Ranchers and Rapid City leaders seek info on proposed billion-dollar beef plant
Megan Kingsbury wants to make Rapid City the home of the largest beef processing plant in the country. She says the plant would create 2,400 jobs and help save local ranchers from extinction.
"We have the technological experts to build a high-tech facility never seen before in the United States," Kingsbury said in a press release. "We want to attract recent graduates to live and work here in western South Dakota with great-paying jobs."
But in Rapid City, residents and lawmakers want more details about the $1.1 billion project.
“The principals that are involved still have a lot of homework to do,” said City Councilman Ritchie Nordstrom. “Where do we get those employees? If the number that is being recited is close to being accurate, we don’t know we’re they’re going to come from and where we’re going to house them.”
Those questions were echoed by City Councilman Pat Jones. He represents a ward in the southeast part of the town.
“We have an affordable housing shortage in Rapid City,” Jones said. “The population continues to grow faster than the market can replace housing.”
The project is a joint venture involving two companies: Kingsbury and Associates, which is Megan Kingsbury's financial consulting business, and Sirius Realty, where Kingsbury is a managing partner. Both businesses are based in South Carolina. Kingsbury's family runs a ranch near Kadoka in South Dakota.
In an interview with SDPB's Lori Walsh on "In the Moment," Kingsbury said her company is "holding this project privately and funding it in-house."
City leaders question location, odors
A press release from the two companies identified a new industrial park, the Black Hills Industrial Center, as a potential location for the plant. The industrial park is on the southeastern edge of the city, near the landfill. Jones said that location is well-suited for the project.
“That’s not surprising to see a business like this packing plant come in,” he said. “What the industrial park offers is everything they need to be successful.”
But Nordstrom is skeptical that the developer of the park, Dream Design International, could fit the 1-million-square-foot facility into the park or build the infrastructure needed for the plant without extra financing from the city.
“I would like to see a meat processing plant, but right now the conditions for the current proposed location don't fit the parameters,” Nordstrom said.
Transportation, water use and odor are also concerns. Jones has heard from constituents who worry about heavy rail and truck traffic near their neighborhoods. He’s also worried about the potential for unpleasant smells like those caused by the Federal Beef plant, which closed after a 2002 fire at its central Rapid City location.
“There would be times when they were doing certain processes, and an amazing smell would come out and impact a lot of parts of town,” Jones said. “People who grew up in that area know that smell and remember it very well.”
The partnership says the proposed plant's environmental impact would be limited: cattle would not be held outside, water would be recycled on-site and the plant would emit no odor thanks to methane-capture technology. Jones and Nordstrom said they hope that’s true, but they’ll have to learn more about the technology.
Megan Kingsbury said technology will not only reduce the plant’s environmental impact, but also allow it to run at a larger scale, with fewer workers in better conditions. By starting from scratch, Kingsbury said the plant could implement modern techniques and machinery found in newer Asian and European facilities. That technology is harder to retrofit into older plants.
Taking aim at a monopolistic market
Supplying the plant with enough cattle may be a challenge. Matt Kammerer is a cattle rancher in the Rapid City area. He said Kingsbury told him and other ranchers she plans to source cattle from six states. He predicts she’d have to cast a wider net to process 8,000 cattle a day.
At that rate, the plant would outproduce facilities owned by large companies like Tyson Foods and JBS Meats. Tyson’s plant in the Sioux City area is the largest in the country, processing around 7,000 cattle a day.
“I don’t know if she needs the 8,000 to be competitive. But if she gets to 8,000 and it’s American money, American cattle 100 percent, she’ll make them stand up and take notice,” Kammerer said.
Kammerer's biggest concern, the lack of on-site rendering, has been resolved. Kingsbury initially planned to ship waste to a separate facility for processing, but recently announced that Farmers Union Industries plans to provide rendering services on-site.
Kammerer hopes the project can create price competition for cattle in a market dominated by four major companies.
“I’d love to see it,” he said. “They’re killing the rancher.”
Those four companies — JBS, Tyson, National Beef and Cargill — control over 80% of the domestic beef processing market. They say labor shortages and the coronavirus pandemic have made it difficult to operate at full capacity, restricting the nationwide supply of meat.
Ranchers and politicians say those problems are exacerbated by consolidation in the industry.
“We need more processing capacity outside of the big four meatpackers,” said U.S. Rep. Dusty Johnson, R-S.D. “I’m a big believer in the free market, but that’s many buyers and many sellers and we don’t have that in the beef industry.”
Johnson is the sponsor of a bill designed to bolster smaller meatpackers, specifically excluding large and foreign-owned companies.
Kingsbury said she hopes to break ground in 2023, with construction lasting three years.
Jones is watching the project closely.
“We’re excited, but we have to proceed with caution,” he said.