USDA has started working to diversify the meat processing industry, help supply chain issues, and ultimately lower costs for consumers by investing nearly $10.5 million in North Dakota.
The Lewis and Clark Regional Development Council, based in Mandan, N.D., was awarded a $10 million grant to create a revolving loan fund to finance the startup or expansion of meat and poultry businesses, as well as to help secondary food chain businesses in the second round of funding.
South 40 Beef in Mott, a ranch, feedlot, and meat processing facility that supplies beef to school districts in the state, was awarded a $472,000 grant to double the size of its 6,000-square-foot processing plant and hire more employees.
Brent Ekstrom, executive director of the Lewis and Clark Development Group, said USDA Rural Development came out with the program to diversify the meat processing industry.
“Basically, there are only four main big meat processors, and Rural Development wanted to diversify that and help develop the state’s and rural communities’ economies,” Ekstrom said.
The funding will be a grant to the Lewis and Clark Regional Development Council and a low-interest loan to those who apply, becoming a revolving loan fund.
Applications are being accepted and there is no set limit to the loan.
“The initial funding has to go to meat and poultry processors, anything from butcher shops to slaughter facilities to large meat companies that process food statewide,” he said.
Ekstrom expects funding to jump start independent processing projects and increase processing capacity, such as helping existing companies expand and local butcher shops to start up.
“We believe this will be a benefit to North Dakota meat processing. There is such a backlog on processing meat,” he said. “Any expansion that we can do there obviously is going to increase the capacity of these processors to do more.”
In addition, funding could go toward hiring additional people to work in the business.
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“Hopefully, they can hire additional people to help. One of the biggest impediments right now in the state is businesses might have the facility, but they can’t run that capacity because they don’t have enough employees.”
The Lewis and Clark Regional Development Council plans to help meat processors by helping them with lower rate financing so they can keep their costs down.
“Ultimately, it means they can pay more for wages and also have lower cost goods going out to the consumers,” he said.
When the council applied for the grant, they did significant research into the grant program and talked about what the funding could do for meat processing with the USDA.
“This program will increase capacity for meat processors, and it will definitely have an impact in the state for those that apply for it and can expand their facilities,” Ekstrom said.
Once the initial funding starts being repaid, the principle will be reloaded and secondary funding will go out to value-added agriculture businesses connected to the food chain industry.
While that won’t go to actual ranchers producing the meat for the grocery store, any type of food business, grain business, or delivery system in between the two ends will probably qualify.
“It could be wholesale truckers or food companies needing equipment, grain cleaners, mills – anything that would help diversify the food chain and secure and grow the food chain,” Ekstrom said.
The interest loan rate will range between 4-6 percent. The terms are set by what they are using the funding for.
“If they are buying equipment, they will have 10-12 years to pay back the loan, and if it is real estate, we can probably go 15-20 years,” he said.
Ekstrom said the council will work with the lenders and are not in competition with banks.
“We are not going to step in where a bank is already willing to loan the funds,” he concluded.