SD lawmakers: use fed funding for locker plants

Legislators, ranchers and others recently discussed the possibility of using some of South Dakota’s $1.25 billion CARES Act federal allocation to address the needs of smaller meat plants.

An estimated 60-70 people attended a meeting in Western Dakota Technical Institute in Rapid City, South Dakota, Sept. 10.

Citizens were encouraged to share suggestions for the use of the funds, which must be utilized by the end of the year.

The federal aid is intended to offset losses caused by COVID.

In May, Governor Noem announced that some of the funding would go to local cities and counties. This week, she announced her intent to utilize $400 million of the money to help small businesses in South Dakota with over $50,000 in gross revenue in 2019, and which have had a reduction in business of at least 25 percent between March and May. The businesses could qualify for up to $100,000 in CARES Act funding. News reports indicate that Governor Noem put another $5 million of the funds into a tourism campaign, with ads already running on Fox news.

Gary Baker, a Hermosa, area rancher, had already talked to local legislators about using some of the CARES Act cash to help small local meat lockers expand, upgrade or obtain federal inspection. Before COVID, cattle owners seeking slaughter services at a local meat plant often had a three-month or more wait in order to get an animal in for butchering. During and since the COVID pandemic pinched meat processing and distribution channels, more consumers are looking for locally produced beef, and the wait to get an animal slaughtered at most local plants is at least a year.

Locker plant operators cite struggles in keeping good help, challenges in obtaining federal inspection, and the overwhelming expense of updating equipment and cooler space as some of their biggest obstacles.

With over four head of cattle for every South Dakota citizen (the highest ratio of cattle to people of any state), the idea of grocery store meat shelves sitting empty is a perplexing one.

That is, until a closer look reveals that regulations prevent local meat lockers (who are not state or federally inspected) from selling locally raised and processed beef. And becoming state or federally inspected isn’t always easy. So nearly all South Dakota-raised cattle are shipped out of state to be processed. The beef that local grocery stores are able to secure likely never grazed the nearby pastures.

With several major beef packing plants being partly or fully closed temporarily because of COVID, earlier this year, many grocers were unable to obtain the beef cuts their customers wanted – some stores were void of beef altogether at times.

Baker, who attended this week’s meeting, said all of the legislators in attendance seemed on board with his idea to utilize CARES Act funding to address smaller meat plant needs.

“They all seemed receptive to doing that. I told them I don’t think we ought to be putting money into the huge corporate meatpackers, but the local mom and pop outfits could use help.”

Moving cattle though local slaughter channels would mean potentially more in the pockets of local ranchers (who have to sell the animal on the hoof unless they are utilizing a state or federally inspected facility), would provide more jobs and would provide consumers with locally produced beef. Meat from state or USDA inspected plants can be sold by the cut; state-inspected meat can only be sold within South Dakota, while federally-inspected meat can be sold anywhere across the globe.

Republican House members from Rapid City, Julie Frye-Mueller and Taffy Howard both strongly support the idea of helping out small South Dakota meat processors.

“Ag is our number one industry, and it needs to be supported,” said Frye-Mueller.

Meat processing classes ought to be provided in-state, too, she believes, and mentioned that Western Dakota Tech is considering the option.

“If we’re going to teach these people a skill, we need to be sure they don’t run off to another state. We want them to stay here, if we’re going to use our funding to educate them in our number one industry, we need to be sure that industry can succeed,” said Frye Mueller.

While she wants to help existing smaller meat plants, Frye-Mueller does not believe the funding should be used to help build a new packing plant that would compete with the local lockers into which South Dakotans have put their “blood, sweat and tears,” she said.

Both Frye-Mueller and Howard said many members of the House have asked for a “special session” of the legislature where the entire legislative body would meet, in order to appropriate the remainder of the CARES Act funding, which amounts to around $603-688 million that has not been spent or committed, said Howard.

The constitution calls for the legislature to appropriate funds, said Howard.

Frye-Mueller is hopeful Governor Noem will support the meat plant upgrade idea. “I know the Governor knows this is going on, so hopefully she will get behind it. We need more inspectors in our plants, we need to be able to buy more local meat in our stores, and ranchers need the option to sell it,” she said.

Senator Lance Russell of Hot Springs backs the concept of using CARES Act funding for smaller locker plants, as does Senate President Pro Tempore, Brock Greenfield.

“If we are going to spend this money, we need to get on with it and help the people of this state,” said Russell, who is also in favor of a special legislative session. “What I don’t want to see happen is that certain industries that are big contributors to political campaigns get the lion’s share of this, rather than the people who really need it,” he added.

Greenfield said as long as federal rules allow for CARES Act dollars to go toward small meat plants, he wholeheartedly backs the idea. “I would love for us to do something proactive that would benefit main street, South Dakota, and the ag sector, and create a synergy,” said the Republican from Clark.

But Greenfield believes the funding can be split up without a special session.

“I don’t believe it (a special session) is necessary. I’m open to the thought process behind it. I am not arriving at this conclusion flippantly,” he said, adding that the legislature, in the past, has not held special sessions to distribute federal funding.

But the dollars being considered number more than perhaps ever before. The $1.25 billion provided for South Dakota is equal to about a fourth of the state’s annual budget.

Greenfield confirmed that five legislative committees will meet jointly in the next couple of weeks in order to take public testimony on how the funds ought to be divvied up. Those committees can then make recommendations to the Governor. The Appropriations Committee, which he and Howard are members of, has already discussed some ideas and will likely meet again to talk about more.

Remote participation in the joint committee meetings is encouraged – citizens may e-mail testimony before hand, and may also call in during public testimony to provide their comments for the public record.

The Ag and Natural Resources Committee will meet Sept. 14 at 9 am with public comment to begin at 9:15. Written testimony will be accepted by email through AgNaturalResources@sdlegislature.gov and must be received at least 48 hours prior to the meeting to be considered at the meeting. The same email address may be used to register to testify.

The Education, Commerce and Energy, Health and Human Services and Local Government committees will also meet in the coming days. Go to SDLegislature.gov for more information.

Governor Noem did not respond to a request for an interview.