South Dakota feedlot expansion plans on hold
ABERDEEN, S.D. (AP)--The Northern Beef Packers processing plant under construction near Aberdeen is attractive to area feedlot businesses because it would save them the cost of hauling their cattle to distant markets for slaughter.
But the processing plant has yet to open.
"I told my boys, 'No pouring of cement,''' said Alfred Larson of Aberdeen, partner in a Columbia-area feedlot operated mainly by his sons. "We are sitting tight. Everything is too tough right now.''
Weather and financing issues have delayed Northern Beef's opening, originally scheduled for late 2007. The plant is expected to employ up to 550 workers when it reaches its full capacity of processing 1,500 head of cattle a day.
"Last year we were shipping cattle as far as Green Bay (Wis.), which cost us $70 per head just for freight,'' said Randy Bauer.
Like the Larsons, Bauer and his family hope to expand their feedlots near Mina because of Northern Beef.
But it's not just Northern Beef's problems. Price is another factor that's making feedlot businessmen think twice before expanding.
"We were in the process of looking at increasing our feedlot, but the market dictated otherwise,'' said Bryan Bauer, Randy's son. "But it is something we still want to do in the back of our minds.''
Last summer, finished cattle brought up to $110 per 100 pounds at the marketplace, Randy Bauer said. The price is about $80 now, after being in the $70-range early this year, he said.
"Prices just fell out of bed when the economy started going south,'' he said.
The Bauers have their own cattle and some they custom-feed for others. Some cattle raisers were losing $400 per head when prices fell, Bauer said.
"You would not believe the literally millions of dollars that have left the cattle industry.''
And he said his family is feeding significantly fewer cattle than normal. Bauer said the recession has created much uncertainty on prices and international markets.
Another unknown: possible new feedlot regulations.
"We have no clue as to where we are headed as far as these environmental deals go,'' Bauer said.
So now is not the time to expand, regardless of when Northern Beef opens, both Bauer and Larson said. But with or without expansion, both say they plan to sell finished cattle to Northern Beef.
Dennis Hellwig of the company has said he expects the plant to open later this year.
"He is a good friend of mine,'' Larson said. "I hope it is a success. If he gets it going, I will sure support him.''