The Northern Beef Packers beef processing plant south of Aberdeen, S.D., was supposed to be the savior of the South Dakota Certified Beef Program, but after the packing plant announced Chapter 11 bankruptcy last week, the future for the already sluggish Certified Beef program seems even bleaker.
In 2005, Governor Mike Rounds created and championed the Certified Beef program as a means of marketing South Dakota beef as a premium, high-quality product, allowing beef to be marketed at a higher price. All beef qualified for this promotion would need to be from cattle born, fed and processed in South Dakota.
While South Dakota beef producers can manage raising and feeding their cattle within the state, many ship their cattle to processing plants in Nebraska and Iowa, because South Dakota lacks a high-volume packing plant.
Northern Beef Packers plant was pivotal to the future of the program. If successful, the Certified Beef program would spur even a greater growth of the South Dakota beef industry by selling beef at a higher price and keeping farmers from shipping their cattle out of state for processing. But with its recent declaration of Chapter 11 bankruptcy, Northern Beef Packers is closing its doors, and the Certified Beef program remains in jeopardy.
To many workers, this shutdown didn’t come as a surprise.
“It was inevitable,” said Jeffrey LaCroix, an employee on the slaughter line. “We haven’t been killing cows.”
Over 200 employees lost their jobs after the plant’s announcement. Six employees remain to oversee the bankruptcy proceedings. Read more here.
Chapter 11 bankruptcies offer companies immunity from their creditors until their businesses can be reorganized to pay off their debt. Northern Beef Packers has received financial aid in the past from both the state government and foreign investors. The South Dakota Development Corporation received a $1.2 million grant to give the plant a loan for construction costs and employment recruiting. This will have to be repaid if certain conditions are met.
The plant remains in turmoil as the reorganization effort begins.
The laid-off workers have their own grievances. Northern Beef Packers told its employees the week of the layoff that they would not be receiving a paycheck for their previous two weeks of work. Because of the debt protection offered in Chapter 11 bankruptcy, the company doesn’t need to compensate its employees until the reorganization has been completed. The courts will have to resolve this matter, but in the meantime, the laid-off employees are eligible for unemployment benefits.
Bankruptcy may not be the end of the Northern Beef Packers plant and the Certified Beef program, but until more is known about the reorganization, the fate of both of these programs remains in limbo.