We're at the point now where people from the administration of former Governor (2003-2011) and current Republican candidate for the U.S. Senate Michael Rounds, if not Mr. Rounds himself, should be answering some questions about the Northern Beef Plant fiasco in Aberdeen. We know that the U.S. Attorney and the FBI are looking into the mangled finances of the venture, paid for as it was by foreign investors who got legal entry into the United States by forking over at least $500 thousand apiece toward the enterprise. That was done under the auspices of the U.S. State Department's EB-5 visa program. The net result so far is the bankruptcy of the $159 million plant, the suicide of one of the state officials who was active in its development from the ground up, and the "improper transfer" (according to South Dakota Attorney General Marty Jackley) of over $500 thousand of South Dakota grant money to that very official after he left the governor's office for private life.
Queries from the conventional media and the blogosphere remain unanswered, and new ones keep popping up. The $159 million question right now is, how on earth did the idea for this plant even get off the ground? In an impressively comprehensive post this morning by Cory Heidelberger, who runs The Madville Times (go to http://madvilletimes.com/2013/12/experts-northern-beef-packers-not-viable-failure-part-of-the-plan/ for the full story), the bottom line is that the plant's prospects were dismal from the get-go. At the time, based on my own involvement in the cattle business (I fed and brokered cattle in South Dakota and the rest of the central and northern Plains for a decade from around 1990-2000) I thought the plant would have its trouble because it was intended for slaughtering and processing South Dakota Certified Beef, a program put into place by the Rounds administration that I believed from hands-on experience wouldn't provide enough cattle for the 1500 head/day Northern Beef Plant. In 2006, I even devoted much of a column in the Rapid City Journal (http://rapidcityjournal.com/tsitrian-rounds-needs-more-specifics/article_0cb07eb0-bb1a-59f5-8726-25dad78f8089.html) to the difficulties of finding SDCB at grocery stores, along with the reluctance of producers to go along with the program because of its cumbersome paperwork requirements. A spokeswoman from the South Dakota Stockgrowers Association told me in frustration that nobody from the governor's SDCB office even called them for some advice and involvement.
How right I turned out to be, but based on the analyses that are in the Madville Times, the plant's troubles were based on industry-wide issues, not South Dakota-specific ones. Economists and cattle producers themselves had seen that the nationwide reduction of the U.S. beef cattle herd, which is at its lowest since the early 1950s, has put the squeeze on the meatpacking industry for several years now, slowing and shutting down plants throughout the country. I believe the question that Rounds and his people should answer is why on earth they thought a brand new start-up of this size would stand much of a chance bucking that national trend. Surely at some point in the planning phase, somebody involved with the Northern Beef venture and its dependence on millions of dollars in grants and other assistance from the State of South Dakota would have gotten the idea that its chances for success were virtually non-existant. The most compelling question of all is, if they'd known about the high-risk nature of the deal, why did they go ahead with it anyway?
Current Governor Dennis Daugaard recently said of the plant that it is still a potentially viable asset to the state and that he hasn't abandoned hope for some success coming out of it. I actually share that view, given that the cattle cycle is likely to turn upward as ranchers gradually rebuild their herds in the face of currently record high prices. But it will take years. Meanwhile the Northern Beef Plant languishes, bought for pennies on the dollar at a bankruptcy auction by a large creditor. What needs to be sorted out now is whether this thing was a self-delusionally driven decision made by a governor whose single-minded commitment to a South Dakota-branded beef industry kept him from dealing with the reality of the business, or just a plain old fashioned ripoff by some people who knew that they could get Rounds to okay just about anything that meshed with his fatally flawed vision.