Cow slaughter, processing plant proposed

By LORI COPE | East Texas Edition

April 11, 2002 -- A proposed cull cow/bull slaughter/processing plant is generating great interest in Southeastern Oklahoma and Northeast Texas. Plans for the plant have progressed through two of three phases necessary to get the facility on the ground.

"The need for a processing plant in this general area (is present) because there is not a substantial sized processing plant for cows and bulls in a 300-mile radius," said Don Covington of Hugo, a cattle producer and steering committee member of the proposed slaughter/processing plant.

To learn more about the proposed plant, known as American Native Beef (ANB), beef and dairy producers are invited to an April 18 meeting in Paris. Information that has been gathered through studies will be shared.

"We are undergoing a very extensive feasibility study," said Gary Bledsoe, a marketing consultant for the Oklahoma Department of Agriculture, on April 3. "I'm not standing here saying we are going to build. We're going to conduct a complete feasibility study, as well as we can, to determine if the numbers are there."

Bledsoe, a native Texan, worked for nearly three decades as Oklahoma Department of Agriculture (ODA) assistant director of livestock marketing. He is also a cattle producer and a member of ANB's steering committee.

"We have all these cows in Oklahoma, and all these cows in Northeastern Texas, and no cow killers here," Bledsoe said. "We ship cows as far as Michigan, over 1,300 miles away. That freight is costing someone something."

A slaughter/processing plant in Southeastern Oklahoma would allow area producers to capitalize from freight reduction and healthier cattle, as well as other assets of the plant's operations, such as its planned state-of-the-art, bacteria-free processing facility.

"Producers in the area whose cows and bulls must be shipped ... to be processed are paid a discounted price to cover shipping and lower yield and grade due to stress and shrink. This can be as much as $40 a head for average cows and bulls," explained Covington.

The proposed ANB operation would be structured as a closed cooperative-member owned entity. Cattle producers would profit marginally from the sale of their cattle, but mostly from the plant's beef sale successes.

"The closed cooperative plan is similar to many others in the Northern Plains states," noted Covington. "This means that a public stock offering will be made for a short period, then closed. These initial investors will then share in the profits of the corporation.

"For those producers located too far out to deliver directly to the plant, they may sell to any auction barn, call the plant and be assigned cattle in a common pool held for this purpose." Covington added. "Exercising their delivery rights in this way allows them to share in the profits of the plant in a proportional manner."

Extension Economist Clement Ward, of Oklahoma State University, agreed "consideration of a cow and bull slaughtering facility in Oklahoma is worthwhile," he encouraged, but warned that "care must be taken not to mislead cattlemen that such a plant is unquestionably feasible, based solely on cow numbers."

"The feasibility study has shaken out like we thought," Bledsoe said. "Profits won't be from just killing cows. The biggest part of the profit is in the further processing of meat. ... When it's all said and done, we are hoping for a 20 percent return on investment within a six- to seven-year period. The numbers we've seen now are there (to achieve this)."

The feasibility study has also outlined marketing and financial strategies.

"The bulk of the work is done. Phase A and B of the feasibility study are complete and have been submitted to the U.S. Department of Agriculture," Bledsoe added. "Once we get their approval, their blessing, we move on to the final Phase C" which involves furthering the business plan and acquiring additional engineering.

Already, ANB has acquired a $100,000, 0-percent loan/grant from the Oklahoma Department of Agriculture. Another $25,000 has been obtained through USDA. At the April 18 meeting in Paris, producers will learn about a public stock offering to be made later this year, and cattle producers will be able to invest.

Currently, ANB is searching for a project manager. "It is very important, very critical that we get the right person to help us," Bledsoe said. "The person will need to be a 'people person,' and also have broad experience in the meat industry." The project manager will also greatly involved in "finding key personnel and in the equity drive," which involves talking to prospective investors.

ANB committee members are still gathering information and insight on the proposed slaughter/processing plant. On April 11, ODA officials will gather with experts from Colorado State University, Texas A&M University, and Oklahoma State University, as well as "a cow processor from a renowned plant," according to Bledsoe.

Information obtained in the April 11 meeting will be added to the April 18 meeting's agenda. The April 18 meeting is set for 7 p.m. at the fairgrounds' community exhibit center in Paris. For more information, contact Covington at 580-326-3098.