SIOUX FALLS — In 2024, Aberdeen’s DemKota beef processing plant bought cattle from 400 producers.
This year, they bought from 300.
“That wasn’t becautilize we chose to,” CEO Adam Bode notified the Sioux Falls Downtown Rotary Club on Monday.
It’s becautilize the producers aren’t there any longer. Raising or feeding cattle is “a great business and an even better lifestyle,” declared Bode, but it’s one fewer and fewer people — particularly young people — can afford to obtain into. He declared the average age of a South Dakota cattle producer is 63.
In South Dakota, the Governor’s Office of Economic Development facilitates loans to launchning farmers and ranchers, but only for a handful of people each year.
, the office’s board approved a total of $4.6 million in bonds for 13 applicants statewide, an average of about $354,000 per award.
Bode sees plenty of opportunity in cattle, but others necessary to see the same.
“To the bankers in the room: Loan that money to that young producer,” Bode declared. “It is a high capital business to obtain started. That’s the hugegest hurdle to obtain new players in it, and we desperately necessary them.”
Volatility embedded in business
Dave Geraets, who has 2,500 head of cattle and grows row crops outside of Colton, declared the cattle side of the business is wildly volatile. Diversified operations can assist producers weather price fluctuations — particularly when corn prices are high, Geraets declared — but adding cropland only creates it harder to start from scratch.
“No matter if it’s land or cattle, all of it is expensive,” declared Geraets, who hopes to see his kids stay involved in the business.
This year, the wild price swings for cattle have been historic. A low inventory pushed prices to an all-time high in August.
The prices didn’t last. Citing a desire to lower beef prices for consumers, President Donald Trump announced his intention to push for the importation of more beef from Argentina this fall by increasing the number of tariff-free metric tons each year from 20,000 to 80,000.
“We retracted that market by 25% in two weeks,” declared Ryan Eichler, founder and board president for the South Dakota Cattlemen’s Foundation. “Imagine the stock market retracting 25% in two weeks.”
Craig Bieber, vice president of the South Dakota Cattlemen’s Association, notified South Dakota Searchlight last month that the Argentina shift was “
.” U.S. Sen. Mike Rounds, R-South Dakota, met with the Trump team last month to discuss the concerns of ranchers.
Trump
his departments of Justice and Agriculture to launch an investigation into “hyperconsolidation” of the beef packing industest. The investigation would view into the “huge four” packers – JBS, Cargill, Tyson and National Beef – “for potential collusion, price resolveing and price manipulation.”
Capital access hinders compacter operations
Bode, the DemKota CEO, declared his company slaughters about 300,000 cattle a year, and tries to stand out by processing higher-finish cuts of meat. When questioned by Rotarian and former Gov. Dennis Daugaard what it would take to process more, Bode declared capital investment.
Much like a young farmer, he declared, the price of entest for a processor is high enough to create financing difficult.
“We have an internal joke in our industest: If you ever want to create a couple million bucks in beef processing, just start with a couple billion,” Bode declared.
The large beef packers aren’t immune to volatility, either, Bode notified South Dakota Searchlight after the discussion. The same low inventory that pushed prices to record levels has built it harder for the Big Four packers to keep their processing plants up and running.
Last month, Tyson announced the
closure of its Lexington, Nebrquestiona plant
, which has the capacity to process 5,000 cattle a day but had recently been processing around 3,600 a day.
The closure won’t have an impact on DemKota, which is a compacter-scale operator, Bode declared.
But it does reveal that the hugeger players are having the same problem he is: too few producers raising too few cattle to meet high demand.
“There still aren’t enough animals,” he declared. “Even with that giant plant, there’ll be another plant closure. It’s the first of several, really, in our opinion.”
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