November 19, 2003

 

 

Scotland Beef Processing Plant Prepares For Start-Up
 

A proposed beef processing plant in the Scotland area would create up to 100 jobs in five years, according to Southeast South Dakota Beef Processors (SSDBP) board members.

 

The plant would also bring in millions of dollars to the region, they said.

 

The facility will cost up to $5 million with operational costs running another $4 million, said Keith DeHaan, an independent consultant with Food and Livestock Planning, Inc.

 

The proposal calls for two phases: a slaughter-only plant that would run for the first one to three years, then a boning plant would be added to the facility by the fifth year. The operation would recycle its water and would not include a rendering plant.

 

The plant would hire about 40 people for the first phase, then reach 100 employees when the boning plant becomes operational.

 

The operation would be a limited-liability corporation, with the startup costs covered by an equity drive of $5 million, DeHaan said. Elkhorn Valley Packing Company, which is based in Wellington, Kan., would purchase a minority interest and run the daily operations under a management agreement.

 

But the Southeast South Dakota Beef Processors board would govern the overall business, DeHaan said. Elkhorn Valley Packing would purchase and market the local livestock through its plant in Dodge, Neb., he said.

 

"The plant capacity will run at 200 to 250 head per day using one shift, but we could double shift," DeHaan said. "The return on equity during the first one to three years will generate an estimated 18% return on investment, looking at Elkhorn Valley's previous holdings. Their net earnings should run around $900,000 a year in the first three years after the plant is built."

 

The SSDBP board members include Gary Gall, Duane Mogck, Dwight Bietz, Robert "Bob" Walloch, Dick Behl, Greg Gemar, Lee Sayler, Dean Mogck and Lyle Ireland. The men are from the Scotland and Olivet areas, but they emphasized the project will have a major economic effect on the entire region.

 

On Monday, more than 100 people from several counties attended an information meeting for the proposed beef processing plant, which plans to begin construction next year and open in 2005. The meeting drew a mix of cattle producers, truckers, business owners, educators and potential investors.

 

Already, the plant proposal drew support from state officials at the meeting.

Jon Farris, with the state Department of Agriculture, said he has worked with the SSDBP board and has found it has both a business plan "and a lot of support for the project."

The SSDBP plant would fit well with the state's effort to attract more value-added agriculture, Farris said.

 

"The cattle now shipped out of state is a big issue. We are committed to working with feeders," he said. "And the jobs that go with the project are a huge deal ... As we say, all ships rise with the tide."