January 31, 2023

By Lynda Kiernan-Stone, Global AgInvesting Media

Florida-based Karis Capital has invested $150 million in Cattlemen’s Heritage Beef Company, an operation launched with the goal of offering sustainable beef with economic benefits for family-run cattle farms and the state of Iowa. 

This investment will now allow Cattlemen’s Heritage to move forward with plans to break ground later this year on a $520 million beef processing facility in Mills County, Iowa, that will:

~ Be fully sustainable

~ Process beef sourced from family farms

~ Have a 2,000 head per day processing capacity 

~ And, will include a “pasture-to-display case” traceability program

~ Create 800 well-paying jobs

~ Generate $1.1 billion per year in positive economic benefits

“Cattle producers and retailers have recognized for quite some time that as more cattle production has moved north to the upper Midwest that we need the processing capacity to match it,” said Chad Tentinger, principal developer, Cattlemen’s Herigate.

“The Cattlemen’s Heritage facility will go a long way to resolving that ongoing challenge and delivering more quality beef from Midwest family farms to consumers.”

A Window of Opportunity

Being dominated by only four major meat packers – Cargill, JBS USA, Tyson, and National Beef Packing – made U.S. meat supply chains significantly more vulnerable to unforeseen pressures, such as COVID-19 or cyber attacks. 

Additionally, changes to the industry beginning in the 1970s that eventually resulted in 80 percent of U.S. cattle being slaughtered by only a handful of processors, and the percentage of every food dollar spent that ended up with ranchers and farmers falling from 35 cents to 14 cents, according to USDA data. 

Recent fallout, including issues concerning plant workers, supply disruptions, price volatility, and consumer hoarding, has drawn the attention of Congress, which turned a lens on the industry to examine the level of competitiveness, and to put forward plans and initiatives, including an overhaul of the Packers and Stockyards Act, to support independent operators as they maneuver to gain a share of a hopefully, more resilient market. 

These same market conditions have also created an opportunity for entrepreneurs to launch new operations aiming to address these issues and diversify a significantly consolidated industry. 

Two Examples

Cattle rancher Rusty Kemp has witnessed these challenges firsthand, and together with his partner Trey Wasserburger, another cattle rancher from North Platte, Nebraska, are launching Sustainable Beef – a move they stated is not meant to replace existing beef processors, but to fill gaps and provide alternatives to regional ranchers that will also boost local economies. 

With plans to build a new meat processing facility, Sustainable Beef went to work to raise $300 million to fund the project, and in September 2022, was successful in gaining Walmart as an investor when it acquired a minority stake in the business as part of a broader strategic partnership that aligns with it comment to increase access to affordable, high-quality beef to its customers while creating long-term economic viability for ranchers. 

A similar scenario is also playing out in South Dakota, where Megan Kinsbury, the head of both Kingsbury and Associates and Sirius Realty, together with partner Farmers Union Industries, has launched a $1.1 billion project to build a proposed meat packing plant near Rapid City, South Dakota under the name Western Legacy Development Corporation. Construction is slated to begin this year, and be completed within three years. 

Cattlemen’s Heritage

Analysis conducted by Ernie Goss, the Jack A. MacAllister Chair in Regional Economics at Creighton University, concluded that the Cattlemen’s Heritage plant represents an economic gain of $8 billion for the state of Iowa through construction and plant operations through 2028. 

Currently, ranchers and farmers in the state are transporting approximately 1 million head of cattle out of state each year for processing, leading Iowa to miss out on job opportunities, income, economic growth, and tax revenues. 

“Iowa pays a heavy price due to its insufficient number of beef-processing facilities,” said Goss.  “Those costs are borne by virtually everyone in the state of Iowa, directly or indirectly, but farmers and rural communities pay a heavy toll.”

“The addition of the planned Cattlemen’s Heritage facility in southwest Iowa means 400,000 head of cattle will remain in Iowa for harvesting and processing, generating an economic gain between now and 2028 of $8 billion.”

This investment from Karis also lays the groundwork for additional investment and partnership opportunities, according to Tentinger. 

“Given the public interest and benefits associated with the project, we continue to work with federal, state, and local government officials who have previously expressed support,” he said. “We also continue to explore retail and other partnerships. Look for more news on those developments in the weeks to come.”

~ Lynda Kiernan-Stone is editor in chief with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, as well as HighQuest Group’s Unconventional Ag. She can be reached at lkiernan-stone@globalaginvesting.com.

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