NOBULL: S. Dakota branded-beef program fails to meet expectations – Northern Beef files bankrupcy

Monday, July 22, 2013 9:31 AM

S. Dakota branded-beef program fails to meet expectations


Associated Press

PIERRE, S.D. (AP) — Launched with great hopes and fanfare eight years ago, the South Dakota Certified Beef program has so far fallen short of its goal of helping farmers and ranchers sell state-branded beef as a premium product commanding higher prices.

When then-Gov. Mike Rounds persuaded the 2005 Legislature to create the program, he envisioned a time when people across the nation and around the world would choose to pay more for steaks that carry a South Dakota seal of approval. He said codes on package labels could let buyers visit an Internet site to track the meat’s origin, following it from a calf’s birth to a feedlot and then a processor.

But that hasn’t happened, largely because South Dakota hasn’t had a meatpacking plant operating at a large scale that would make processing economical, officials say. They hope the long-delayed Northern Beef Packers plant in Aberdeen will soon fill that void.

In the first eight years of the program, only 16,386 cattle — a tiny slice of a state herd that approaches 4 million head — have been enrolled by farmers and ranchers. Only 500 have made it all the way through the program to be sold as meat from the program, mostly just within South Dakota from cattle processed by small custom meat lockers.

Rounds, now running for the U.S. Senate, still thinks the program will succeed once the Aberdeen packing plant is running at full speed and more buyers demand verification of when and where cattle are born.

"I think its time will come," Rounds said earlier this month.

Todd Mortenson, a Hayes rancher who is still registered with the program, recalled sky-high expectations when the program was launched.

"I keep hoping that something will come of it, that they’ll get it revived," Mortenson said.

Mortenson and others, including state Agriculture Secretary Lucas Lentsch, said that will require developing a large-scale packing plant in South Dakota that can process cattle economically. Mortenson said selling a few cattle at a time through the program isn’t worth the effort because he needs to sell a truckload of 50 cattle at a time to make the Certified Beef program work financially.

Northern Beef Packers, first proposed six years ago, is now operating in Aberdeen but well short of capacity. The plant laid off 108 of its approximately 420 workers in April, citing lack of money to buy and process high volumes of cattle. The plant at the time was slaughtering about 200 cattle a day; its goal is up to 1,500 daily.

A.J. Monger, director of new business development at the plant, said Northern Beef Packers wants to work with the South Dakota Certified Beef program. He said plant managers hope to reach capacity soon. He declined to talk about efforts to get additional financing to buy more cattle.

Sarah Caslin, with the state Agriculture Department’s Livestock Marketing and Development Program, said about 60 farmers and ranchers are registered with the program, with about 6,000 head of cattle currently enrolled. The program requires that cattle be born, fed and processed in South Dakota, and most cattle now are shipped to packers in Omaha or Sioux City, Iowa, she said.

The Agriculture Department spends about $52,000 a year to run the program, with much of the cost attributed to a federal audit of the program and the state’s checking of farmers and ranchers to make sure they follow the rules, Caslin said. Part of that cost is recovered from the $100 annual fee paid by producers and the 50-cents-a-head fee to enroll each calf, she said.

To qualify as South Dakota Certified Beef, the cattle have to be born in the state, carry electronic ear tags and be tracked every time they are sold. Before being slaughtered, cattle have to be fed a high-starch diet or corn or other grain for at least 100 days.

Caslin said other certification programs have taken a long time to develop.

"We’re still in our baby steps. "The producers still feel this is a good program, and we’re just going to grow," she said.

And even though little meat has actually been marketed in the program, its tracking components help some farmers and ranchers sell to buyers who demand to know when and where cattle were born, Caslin said.

At an event in to kick off the program in 2005, Minerva’s restaurant in Sioux Falls served invited guests and others to eat steaks processed and approved through the program. But the restaurant stopped selling the Certified Beef a few years later because Marshall Johns Beef in Hudson couldn’t supply enough meat, said Don Anderson, vice president of Minerva’s owner WR Restaurants.

Steve Willard of Marshall Johns said the operation still sells 50-60 head a year for sale to private customers. The steaks are easy to sell, but ground beef is more difficult to sell at a premium price, even though most people would say it’s probably the best tasting ground beef they’ve ever eaten, he said.

Willard said the beef industry is likely headed to a time when more buyers will demand verification of the age and source of cattle, something the Certified Beef program can provide.

"It’s a case of where I think it was an idea that was a little ahead of its time," Willard said.