Still waitingDAZEY, N.D. — After more than a year, Lloyd Wieland is waiting. Wieland delivered two groups of cattle to North Dakota Natural Beef LLC, at its New Rockford, N.D., slaughter plant in the fall of 2010. More than a year later — despite assurances, and after a bond payout — he’s still owed about $45,000 on the last load.
By: Mikkel Pates, Agweek
DAZEY, N.D. — After more than a year, Lloyd Wieland is waiting.
Wieland delivered two groups of cattle to North Dakota Natural Beef LLC, at its New Rockford, N.D., slaughter plant in the fall of 2010. More than a year later — despite assurances, and after a bond payout — he’s still owed about $45,000 on the last load.
He understands the company’s explanations that the recession affected their markets for meat, but says he was “shocked” to realize the company could be in such financial crisis, considering the pillars of North Dakota agriculture who were involved.
The federal Grain Inspection Packers & Stockyards Administration has audited NDNB inventories, and some money has been paid from a trust that was established from those funds. But after the partial payments, Wieland and his wife Audrey still are owed about two-thirds of what they were owed in 2010.
Separately, NDNB had a $30,000 bond, which was divvied up by the North Dakota Agriculture Department.
Wieland says $400,000 to $500,000 was initially owed to all beef producers. He doesn’t know how much of that is still owed. Meanwhile, the North American Bison Cooperative, which technically owns the beef company, and has the same management, rolls along, and isn’t answering phone calls.
North Dakotans since 1895
There have been Wielands in the Dazey, N.D., area since 1895. Lloyd’s grandfather, John Q. Wieland, homesteaded here, and had a reasonably large farm that was divided into four farms in 1942, for four sons. One of those sons, Richard, ran his part the of farm until the early 1970s when Lloyd took the reins.
Born in 1945, Lloyd graduated from high school in 1963. He went to North Dakota State University and in 1969 picked up a mechanical engineering degree. The same year, Richard had a heart attack.
“I had been inducted into the Army, even passed a physical, but I got a health deferment,” Lloyd says. The oldest son in a family of 13 children, Lloyd came home. In 1988, he married Audrey Petersen, who’d grown up near Litchville, N.D.
The couple started out with 420 tillable acres and a herd of cattle. Not wanting to buy more land, Wieland shifted into feeding some of the cattle out in the 1980s and 1990s.
The Wielands buy cattle and feed out up to 200 head in the winter. They owned 300 to 400 acres of pasture and rented out another 250. Initially, they sold fat cattle in West Fargo, N.D., and then to IBP in Nebraska or sale barns in Sisseton, Britton or Aberdeen, all in South Dakota.
“You needed a ‘potload’ to sell to IBP,” he says, noting that 35 to 40 head at 1,200 to 1,350 pounds apiece would fill a semi-load.
New and natural
In the mid-2000s, Wieland turned to the “natural” beef market.
Hoping for a premium on finished cattle, he would sell them in Sisseton or Aberdeen as natural, often in groups of just 10 or so at a time. Delivery distances — 150 miles one-way — ate some of the profit. “At times the premiums were good — $15 a hundredweight, but it was kind of a crapshoot,” he says. “Usually you got some premium, but sometimes you didn’t.” If a producer didn’t get paid any extra for the natural animals, they were probably coming out behind, he says.
One of the natural programs the Wieland sold into in Aberdeen required cattle to be at least 51 percent Black Angus breeding, regardless of the hair and skin color. To market cattle as natural, producers would immunize and watch the animals carefully for signs of health problems. “Immunizations are fine for natural beef (under that program), but no antibiotics — nothing in the feed, but if they got sick you gave them a shot and pulled them from the program,” Lloyd says.
Studies showed that it cost 10 to 20 percent more to raise natural beef because it takes longer for them to reach ideal market weights. The rule of thumb, Wieland says, is that for every $1 you spend on hormone implants in conventional markets, you gain $20 back in the rate of gain.
In 2006, Wieland turned 62 and quit finishing cattle at home.
For the next couple of years, he sold natural feeders in Aberdeen. There often wasn’t much premium, and sometimes the buyers wouldn’t even bother having him sign the affidavit that proved they were natural. There was little premium in selling natural feeders, he says.
In 2009 and 2010, North Dakota Natural Beef came along. They had a “never ever” program regarding hormone and antibiotic treatment. “I heard about the program, and it looked like a good way to sell the cattle,” he says.
The Wielands, long-time North Dakota Farmers Union members, were encouraged by the fact that their organization had invested $750,000 in the beef company. Woody Barth, the NDFU vice president, and now president, would be on the board of directors.
North Dakota State University, Wieland’s alma mater, was also heavily involved. Dakota Growers Pasta Co., another investor, was chaired by North Dakota Lt. Gov. Jack Dalrymple, now the governor. Dakota Growers Pasta Co., originally a cooperative, became a corporation in 2002. It was sold to Viterra Inc., of Calgary, Alberta, on March 10, 2010, and now operates as a wholly owned subsidiary under Viterra management and no longer has a local board.
“With all of these principles involved I never thought it could go that haywire. I never thought it would turn out that way. Do you know what I’m saying?” Wieland says. “I just thought to myself, they’re not going to shut this thing down: they can’t. And they didn’t.”
