Meat + Poultry - December 2015 - 18

BUSINESS PERSPECTIVE

Keeping it real
I've been writing about the US meat and poultry industry
for 28 years, and I suddenly realize I'm in the wrong
business. Instead of being a journalist, I should be a
consultant. To be clear about my focus, I would call my
company Reality Check Inc.
Had I been in business back when Future Beef
Operations was founded in 2001, I would have adamantly
told its stakeholders that the company's business plan
was based on unrealistic expectations. I was struck
by how much beef FBO thought it could get from each
carcass. I wished FBO well, but was not surprised when
it closed after only seven months.
The Bank of Nova Scotia was
owed $140 million by FBO, and
I imagine it recovered only a
portion of that debt.
Two other groups involved
in beef plant startups might
also have benefited from my
advice. The first would have
been those behind the Northern
Beef Packers plant in Aberdeen,
SD. Years in the making, the
plant cost $108 million to build
but closed after nine months of
low-volume operations. Now
owner White Oak Global Advisors
There are some has reportedly reopened it again.
White Oak is the investment firm
consultants
that lent NBP at least $35 million
who owe it to
and then bought the plant out
of bankruptcy for $44.3 million
their clients
in 2013. I might have saved it
to be honest
a lot of money by advising the
enough to tell
stakeholders that the plant would
them, 'No, this never succeed.
Had foodservice giant Sysco
won't work.'
asked me, I might have saved
them $1 billion. For starters, I
would have cautioned it about
investing in a beef processing plant in Tama, Iowa,
which it did to the tune of $46 million. Iowa Premium
Beef is just completing its first year of operations, and
I'm told the losses are large. That's to be expected of
any startup, of either a new or refurbished plant (which
IPB is). A certain amount of operational hiccups are
also to be expected as the operator of any startup
would attest.

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MEAT+ POULTRY | 12.15 | www.meatpoultry.com

Some plants seem to be jinxed and should be
bulldozed, not reopened. Just ask the former IBP
executives who bought a cow plant in Palestine, Texas.
If consulted, I would have reserved my strongest
advice for Sysco over its attempt to buy US Foodservice.
Did its top executives really believe the Obama
Administration would allow the two largest foodservice
operators in the US to merge? One only had to see how
the Justice Department turned down JBS's attempted
purchase of National Beef Packing to realize the odds
were against Sysco. It eventually had to take a $900
million charge and the financial damage to the company is
likely greater than that.
I have no wish to squelch the dreams of those who
want to start a new meat company or open a new plant or
renovate an existing one. But there are some consultants
who owe it to their clients to be honest enough to tell
them, "No, this won't work."
Sometimes the truth can hurt but ignoring it can
create millions of pain points that could be avoided by a
simple reality check.
S T E V E K AY | m e a t p o u l t r y @ s o s l a n d.c o m
http://www.meatpoultry.com
Meat + Poultry - December 2015

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