Nebraska ranchers have a plan to contend with Big Beef and restore local economy
Ranchers in Nebraska are rebelling against the “Big Four” meat companies by planning their own beef processing plant. They’re seeking a transformation for themselves, the industry and western Nebraska.
Plans to disrupt the Nebraska beef industry began in Hanoi, Vietnam.
Rancher Rusty Kemp was on a 2019 trade trip with Nebraska Gov. Pete Ricketts. He’d been griping about the meat industry when he remembers the governor turning to him and saying, Well, let's figure out how to fix this. Get after it.
Kemp started thinking about the problems in his industry. He remembered how a fire at Tyson's Holcomb plant in Kansas halted more than 5% of the nation’s daily beef production and affected prices. Later, cyberattackers paused 20% of the country’s meat by hacking processing giant JBS.
Trey Wasserburger, another Western Nebraska rancher, had also been feeling the vulnerabilities of the meat system. Especially through the pandemic.
"We lost a third of our income overnight,” he said. “And then I watched a third of my equity leave in a matter of a week."
The system didn't feel fair. All that risk and effort to get a steer ready for slaughter, and then accepting whatever price a processor offers.
"So,” Wasserburger said, “we have five years invested and in the last 48 hours we give it away."
It got this way partly through concentration. When Wasserburger’s wife’s grandfather was in business, there were 13 buyers in Omaha. And if he wasn’t interested in them, Denver buyers could offer good money for the cattle he’d raised. Forty years later, Wasserburger deals with one.
"And sometimes," Wasserburger said, "he doesn't pick up the phone."
President Joe Biden has released plans to crack down on consolidation in the meat industry. Four companies control 80% of the nation’s beef.
U.S. Agriculture Secretary Tom Vilsack has said that farmers and ranchers need more options to sell their animals. Kemp and Wasserburger want to be a part of that change. Former executives from Cargill — one of the Big Four meatpackers — have joined the effort.
The team plans to build a new plant called Sustainable Beef to slaughter 1,500 cattle a day — just a quarter of what Tyson goes through in one of its nearby plants.
The vision isn’t intended to replace the Big Four. Rachael Kemp, Rusty’s wife, ranches with him in western Nebraska and previously worked at Iowa Beef Processors, a packing company that Tyson now owns. She says she’s not anti-packer, because the country needs them to put food on the table.
Rather, the plan is to give ranchers in the region an alternative and boost the local economy with its own factory-scale butchering plant. It’s not a new idea. Plenty of ranchers have gotten frustrated and tried to rally. A group in Iowa did just that — and the plant got bought out by one of the Big Four.
"I don’t know how many times I’ve had producers call me and say, 'Hey, we’re building a packing plant,'" Wasserburger said. "I’ve probably been a part of four or five groups."
But things are falling into place for this project. Gary Person heads up the North Platte Chamber of Commerce and he leaped at the chance to host the plant. After all, it promises to employ 875 people with jobs that pay $50,000 a year with benefits.
Location, location, location
North Platte has been a struggling Midwestern town in recent years. At one point it was the fourth largest town in Nebraska. Today, it’s ninth.
It’s not for lack of industry. Union Pacific built the world’s largest rail yard there in 1948. But layoffs at the transport company and the weakening of rail have dulled the shine on that infrastructure.
The city has lost population and jobs at a faster rate than other similar cities in Nebraska. So officials hope the beef plant will help reverse that trend. Creighton University economist Ernie Goss concluded that the plant could bring in almost $1.5 billion of annual income to the city.
The plant fits in with North Platte’s rancher history, Person says. The city promotes itself as the home of Buffalo Bill Cody. It’s where he ranched and launched his wild west show.
To Person, the plant is a perfect fit with what North Platte needs economically and culturally.
”If you came in here three years ago and asked people’s general attitude about the community and it might not have been very positive," Person said. "It’s kind of the opposite now, they’re on fire with excitement and energy. A lot of positivity that I don’t think has been around North Platte for a long, long time."
But a small group of residents sees the project as a threat to North Platte’s culture. They’re leery of the odor that comes with so much cattle, even while organizers say the facility's equipment will reduce the smell. And Person said some opposition comes from a predominantly white community uncomfortable with the immigrants and refugees who tend to fill jobs at plants.
"In the public hearings, you can tell what they’re thinking, but they won’t say it out loud," he said. "You can’t control people’s internal prejudices."
An uphill climb
Then there’s the money. A new facility will cost $325 million, which Chief Executive Officer David Briggs says will come from grants and loans.
The group is securing financing and official city support now, but Briggs says it’ll still hit their goal of breaking ground on construction by fall.
In 2023, when the organizers hope the plant is running, the challenge of profitability will set in. Meatpackers typically need to run on a massive scale to turn a profit.
Briggs said the plant will market its meat as higher quality and keep costs down through efficiencies and still pay those above-market wages to workers.
"If you’re running, you know, four times the animals through a facility, some of your fixed costs might be lower per head,” he said. "But we think with some of the other variable costs we will actually be more competitive than the Big Four."