But that didn’t mean Wieland couldn’t get hurt.
Finishing for profit
The Wielands needed to finish their cattle elsewhere. They took 103 to Pipestem Feeders in Carrington, N.D., and finished them 10 miles from the New Rockford plant. The animals averaged 1,000 pounds and would be fed to a market weight over 1,300 pounds.
All the animals had identical genetics, all with more than 50 percent Black Angus breeding. Some had the black hair and underlying black skin that is so popular today. Some had lighter hair and skin, showing the Charolais breeding in the background.
One of the steers didn’t survive. The 102 others were sorted and sold in three groups.
The first group of 26 was delivered August 26, 2010 — all black. Five graded prime, 20 choice and 1 select. “It was a pretty good premium,” Wieland recalls.
Wieland was happy. “If they graded prime they’d get a $20 a hundredweight premium over the rolling average price for this area, and a $15 premium if they were graded choice. If they were select, they just got the rolling average for the area.” The base price at the time was $155 per hundredweight of “hot hanging weight,” Wieland says.
By law, beef checks are supposed to be mailed within 48 hours of killing and grading.
Fifteen days passed.
Concerned he would not get his money, Lloyd called Tim Lundstrom, the company’s chief financial officer in Fargo, N.D., who assured him a check would be sent. Audrey took it to Bank Forward in Hannaford, N.D., and deposited it, but was concerned about whether it would be good. Lloyd double-checked with Lundstrom to make sure the check would clear, and it did.
A second group of 28 animals was supposed to have gone to NDNB. The company indicated it might change a policy on light-colored cattle during the finishing time, but they didn’t get that done.
“When it came time for them to be sold, they weren’t accepting the white skin,” Wieland says, noting their Charolais genetics showed through, even though they were more than 51 percent Angus. That load had to go to Tyson with some of Pipestem’s other cattle. The Wielands figured that decision cost them $15 per hundredweight less than they’d expected, due to extra shipping.
But at least they got paid.
Three’s a charm
The third group included 48 animals — seven prime, 40 choice, one select. The base rate was $1.527 per pound. The Wielands were happy, but not for long.
They waited for a $68,000 check but instead received a letter from GIPSA. Somebody else reported that NDNB had not paid them on time, so the agency was stepping in. In the letter, Bruce A. Gardner, financial unit supervisor in the agency’s Des Moines, Iowa, office, said the North American Bison Cooperative, doing business as NDNB, was being audited. All money and inventories would be held “In trust for the benefit of all unpaid cash sellers” until full payment is received, Gardner wrote. The Wielands would need to file a written claim within 30 days if no check had been received at all, or if within 15 days they’d received a check that bounced.
Lloyd attended a meeting on Oct. 27, 2010, at the Radisson Hotel in Fargo. GIPSA officials said they would be taking inventory. After the meeting, Wieland says Lundstrom, the beef company’s financial officer, approached him and told him not to worry, that there would be plenty of inventory to cover cattle expenses.
“I wasn’t that worried,” Wieland says, “Yet.”
In March 2011, the Wielands got their first “trust” check for about $12,000. In May they got another for $8,000.
Later, the North Dakota Agriculture Department notified the Wielands that they would distribute a $30,000 bond. On Jan. 23, 2012, Wieland received $3,742 — his share of that amount.
Wieland has been told that more money could come from inventories. Wayne Carlson, from the ag department’s livestock division, said the department was trying to divide among all of those owed, whether or not they’d filed claims for the trust in a timely fashion.
Wieland says he’s still owed about $45,000. Some producers are small, others large. Initially, the total owed to all producers was about $500,000, but he’s unclear how much is still owed.
The Wielands are not out of the cattle business, but they’re not feeding cattle anymore.
“We’re not wealthy, but we’ve always paid our debts, and we expect others to pay their bills, too,” Wieland says. “We didn’t have debt when this came along, so we got through it okay. If we don’t pay our fertilizer bill, they put a lien on us. That’s what they do. They should have something like that for this kind of company.”
If it had been at a different time in their lives, the Wielands say losing $45,000 might have been tougher. “Now, we’re close to retiring, didn’t have a lot of debt, so we didn’t have any trouble putting food on the table. We didn’t buy any new tractors though, and we didn’t have to worry about income tax.”
Wieland worries about other farmers and ranchers.
He says the recent demise of Anderson Seed Co. for sunflower growers in the Dakotas is a warning for livestock producers, too. He thinks business bonds are inadequate to protect farmers. The NDNB $30,000 bond doesn’t correlate to a $400,000-plus obligation to producers. He thinks the state legislature should either increase the bond requirements, or — if that can’t be done — stock growers should consider putting in place a self-funded indemnity fund for farmers who sell cattle, similar to one in place for price-later grain contracts in North Dakota.
“Many cattlemen sell their total income on one day,” Wieland says. “If any of these livestock places run off with the money, or fail, they’re in a tough bind.”
Tags: north dakota natural beef, new rockford, grain inspection packers & stockyards administration, north american bison cooperative, black angus, natural beef, dakota growers pasta co., north dakota agriculture department, charolais, livestock, agribusiness, updates, beef, cattle, cows, slaughter, farm, agriculture, ranchers, sunflowers, cattlemen, grain