Hopes, concerns aired in wake of plant’s bankruptcy

Farm Forum

Proponents of the Northern Beef Packers and government officials are reacting to the news of the plant’s filing for Chapter 11 bankruptcy with a variety of responses:

·”We were excited to bring them on as a customer,” said Alaina Henning, manager of Diamond Vogel Paint in Aberdeen, one of the small businesses in Aberdeen with unpaid bills from the beef plant. The store filed a lien against the plant for $2,819 on May 3.

“We had a good relationship. We put a lot of paint in that place. I am disappointed, I can’t lie. When they stopped needing paint, they stopped paying. Every month we would send a bill. When we called them our calls would go unanswered. They have affected a lot of businesses that are part of Aberdeen.”

·Duane Sutton, Brown County Commission chairman, said “I hope it is a temporary setback. The success of the beef plant could be a boon to our area. As a commission, we have some questions that need answering. One concerns the contractor’s agreement for road improvements. We need to know if that is transferrable to any new owners. We also need to know how the bankruptcy will affect TIF payments. We have put in a call to our legal counsel and hopefully will have these answers by the county commission meeting.”

·Herman Schumacher, beef producer with operations in Herreid and Ipswich, has been a strong proponent of a local beef plant. He has furnished cattle to the plant.

“This is a tough situation, no doubt,” he said. “I am very hopeful they can find their bearing and move on. This plant will not only be a benefit to Aberdeen, but the Dakotas and the entire region.”

Schumacher said that in addition to purchasing some of the TIF bonds, he loaned the beef plant $192,000 as an unsecured creditor.

While the plant owes him the loan money, it did pay him for his cattle, he said. It is his understanding that all the cattle producers have been paid for their cattle, he said.

Schumacher said he believes in the plant and the potential it holds to give cattle producers a better, closer market, as well as pay a premium for quality South Dakota-raised beef.

“I am confident that some day the plant will process cattle,” he said. “Let’s stay positive.”

·Jim Barringer, Aberdeen Development Corp. executive vice president: “We are disappointed the plant continues to struggle. We are hoping this will be a path to resolve issues that have continued to plague the beef plant.”

Barringer said that the development corporation did not loan money to Northern Beef. The corporation offered the plant $2.5 million to $3 million in loans, but the beef plant did not meet the necessary requirements to receive them.

“The development corporation is financially strong and was equipped to make the loans, but Northern Beef did not do what was necessary,” Barringer said.

He said that the development corporation has been a backer of the plant all along, including supporting the tax incentive financing bonds initiative, helping lobby the state for road improvements and paying for the feasibility study. His hope is that the beef plant will be able to succeed, he said.

·”It is sad to hear about the bankruptcy,” said John Sumption, a cattle producer near Frederick. “It seems like the plant has struggled financially since the day it began.”

The Sumption family has been looking forward to selling cattle to the beef plant, but because of the small numbers of cattle processed at the plant and the timing of when their cattle were ready for slaughter, the Sumptions have not sold any animals to Northern Beef.

The South Dakota Certified Beef program, which the plant is planning to participate in some day, is a great one, Sumption said.

“The plant is needed,” he said. “This is cattle country and we shouldn’t have to drive so far to deliver our cattle.”

While Sumption said he is confident that the plant will one day process cattle, he is concerned about the plant’s past record.

“I don’t understand the continued drag, the continued postponement to get fully open,” he said.

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