Central Utah Agri-Park could spell difference between profit and loss for local producers

By Emily Olsen / Sanpete Messenger, January 25, 2023
Sanpete County, Utah

Sustainability in family agriculture is the focus of an economic development project being pursued this year by the Six County Association of Governments (Six County).

The proposed Central Utah Agri-Park would provide local and family-owned agriculture businesses with a local and more affordable meat processing facility to help them increase profit margins.

“The delta between producer prices and retail prices has never been larger in history, and it’s because there is a monopoly,” said Darin Bushman, a Piute County Commissioner who is working on the project and contributed to a presentation for the project given to the Sanpete County Commission on Sept. 20. “Senator Lee and others have raised this issue.”

At the Sanpete County Commission meeting on Dec. 6, the commissioners authorized the contribution of $200,000 towards the project. The funds, which will be split into two payments of $100,000 over two years, were available through government grant money.

Other counties have also contributed to the project, including Wayne and Piute counties. Bushman said that Piute County has contributed its entire grant amount for year one that it received from S.B. 95. Entitled “Economic Development Amendments,” the bill was passed by the Utah Legislature in 2020 to provide up to $200,000 for economic development in rural Utah counties. Additional funds are also available in the form of matching funds.

Sanpete County Commissioners signed a memorandum of understanding with Six County in September. Six County is also partnering with other counties and entities in Utah, such as the Inland Port, Bushman said.

In addition, State Senator Doug Owens confirmed with the Sanpete Messenger this week that Governor Spencer Cox requested $18 million for the Agri-Park project in his budget this year.

There is no question that the need for an affordable meat processing facility in Utah is great.

Bushman said during the September presentation that during the last 45 years, the price paid to a farmer for live beef, for example, has been almost stagnant, when production costs, other expenses and inflation have increased substantially during that time.

“When I was a kid, I raised a bunch of Holstein [cattle], and I sold them for $1.06 per pound, and one of the producers who is on our team was telling us that he just sold a bunch of steers for $1.36 per pound,” he said. “So how do you do that when diesel fuel was 45 cents a gallon [45 years ago], and now we’re talking $5.00 a gallon?”

Most Utah farmers are forced to rely on out-of-state meat processing facilities, which quickly tallies expensive shipping costs. 

“The more we dug into it, the more we learned about the price controls that are being put in by basically four corporations that control the protein market in the United States,” Bushman said. “The problem at the end of the day is that the margins are not there.”

Farmers would be able to increase profit margins just by having access to an affordable commercial facility available in-state.

Building a meat processing facility within Utah, and even within the county, has been attempted before, but such a facility requires specific zoning and conditional building permits related to its wastewater requirements. Another factor is odor, which necessitates it being located at a distance from residential areas. The facility would also need to have easy access to an interstate freeway and an industrial train route, Bushman said.

The Six County Association of Governments has found a location in Utah that would meet its building requirements, although they have not yet revealed its location.

The Covid-19 pandemic exposed the bottlenecks happening in the U.S. meat processing industry, and it led the Utah State University Extension to partner with the Utah Department of Agriculture and Food on a feasibility study, released in 2020, regarding the viability of such a meat processing facility in Utah. 

“Financial feasibility was estimated for a very small-scale meat processing plant with a maximum capacity of 750 head per year. This capacity is based on a single shift. Additional shifts may be used to increase the capacity, but are not considered here,” says the report, entitled, The Potential for Growth in Local Processing and Sales of Utah Beef.

“With the price of livestock estimated at $115 per cwt. [100 pounds] and wholesale meeting at $6.50 per pound, the estimated net income is more than $75,000,” the report continues. “With an investment of $1.4 million, this equates to a return on investment of 8 percent.”

The Six County economic development project utilized this study for their project. Although the study focused on beef production, the proposed Central Utah Agri-Park would also process lamb, pork, and potentially poultry, as well as package hay and other livestock feed.

Each day, Utah consumers purchase the equivalent of 750 cattle, says the USU report as quoted by Bushman. “After we have shipped it away, [other businesses] are bringing 750 beef a day back into the state.” This statistic represents not only the demand in Utah for beef, but revenue from other meat and poultry products that Utah farmers are missing out on.

Six-County intends to retain ownership of the land included in the Central Utah Agri-Park and lease out space to industrial agriculture businesses. The park would be designed to serve the needs of local and family-owned farms, and leasing out the space will help Six County maintain such managerial oversight of the complex, Draper explained during the September presentation.

Although a return on investment for county contributions will not be immediately realized, Bushman believes that future county budgets will benefit residually in a number of ways.

“Right now I am looking at 100 percent sunk cost, and that is what I have shared with our constituents,” he said. “In our minds, if we can do what we have with the intention that we have, eventually, this would give some residual cash back to the Six County organization and potentially back to [Sanpete County] in the form of reduced costs at Six County.”

Bushman said they are following the model utilized by Delta, Colo., when they installed a fiberoptic backbone through their county, from which they are now able to lease bandwidth off to last-mile providers.

Their association of government has a monthly revenue stream coming in continuously from that infrastructure that they put in place,” he said. “Our target is to do something similar.”

Zack Jensen, co-owner of the 3,800-acre M&K Farms and feed lot in Centerfield, has played an integral role in the project, Draper said.

“Zack Jensen was really pivotal to all of these discussions. He came to every meeting and was involved in every discussion,” she said.

Most cattle ranchers in Sanpete County are unable to finish beef, a process for increasing the weight of cattle to their desired size before selling them, which is frequently done in a lab.

Commissioner Scott Montgomery expressed his enthusiasm for the Agri-Park project, which would help finish beef.

“[Jensen] was telling me, the other day, ‘I just figured it was a pipe dream,’” Montgomery said. “But all of a sudden, it just started coming together. And he said, ‘I am telling you, I am excited because I would like to start finishing beef instead of sending it out of here at 800 weight. I would like to finish them and be able to put them into a processing plant right here.’”

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