Last week, Bluestem carried news of the growing displeasure with big meat packing companies in Agri-Stats lawsuit: MN joins Biden administration push against concentration in agriculture, an article from Minnesota Reformer.
On Monday, South Dakota News Watch's Bart Pfankuch took a look at small, local meat processing in the Rushmore state. Could we be moving back to local butcher shops?
South Dakota beef industry sees potential in small, local meat plants
By Bart PfankuchWALL, S.D. – The small, somewhat worn meat processing plant in rural Wall seems an unlikely place for the birth of a new trend in South Dakota agriculture. But it could fundamentally change the economic landscape for the state's $1 billion annual beef cattle industry.
The 2,400 square-foot Wall Meat Processing plant is the current home base of an aggressive, innovative new ownership team that has plans to revolutionize how South Dakota ranchers get their animals processed and expand opportunities for local consumers to buy meat raised almost in their own backyards.
On a recent day, a half-dozen or so workers were on task in the cramped but clean meat plant that sits less than a mile from Wall Drug. It's the last structure standing before the city of 700 fades into a nearly endless prairie to the north.
Built nearly 60 years ago, the boxy white plant takes in local cattle as well as a few hogs, sheep and buffalo and processes them from live animals to carcasses to final cuts of meat packaged in plastic, ready for consumer purchase. With a capacity of only 15 head of cattle per week, the plant hardly makes a dent in processing the roughly 1.5 million beef cows raised in South Dakota in 2022, the overwhelming majority of which are trucked out of state for processing.
But the two co-owners of the plant, who bought it in 2017 after the former owners shuttered the business for several months, are using what they have learned in Wall to develop a business expansion plan that agricultural leaders said could form the model for future development of a new generation of in-state regional meat processing plants.
The local packing plants, they said, will allow more livestock grown in South Dakota to be processed, sold and consumed entirely within the boundaries of the Rushmore State. Local processing will create jobs and tax revenues, save ranchers money on trucking and packaging and create a fully South Dakota farm-to-table process that is increasingly popular among consumers.
Local beef, local stores, local consumers
The Wall owners and a third partner recently launched a new entity, I-90 Meats, which plans to build a $21 million, 30,000 square-foot meat processing plant in New Underwood, a town of 600 people located south of Interstate 90 midway between Wall and Rapid City.
The high-tech plant would have capacity to process 15 cattle a day, or about 4,000 a year, and would include a retail market, agri-tourism learning center and culinary demonstration area.
The plant, with a proposed groundbreaking in early 2024 and projected opening in 2025, could employ as many as 50 people with wages up to $36 an hour, according to I-90 Meats co-owner Ken Charfauros. The plant will process beef, pork, lamb and bison produced by local ranchers. It would sell those products at the plant store as well as a retail location in Rapid City and at other groceries across the West River region.
"South Dakota is fourth or fifth in cattle production in the nation, but we sell our cattle out of state and then buy it back, so it's kind of backwards," said Charfaurous, who co-owns Wall Meat Processing with Janet Neihaus. The third partner in the new I-90 Meats venture is Thomas Fitch.
"To keep the regional protein production and the revenue right here, it helps our community. And not just the ranchers and the processors but also the consumers," he said.
Change should help farmers, state coffers and consumers
The move toward greater in-state processing will mark a major shift from the existing method most South Dakota livestock producers use to get their animals processed.
Under the current system, most animals, cattle in particular, are raised in the state but then trucked out of state for finishing, slaughtering, processing and packaging at one of the four major meat packing companies in the U.S.: Cargill, JBS, National Meat Packing and Tyson.
None has a plant in South Dakota.
By sending animals to those plants, producers pay much more to have their animals transported and processed, and the state loses out on the resulting jobs and tax revenues generated by the plants. Meanwhile, consumers then pay more for products that are returned to the state for sale and for which they have no idea whether the meat they are eating was raised in South Dakota, California or even Mexico or Brazil.
U.S. Sen. Mike Rounds, R-South Dakota, said further expansion of processing capabilities of agricultural products in South Dakota would be a win for both producers and consumers.
"We want to make sure our meat is high quality. … And when you've got quality local producers and processing is done locally, you’re going to get a higher price for it (the products),” Rounds said in an interview with News Watch.
Latest of several other efforts
Since the 1990s, he said, the state has seen a variety of efforts to expand processing, from the opening of the Hutterite-owned poultry plant in Aberdeen to development of soybean biofuel plants to improvements and expansions at the Smithfield Foods pork plant in Sioux Falls.
But Rounds said long-range infrastructure and telecommunication challenges as well as difficulty in finding capital and labor to fuel development of processing plants have limited the growth of large meat processing plants in South Dakota.
He has worked in Congress to end “the stranglehold” the four major processors have on the American beef market, in which they process about 85% of the beef raised in the U.S.
As livestock processing evolves, and consumers seek a greater connection to how and where their food is raised, Rounds said he sees the growth of smaller processing plants around the state as a likely path forward for the agricultural industry.
“Our smaller towns still struggle, and at the same time, this is the place that feeds the rest of the world,” Rounds said. “If our premises are correct, that people want to buy American beef because of its quality, then I think these smaller processors are going to continue to grow and I think they’re going to become the wave of the future."
Rounds said government can play a role in encouraging growth in processing capacity by providing one-time, startup financial incentives while adding more flexibility in labeling and marketing rules to create opportunities for growth in smaller, regionally based processing operations in South Dakota.
I-90 Meats, for example, received a $3.3 million grant from the U.S. Department of Agriculture to get its operation started and has a USDA guaranteed loan package of $21 million, Charfauros said. Another proposed new regional plant in Faulkton received a $2.2 million USDA grant this year.
Rounds said South Dakota farmers and ranchers who produce high-quality foods will get higher prices for their products if they are raised, grown and processed locally. Consumers will benefit by having greater access to the quality foods that are produced in their own communities or nearby, particularly beef products that are almost exclusively processed in other states.
“We want to continue to provide alternatives other than the four major processors who process not just American beef but a lot of foreign beef as well,” Rounds said. “Anything we can do to make sure that Americans who want to buy high quality American beef are able to do so, the better off we’re going to be.” . . .
There's more about other food processing developments in the full article at South Dakota News Watch.
Photo: The cramped but efficient front counter at the Wall Meat Processing plant in Wall, S.D., is evidence of a growing movement to expand capacity and capabilities of small meat processors in South Dakota. (Photo: Bart Pfankuch/South Dakota News Watch)
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