State officials refuse to bail out beef processor

By HOLBROOK MOHR

The Associated Press

JACKSON – State officials who visited a $43.4 million state-backed beef processing plant in Oakland on Wednesday said they won't bail the company out of its financial troubles.

Richard Hall Jr., the president of Mississippi Beef Processors LLC, said in a prepared statement Wednesday that mechanical problems forced the plant to halt operations on Nov. 17.

The plant had been operating for only three months when company representatives notified its 400 employees that they were out of work.

Patrick Sullivan, spokesman for the Mississippi Department of Agriculture and Commerce, is on the Land, Water and Timber Resources Board that approved the project. The board was formed in 2000 to enhance Mississippi's agricultural industry.

Sullivan told The Associated Press that board members visited the plant Wednesday and “are trying to do anything we can to help, outside of providing capital or additional money.”

Sullivan said Hall had asked for more money in the past but was denied. He said the board's intent from the onset of the project was to fund construction not operational costs.

While some people speculated that the limited number of cull cattle available in the area for processing led to financial difficulties, Hall said the plant “simply cannot process the number of cattle that we need to process until the rendering plant is fully operational.”

Greg Gibson, a spokesman for Mississippi Farm Bureau, said studies based on the number of cull cattle within the plant's 500-mile service area reveal there are plenty of cattle to support the operation.

Gibson said “they're just having mechanical problems.”

Looking for investors

Hall said the plant must have additional revenue to resume operation and is looking to outside investors.

“Several companies have expressed significant interest in investing in the Mississippi Beef Processors if the problems … can be solved and if satisfactory agreements can be reached with the existing senior creditors of the company, primarily Community Bank and the state of Mississippi,” Hall said in his written statement.

Hall would not name the potential investors and blamed the shutdown on the plant's designer and builder.

Hall said inadequate designs on equipment that converts waste material into usable products did not operate at a desired rate and slowed other operations so much that the company was losing money.

The statement did not name the construction firm and Hall did not return calls to The Associated Press.

Sullivan said the construction manager was The Facility Group, based in Atlanta.

The Facility Group representatives did not immediately respond to requests for comment.

In 2001, a study by Mississippi State University estimated the project would cost about $21 million. By the time Mississippi Beef opened its 154,000-square-foot plant in August, costs had ballooned to $43.4 million, said Mick Bullock, spokesman for state Auditor Phil Bryant. Bullock would “neither confirm or deny an investigation” into the tax-funded project.

However, he said the state auditor's Performance Audit Division routinely reviews such projects.

Jacob Ray, a spokesman for Attorney General Jim Hood, said the attorney general's office is part of a multi-agency investigation into the project.

“Right now it's just really getting facts together,” he said Wednesday.

The project was meant to provide jobs in an economically ailing part of north Mississippi while helping cattle farmers who previously had to send their cows to processing plants in Texas or Georgia.

A report issued last month by the Performance Audit Division noted the risk in the project.

“In an industry with historically low profit margin, attention to issues such as product acquisition cost, market supply and demand and pricing structure is critical to success,” the report says. “Small fluctuations in any or all of these factors could prove the difference between handsome profits and disastrous losses.”