Giant Packing Plant Project in SD

OMAHA (DTN) -- An investment company and real-estate firm in Rapid City, South Dakota, has announced it will build the single-largest beef packing plant in the country.

Kingsbury & Associates -- which has offices in Rapid City and Greenville, South Carolina -- announced plans to build a 1-million-square-foot plant that would process 8,000 head of cattle a day, as well as bison, in a project that the company estimated would cost about $1.1 billion. The plant, which is expected to take about three years to complete, would employ about 2,500 people, Kingsbury & Associates stated.

If built and running at capacity, the proposed project in Rapid City would be the single-largest beef processing plant in the country. Cargill, JBS, National Beef and Tyson all have packing plants that have capacity in the 5,000- to 6,000-head capacity. None of the Big Four packers, however, has a single plant capable of processing 8,000 head a day.

Megan Kingsbury, president and managing partner of Kingsbury & Associates, told DTN on Monday the plant has investors and the project would focus on processing U.S. beef and bison.

"It's privately held, privately funded within the U.S. -- all-American first," Kingsbury said. She added, "We've been doing our research on it, development work and roundtable discussions with key agricultural leaders and political individuals for several months now."

CATTLE SUPPLY FOR PLANT

When asked about cattle supply for the plant, Kingsbury said others involved in the project have been working with feedyards in western South Dakota that may have closed in recent years specifically because they did not have a packer relationship.

"We have a significant number of those around, just within a 90-mile radius of Rapid City," Kingsbury said. Branching out, she added, "So when you look at the numbers within South Dakota and then you look at the five-state region, and then you spread that out to 13 states collectively, then you pull in from the national."

Kingsbury added her group has been working with South Dakota's congressional delegation on possible economic development programs at the federal level. USDA has been working to provide funds to expand packing capacity, but an 8,000-head per-day facility with $1.1 billion in capital investment likely falls outside of USDA's funding boundaries to boost packing capacity through smaller processors.

Kingsbury compared the Rapid City project to a JBS plant in Grand Island, Nebraska, that employs about 4,800 people. With upgraded technology, Kingsbury said Rapid City would employ fewer workers, but with a higher pay base.

"We have extensive manufacturing and capital experience," she said.

RESTORE COMPETITION

In a news release, Kingsbury said, "Our aim is to restore competition in American meat processing." She added, "I am a 5th generation producer from western South Dakota, and I know how difficult it is right now for us as producers to be profitable. I want to fix that. We want to compete with the big four meatpacking giants and be that all-important "second bidder" in the cash market. We will build a brand that is America first focusing on procuring American cattle and feeding American citizens affordable, high-quality protein as our first priority. Our grocery store shelves should never be empty of meat again."

The news release added, "The American rancher is less than a generation away from being extinct if we don't do something fast. We've already seen the high cost of meat in stores and the low prices producers are receiving for their animals. There is profit in this industry up and down the supply chain if we restore competition. When that happens, everyone who produces and consumes high-quality beef wins."

Kingsbury said the packing plant would pull in technology experts from South Dakota engineering and mining schools to build a high-tech facility "never seen before in the United States." The goal would be to attract young people to work and live in the Rapid City area.

OTHER PROJECTS

The South Dakota project comes as others have been working on other sizable, but smaller projects in neighboring states. Sustainable Beef LLC, -- a group of investors looking to build a 1,500-head daily plant in North Platte, Nebraska -- has been working on permits and local government approval since last year. A local economic development leader indicated to DTN that Sustainable Beef might be ready for groundbreaking as early as June.

In southwest Iowa, Cattlemen's Heritage Beef Co. also is looking to build a $325 million facility south of Council Bluffs, Iowa, that would process 1,500 head a day. Heritage Cattle was soliciting a group of investors at the end of March.

Such packing plant announcements come as the industry has ramped up daily slaughter. According to USDA, daily cattle slaughter is averaging more than 122,000 head per day (Monday-Friday), which is about 25,000 to 27,000 head higher per day than a year ago.

During congressional hearings last year on the meatpacking industry and cattle markets, analysts noted plans nationally had been announced at that time to add about 8,000 head of capacity for fed-cattle processing. Dustin Aherin, who at that time was an animal protein analyst for Rabobank, also cautioned about the risks of too much expanded meatpacking capacity.

"There is a point where industry capacity expansion goes too far to withstand cyclical periods of tight cattle supplies," Aherin told senators in July 2021. "The long-term cattle cycle, drought risks and market fundamentals must be considered."

Chris Clayton can be reached at Chris.Clayton@dtn.com

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