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NBP Business Plan Low-Balled Costs, Exaggerated Jobs

A January 2008 business plan prepared by Agrifood Solutions International for Northern Beef Packers in Aberdeen offered this estimate of the construction costs then anticipated to put a slaughterhouse in operation by August 2012:

2008 NBP Construction Cost Estimate

As we well know, Northern Beef Packers didn't start slaughtering cattle until October 2012. But by then it had apparently slaughtered a lot of financial sheep, burning up perhaps twice as much money as its own business plan projected to build.

But notice that line on loan fees. NBP's organizers said they'd have $300K in loan fees. They disbursed more than that, $450,000, in one fell swoop to Richard Benda for his "loan monitoring" duties.

While understating construction costs, NBP's January 2008 business plan overstated job projections:

2008 NBP Job Projections
2008 NBP Job Projections

By 2009, NBP said it would employ 702 workers. NBP held out the prospect of employing two shifts and bringing job totals to 1,352. In a 2011 economic impact study contracted by the Governor's Office of Economic Development, ASI revised those job numbers down to 561 at start-up (again prematurely projected for October 2011) and 660 by 2015. At its peak during its brief nine months of operations, NBP employed around 400 people. If I'd have been an EB-5 investor in 2007 or 2010 counting on NBP to use my $500,000 investment to create at least ten jobs to win me my green card, more accurate job projections might have swayed my decision to invest.

Who was helping sell these bogus numbers to the state and its EB-5 visa investors? Northern Beef Packers board member Larry Gabriel:

2008 NBP Business Plan: Gabriel resume
2008 NBP Business Plan: top resume for Board of Directors member Larry Gabriel

That's former South Dakota Secretary of Agriculture Larry Gabriel, whose resume in the 2008 NBP business plan touts his leadership in crafting Governor Mike Rounds's South Dakota Certified Beef program, which was central to NBP's business plan and which, like NBP, failed.

Experts who say Northern Beef Packers didn't stand a chance of fulfilling its business plan promises aren't just shooting hindsight spitballs. John Tsitrian, who brokered cattle for a decade and knows more about business in general than I, said back in 2006 that Governor Rounds was exaggerating the prospects for his beef initiative. Tsitrian says that the South Dakota Stockgrowers Association complained about the Rounds Administration's lack of consultation on the certified beef program.

Northern Beef Packers' plan, supported by a prominent former Rounds official, got its numbers badly wrong. They didn't just miss clear signals from the market; it's as if NBP and Governor Rounds didn't want to hear experts who might review their numbers and see that they didn't add up.


  1. Kellee 2013.12.23

    You should never sign anything you don't completely understand or agree to, but especially not something with such a huge dollar
    value attached to it. Purchasing a piece of property is a monumental investment and the process requires a
    knowledgeable expert to help you streamline the procedure.

    That's why using a mortgage broker is such a good idea,
    and one that more and more homebuyers are starting to do.

  2. Lanny V Stricherz 2013.12.23

    Surely you jest. The gift that just keeps on giving, Larry Gabriel. I just don't pay enough attention to State Government. (I have a hard enough time keeping up with the Governor, the Legislature and the PUC.)I was not aware that Larry Gabriel was a director of NBP.

    This is the same Larry Gabriel, who as Secretary of Ag for then Governor Rounds, promoted the CAFO dairy farms in Eastern South Dakota in foreign magazines. He was able to sign up 10 of these stream, river, lake and aquifer polluters, two of which went bankrupt and who knows how many employed illegal aliens. The same or less money, time and effort could have been spent to develop many more dairy farms with smaller and less polluting herds and thus keeping some local young folks interested in staying in South Dakota to raise their family.

    In reading his resumé, I see that he is a problem solver. Maybe the investors and the citizens of South Dakota should ask him to solve this problem. And as far as being a consensus builder, I guess he did a great job of selling this idea to a lot of people, to make it the giant fiasco, which it has become.

  3. Rorschach 2013.12.23

    How many hundreds and hundreds of thousands of dollars did this failed never-fully-operational NBP pay Larry Gabriel to serve on the board of directors? Methinks the whole idea of NBP was a scam to bilk the foreign investors out of their yuan and line insiders' pockets with the converted currency in exchange for little to nothing of value. Larry Gabriel, it appears was one of the lucky insiders who got paid while the production employees went without. I doubt if Larry Gabriel was dumb enough to put any of his own money into the venture, and certainly not as much as he got paid to be on the board.

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