Advertise in Print | Subscriptions
Published December 17, 2012, 09:24 AM

Lenders foreclose on ND beef plant

FARGO, N.D. — Lenders have notified North Dakota Natural Beef LLC of their intent to foreclose on a meat processing plant in Fargo, N.D., officials say.

By: Mikkel Pates, Agweek

FARGO, N.D. — Lenders have notified North Dakota Natural Beef LLC of their intent to foreclose on a meat processing plant in Fargo, N.D., officials say.

Dieter Pape, president and chief executive for the defunct company, says NDNB vacated its plant in late November.

“All we were really doing was utilizing some space in the plant, keeping it in operating conditions for potential sale,” Pape says. The facility served as collateral for loans for lenders, including the North Dakota Bond Authority.

George B. Sinner, with American Federal Bank in Fargo, who Pape identified as one of the lenders in the project, declined comment on its status. Sinner, who recently was elected to the state Senate, cited confidentiality rules and said other lenders also likely would be unable to comment. Neither the Cass County (N.D.) Recorder’s office nor sheriff’s department had the plant on a list of foreclosures as of Dec. 12.

NDNB was created as a companion company to North American Bison Cooperative, and the two companies shared management.

NABC is based in New Rockford, N.D., where its kill plant was established as a farmer-owned cooperative in 1993. Pape served as president and chief executive for both companies.

No annual profits

NDNB never made an annual profit, Pape says. It was affected by a one-year construction delay and dispute with a contractor, in which it lost “a number of clients right off the bat, because they couldn’t wait.”

In 2008, the beef market changed dramatically because of the recession, and faced higher cattle prices and a shrinking cattle-on-feed inventory, the lowest since 1976, when the industry began keeping track.

“With the recession, people stopped consuming so much premium product, and that’s what our product was — a premium product,” Pape says. He dismisses criticisms that the plant was developed despite feasibility studies that indicated it would not work.

When NDNB fell behind in paying farmers for their animals, it voluntarily stopped buying animals and became a custom processor of conventional beef. NDNB recently had been doing custom kill and processing work for a beef processing company in Buffalo Lake, Minn. Early last fall, the Buffalo Lake company completed an upgrade on its own plant and moved its operations there.

“They first moved their harvest (kill) operation there, and then moved their fabrication there about six months after that,” Pape says.

At the time, Pape said NDNB was looking for a new customer for its beef processing operation, but no replacement was found. “With Fargo closed, the bison work has gone back to the way it was” before NDNB was formed, Pape says.

Under lender control

Under the arrangement between NABC and NDNB, NABC in New Rockford did all of the bison and beef kill on a toll basis, and NDNB did all of the processing, grinding and packing of final cuts. North Dakota State University’s meat sciences department used some of the facilities for teaching.

Pape says NDNB technically still exists as a shell company that could be revived to begin operation at some point, but he doubts it will.

Pape says the facility and the bulk of equipment remains in the plant and now is under the control of lenders.

“There’s nobody that took a big hit, other than, obviously, the primary lenders,” he says.

While NDNB has failed, NABC is struggling to find suppliers to keep up with demand because of its quality and healthy image, Pape says.

He says that besides slaughtering bison, the New Rockford company recently started doing some custom-harvest of premium, grass-fed beef for Tallgrass Beef Co., of Sedan, Kan.

Tags: