ANB cooperative's equity drive ends soon
Board members describe need for the slaughter/processing plant

By LYNN MONTGOMERY | East Texas Edition

ANB has often pointed to the fact that cattle producers in Northeast Texas and Southeast Oklahoma, as well as those in the surrounding areas, are in need of a slaughter plant for cull cows and bulls. ANB proposes a plant that also outputs a value-added product. -- Staff photo

February 13, 2003 -- Trying to convince a cattle producer to invest money in a new business is hard to do, but that is what people associated with a new slaughter/processing plant, to be located in Hugo, Okla., have been trying to do since November 2002.

Don Covington, a member of the American Native Beef (ANB) board of directors, along with member Ronnie "Doc" Surratt and project manager Jim Mitchell, explained to the people gathered at the Four States Agricultural Expo in Texarkana on Feb. 4 why it was important for this new generation cooperative-owned facility to be built.

"This plant will be producer owned, will have value added, and it will be a closed cooperative," Covington said. "We intend that the plant will provide a viable market for our members‚ slaughter cows and bulls and a means of realizing added value from their beef."

Surratt detailed how producers can get on board. "We are offering up to 100,000 shares of common stock to qualifying members, with the price of $250 per share. Each member must purchase at least 20 shares (a minimum of $5,000 minimum investment). There is also a one-time membership fee of $200 in addition to the investment amount."

The investments will be held in escrow until $12.5 million is raised. If the amount in not raised, the investment will be returned and all agreements will be canceled.

As of Feb. 4, the ANB speakers said approximately $2 million had been raised but they are expecting to meet their goal in this "great opportunity."

"In return, investors will have the ability to deliver their cattle to the plant, will receive fair market value on cattle, and the company will pay the investor a dividend," Mitchell said. Fair market price is determined by the USDA reported slaughter cow and bull market price (blue sheet). Added to this price or subtracted from this price will be premiums or discounts based on carcass weight and grade, which the procurement manager will adjust the premiums and discounts according to time of year and carcass quality supply and demand.

As far as cattle going across the state line, inspectors at the border will need to be told they are going to slaughter and federal inspectors at the plant will send needed information to the state, according to Mitchell.

New generation cooperatives have a high initial equity investment. Other key factors about the ANB cooperative are: each share of stock has attached delivery right and commitment, delivery right can be sold to other producers, and stock value fluctuates with profitability of the firm, high proportion of profit distribution in cash (instead of stock), closed membership, and one member - one vote versus a traditional cooperative which is a special form of corporation, has one member - one vote, profits distribution in proportion to use and an open membership.

The state-of-the-art plant will be designed to slaughter, bone and process 400 head of slaughter cows and bulls per day, or approximately 100,000 head per year, according to Mitchell. It will eventually employ 237 people who will work in teams instead of an assembly line, he added.

ANB plans to sell fresh product, precooked roast, ground beef, sausage, edible offal, and pharmaceutical products. These products will be sold to Oklahoma food companies, national food companies, government purchasing programs, and foreign food companies.

According to ANB, this slaughter/processing plant will succeed for three reasons. One, it is producer owned. Farmers are trusted and the possibility of identify preserved certification. Two, it is a new generation, hygienically superior processing plant. And three, it is in close proximity to Oklahoma and North Texas food companies.

ANB board members are winding down a 90-day stock offering drive which will end on Feb. 14 at 5 p.m. CST. The membership drive began Nov. 12, 2002.

For more information about American Native Beef, visit www.americannativebeef.com, or call Mitchell at (918)470-6577.