolved death of South Dakota’s Richard Benda in 2013 with his EB-5 past remains a mystery for the political junkies who follow Joop Bollen’s role in the scandal. The late Republican former Governors Frank Farrar and Bill Janklow built the dynasty trust industry.

    China hates South Dakota because the state screwed Chinese job creators out of at least $100 million. Republican former Governor now US Senator Mike Rounds began courting Chinese money in 2004 but escaped a thorough probe of his part in the racket or in Rich Benda’s death.

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