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Published June 30, 2008, 12:00 AM

DAKOTA HALAL: Adapting to geopolitical turmoil becomes its norm

NEW ROCKFORD, N.D. -- Meet Adnan Aldayel -- a North Dakotan who has survived the up-and-down meat business for Muslims in America. Today, he says he is one of the three largest suppliers of the specialty meat in the nation.

By: Mikkel Pates, Agweek Staff Writer

NEW ROCKFORD, N.D. -- Meet Adnan Aldayel -- a North Dakotan who has survived the up-and-down meat business for Muslims in America. Today, he says he is one of the three largest suppliers of the specialty meat in the nation.

Aldayel is president and owner of Dakota Halal Inc., a business that provides fresh and specially processed meats in the halal market for Muslims. His meat is processed in toll arrangements with plants across the nation and sold to Muslims, mostly in the Chicago area and east.

About 60 percent of his meat products are turkey-based, while 20 percent are beef and the rest a mix between chicken and lamb. Since 1980, he's raised his own flock of purebred Katahdin breed "hair sheep" bred for meat in New Rockford, N.D. He provides breeding stock to about 20 producers in North Dakota who produce market lambs for this and other markets. The Katahdin breed, named for the mountains in Maine is not susceptible to scrappier disease.

Aldayel, 52, has been a proud North Dakotan for more than a decade.

A Saudi Arabian native, he met his wife, Merita, in 1978. Both were working for Saudi Aramco in Saudi Arabia. He was a marine engineer and naval architect and she, a native of New Rockford, was a teacher.

Developing the business

They married in 1980 and, after stints in Saudi Arabia and Singapore, they moved to the United States in 1990. He accumulated additional degrees in finance and investments in New Orleans and Oregon and moved to New Rockford in 1996.

In 1997, Aldayel had established Aldayel Financial Services, to help investors from overseas invest in the U.S. market. At the same time, he led the development of Dakota Halal Processing Co., a business designed to cater to Muslims in the U.S. and abroad. Incorporated in 1999, the company was formed as a joint venture between himself and farmers. Aldayel owned 40 percent and a 56-member group Central Dakota Cattle Association based of Maddock, N.D., owned 60 percent. The farmer-owners were supplying the beef for the project, which, among other things, required that they not feed any animal byproducts or use any hormone implants.

The company built a kill plant and processing facility in Harvey, N.D., in 2001. The $2.7 million project had received development money from the North Dakota Agricultural Products Utilization Commission. A U.S. Department of Agriculture loan guarantee covered $1.5 million, and the partners came up with the other $1 million in equity.

Production was just rising to the 60-head-per-week "break-even" level when disaster struck.

"We started operation and were open a few months before Sept. 11, 2001," Aldayel recalls. "After that, the Muslim market was affected heavily."

Rebounding after 9-11

Dakota Halal's customers had been concentrated heavily on the East Coast and West Coast, where the public reaction to the terrorist attack was greatest.

"We could not move product for two months," Aldayel says. "It put the crunch on our company financially. A lot of stores that had carried our product were attacked and had to close."

Some of the store owners simply shut their doors and emigrated to their native countries -- Pakistan, Egypt and others. Customers -- often doctors, lawyers and engineers, who were likeliest to adhere to more conservative Muslim standards -- were among the quickest to leave.

People who had run meat markets were in some cases harassed, so those customers decided to go to the mainline grocery stores and sometimes become vegetarians. It is proper for Muslims to eat fish and seafood that don't require the halal handling.

"After we started back up again, we couldn't come up to the numbers we'd had before," Aldayel recalls. Southern California alone lost an estimated 100,000 of its 400,000 Muslims.

The company attempted a new plan, with a split marketing plan.

One plan was to sell to the conventional American food market under the Sheyenne Valley label.

From the cattle, beef steaks were sold as they were, but everything else was processed into meals. Sheyenne Valley, marketed a non-halal product line for the conventional market. The company produced five ready-to-eat meals, produced under a "natural" regimen.

Another was to sell finished food product to the halal market under the under the Zemzem trademark. The Zemzem moniker is word associated with the Muslim holy city Mecca and a well from which water came out of the desert.

It was difficult to differentiate the company's product from what was being produced by large, international food companies. Beef producers involved with the venture didn't totally embrace the concept of expanding into chicken and lamb.

Aldayel was pushing for selling processed meat, while some of the ranchers thought he should concentrate on raw or frozen meat.

"A lot of large companies don't make the money on the meat. They sell it at cost," Aldayel says. "Where they make their profit is on the offal -- hide, liver, etc. -- $80 to $90 per head. Out here, we have to pay someone to come and take the offal, so it's costing us."

In 2002, Aldayel resigned as president of the company. The farmers ran it for two years, but sales didn't pick up as fast as hoped. In March 2003, they dissolved the company. (The facility is currently run as Central Dakota Beef L.L.C.)

Pressing on

Meanwhile, Aldayel pressed forward in the halal business, under the Zemzem brand name. He expanded his business from beef, to lamb, turkey and chicken. He hired processing at a number of plants, including Bridgewater, S.D., and New Rockford.

Among other things, he marketed turkey sausage -- a product aimed at a breakfast menu for African-American Muslims, among others. Many of these customers had come out of a Christian tradition and the sausage was something they sought.

His meats currently go into 38 product types such as hot dogs, salami (also called summer sausage). His variations include pistachios, black peppers and others. He had been doing quite a bit of exporting of these beef products to Kuwait, but that ended in 2004, when the first case of mad cow was found in Washington state.

"Since then, I've decided to concentrate on the U.S. market," he says.

Because he occasionally had run into a retail store that would substitute non-halal meat in for the halal, he also has changed his marketing. Working with six or seven processors at any given time, Aldayel currently sells directly to customers -- only individuals and restaurants. He's also pulled out of the California market entirely, largely because of the decline in Muslim population.

Aldayel Financial Services was forced to change, too. Before Sept. 11, a significant amount of his clientele was overseas, in Saudi Arabia and elsewhere.

"After that, I decided not to do business overseas," Aldayel says.

The U.S. government had put what he considered strict restrictions on money transfers, but many of the customers didn't want to put up with the restrictions. It killed his business from overseas clients.

Life has changed.

"When I travel, they'd show a picture of Osama bin Laden on the television, and people would turn and look at me," he says matter-of-factly. "It wasn't comfortable. It still isn't."