What's Next For Northern Beef Packers?

Big South Dakota project declares chapter 11 bankruptcy; hopes to reorganize.

Published on: Jul 31, 2013

An investor meeting and a date in bankruptcy court are what's next for Northern Beef Packers, a much troubled beef processing plant that opened in Aberdeen, S.D., in 2012.

The $110 million plant declared bankruptcy last week -- leaving creditors on the hook for $10-$50 million. It laid off its 250 workers -- some who hadn't been paid for weeks. However, sources say the company had paid farmers for their cattle.

Northern Beef Packers CEO David Palmer told KSFY-TV that he resigned, but later told the media that he was still on the job. The principal investor in the company -- a South Korea businessman -- said he was coming to South Dakota soon for an investor meeting and to plan how to reorganize under bankruptcy protection. Most of the investors are South Koreans

Northern Beef Packers, shown here under construction, sits on about 100 acres on the south side of Aberdeen. The company filed for Chapter 11 bankruptcy.
Northern Beef Packers, shown here under construction, sits on about 100 acres on the south side of Aberdeen. The company filed for Chapter 11 bankruptcy.

Ever since its inception in 2006, Northern Beef Packers has been delayed by financing problems and construction setbacks. At one point, creditors filed more than $10 million in liens against the company.

Northern Beef Packers paid those bills, finished construction and opened last year but apparently never killed more than a couple hundred animals a week. The state of the art plant was built to process as many as 1,500 animals a day.

The plant was toured as recently as early July by a group of South Dakota cattlemen who said they were impressed by what they saw. It was the first meat processing plant in the nation to be built from the ground up, in approximately three decades. Nationally known cattle expert Temple Grandin helped design the cattle holding and handling system.

"It is a state-of-the-art plant," said Gary Deering, Sturgis, S.D., rancher and South Dakota Beef Cattle Improvement Association director. "It was very impressive. It's exciting to have a packing plant of this level in South Dakota."

News of the company's bankruptcy disappointed, but did not surprise some people in the industry. The plant had laid off workers in recent weeks, delayed paying employees and stopped buying and processing cattle.

Many now hope Northern Beef Packers can work through the reorganization and resume operations. Herman Schumacher, a beef producer owner of the livestock auction in Herreid. S.D., and an investor in the plant, has been widely quoted. He hopes the company can "find their bearing and move on. This plant will not only be a benefit to Aberdeen, but the Dakotas and the entire region."