By Nickel, Raylene F.
Rural Cooperatives , Vol. 69, No. 6
Editor's Note: Nickel is a freelance ag journalist based in Kiel, North Dakota.
North Dakota's rolling grasslands grow nearly a million beef calves each year. In the fall and early winter, soon after the calves are weaned and possibly fed for a while on farms, semitruck after semitruck carry the calves far out of state, typically to feedlots in Kansas and Nebraska. About 95 percent of those North Dakota calves leave the state, in spite of the fact that North Dakota's fields raise bumper crops of feed grains. Much of that grain also is shipped out of state, often to the very feedlots where the North Dakota-bred calves end up.
This tradition of feeding North Dakota grain to North Dakota calves in feedlots in states to the south got its start because farmers and ranchers believed North Dakota's cold winters would cause poor gains in cattle on feed. But research and experience are refuting this perception, leading producers to look for ways to plant the seeds of a feeding industry in North Dakota.
In the arid southwestern corner of the state, this desire for an in-state feeding industry has resulted in a network of new feedlot pens built to hold 6,500 head of cattle. Surrounded by open prairie, the feedlot facility is owned by Dakota Prairie Beef, a cooperative of 145 members, most of them farmers and ranchers, each of them owners of cattle being custom fed in their cooperatively owned lot.
Long time coming
"The idea behind this feedlot cooperative was a long time in coming," says former board chairman Lance Larsen. Larsen, who ranches in western North Dakota, is one of the founding members.
"We're the first ones to get such a concept off the ground," Larsen adds. "We didn't form the feedlot cooperative in order to create an investment opportunity simply for the sake of earning eventual dividends. The members are the customers. We retain ownership of our cattle all the way to processing and pay the cooperative to feed them.
"The feedlot is really only an extension of a member's own farming or ranching operation. The purpose in forming a cooperative to build a custom-finishing lot was to maximize the economies of scale that a larger feedlot affords." This provides cheaper gain than a producer might obtain by feeding small numbers of cattle at his or her home feedlot.
Larsen was among a handful of western North Dakota ranchers who began talking together 6 years ago about the possibility of forming a cooperative to build a custom feedlot in the region. It was during the time that a regional cattle producers' cooperative, Northern Plains Premium Beef, had organized with the intent of establishing a producer-owned packing plant. Larsen's group believed that the formation of a producer-owned custom feedlot could be a source of fed cattle for the NPPB packing plant.
Though the cooperatively owned packing plant never came to fruition, the ranchers plowed ahead with their vision of building a producer-owned feedlot in the state. For a year, the steering committee staged community meetings in North and South Dakota as well as in Montana. The goal of the meetings was to raise enough equity for the group to build a new feeding facility on purchased land near the small town of Gascoyne in southwestern North Dakota.
Two share types offered
Two types of shares were offered to producers: "B" shares cost $60 each and bought the buyer bunk space each year for one spring-born calf delivered to the feedlot between Oct. 1 and March 30; "C" shares cost $55 each and bought the buyer bunk space each year for one yearling delivered to the feedlot between April 1 and Sept. 30.
"We offered 6,500 calf shares and sold all of those shares," says feedlot manager Mark Vachal. "We offered the same amount of yearling shares and sold 2,400 of those. So yearling shares continue to be available, as well as some calf shares from individuals who have decided, for one reason or another, to sell their shares. …