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Mississippi takes big hit on cattle plant loans

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Econ101

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FBI says beef plant investigation to expand to other states

HOLBROOK MOHR

Associated Press

Sun Herald

Jan. 28, 2006



JACKSON, Miss. - An investigation into a failed beef processing plant that has cost Mississippi millions of dollars and has already generated one guilty plea could spread to Tennessee and Georgia as investigators follow the money trail, the FBI says.



Mississippi Beef Processors president Richard N. Hall Jr. pleaded guilty on Wednesday to federal and state corruption charges, but Mississippi's top FBI agent says the second phase of the investigation is just getting started.



"Just because an indictment is returned or one part of a case comes to fruition doesn't necessarily mean there are not other spinoff cases," John G. Raucci, the special agent in charge in Mississippi, told The Associated Press on Friday.



Hall is facing two concurrent eight-year prison sentences for mail fraud and money laundering. He has agreed to cooperate in an investigation of the failed plant.



The plant operated for only three months in 2004, and its abrupt closing left the state of Mississippi holding a $43.5 million bill on a defaulted loan and 400 people without jobs.



The cost of the plant has ballooned to nearly $55 million with maintenance costs, grants and consulting fees.



Raucci said he could not discuss the investigation in detail but said it has led to Tennessee and Georgia.



Mississippi Attorney General Jim Hood has already set his sites on a Georgia company.



Hall had been sought out by other Mississippi officials because of his family's experience in the cattle business in Tennessee.



Hall and his father and brother owned Tennessee Dressed Beef Company near Nashville, among other ventures. But they quarreled over ownership in court before Richard Hall came to Mississippi, according to court records.



Hood has said he plans to sue Smyrna, Ga.-based Facility Group, a construction management company, hired by Community Bank and the Mississippi Development Authority to guide the troubled project to completion. Community Bank helped the state finance the plant.



The beef plant was hailed by many state officials as a way to create jobs in an economically struggling area and to help cattle farmers cut shipping costs by allowing them to process their cattle in state. But the project ran into problems almost immediately, and Facility Group was hired to bail it out.



Facility Group was paid $3.2 million for its services, which Hood said included paying contractors. Several vendors have not been paid a collective $1.7 million, Hood said.



Donya Edler, executive vice president for marketing at Facility Group, has said the company was responsible for the supervision of the project, not paying subcontractors and vendors.



Raucci would not say where the investigation has led in Tennessee, but he did say it involves individuals and not other corporations.



"I'm not suggesting that there were other businesses involved in other states. There are other individuals, though. Some have left the state of Mississippi," Raucci said. "Eventually, we're going to have to track some of those others down to refresh the stories that they told earlier."



Hood spokesman Jacob Ray said he could not comment on a Tennessee connection to the case. And Raucci said officials would likely remain tightlipped.



"I don't anticipate there being a lot of public comments in the near future," he said. "We have a lot of important work to do."





sunherald.com
 

Econ101

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The real question here is why is the state of MS backing private loans. When private loans like this go bust, the taxpayers foot the bill. Why didn't a bank back this deal? It was only operating for 3 months? What is the govt. doing backing these private deals?
 

Jason

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Conman, you just blew your buddy RKaiser out of the water!

They want gov't garanteed loans.

The competition in the packing industry is stiff. That's why a bank didn't back this project. It was a gov't sponsered plant to help with unemployment issues.
 

Econ101

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Jason said:
Conman, you just blew your buddy RKaiser out of the water!

They want gov't garanteed loans.

The competition in the packing industry is stiff. That's why a bank didn't back this project. It was a gov't sponsered plant to help with unemployment issues.

That is the puzzle, isn't it, Jason? rkaiser knows the answer to this puzzle. What is is in his drinking water that is not in yours?
 

Sandhusker

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Jason said:
Conman, you just blew your buddy RKaiser out of the water!

They want gov't garanteed loans.

The competition in the packing industry is stiff. That's why a bank didn't back this project. It was a gov't sponsered plant to help with unemployment issues.

I don't know about up there in Canada, but here in the US, many millions of dollars in loans are backed by the government. Every FSA or Farm Credit note is backed by Uncle Sam.
 

rkaiser

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Are you finished jumping up and down with glee yet Jason.

Was the plant in question owned by producers Jason.

Was the idea of the plant in question, to help those producers who can actually see the benefits of more than two packing plants in Canada?

Did Cargill or Tyson ever acquire government loans Jason, on top of all the grant money it took to get them started here in Canada?

Almost every business has a certain amount of government money involved. This PRIVATE venture may have been one of those that the government regrets, OR maybe the family still lives pretty darn good even though they squandered public money.

Blown out of the water all right Jason. By who? You and your packer backin buddies. Shoot. Every thing that I talk about has the potential to help even you Jason, but you can't see it. Rather see the grass up close as you bend over for whatever your packer heros have for you next.
 

Sandhusker

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Kaiser, "Did Cargill or Tyson ever acquire government loans Jason, on top of all the grant money it took to get them started here in Canada?"

They're still getting grants from your government, Jason - didn't even have to submit a real application. :wink:
 

Econ101

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Sandhusker said:
Kaiser, "Did Cargill or Tyson ever acquire government loans Jason, on top of all the grant money it took to get them started here in Canada?"

They're still getting grants from your government, Jason - didn't even have to submit a real application. :wink:

It is just part of the current money laundering. It just happens to be taxpayer money that is laundered by political cronies.
 

Jason

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You guys are so stupid you can't even get it straight.

Randy wants gov't garanteed loans.

Conman just said "why did the gov't garantee this loan?"

Sandbag chimes in with some money laundering scheme. Laundering what money for whom?

The plant failed. The management bailed and abscounded with some money. I hope they are caught and charged. The plant still failed.

Did you hear that the plant failed. Not nice, but a business reality. Plants can and do fail.

The real moral is be careful where you invest your money, it could be lost.
 

rkaiser

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Genious son says
You guys are so stupid you can't even get it straight.

And you are the genius who should be in charge of the USDA Jason. :roll:

You are already so brainwashed by the packers that they wouldn't even have to train you.
 

Jason

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Nothing of substance to add I see.

The plant didn't work out. The gov't backed the loan, they lost the money.

Conman says gov't loans shouldn't be used to back a plant, your beef is with him because that is where you want the loan backed from.
 

Econ101

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Jason said:
Nothing of substance to add I see.

The plant didn't work out. The gov't backed the loan, they lost the money.

Conman says gov't loans shouldn't be used to back a plant, your beef is with him because that is where you want the loan backed from.

Seems you like the shortcut approach, Jason. Just give it to the packers up front and forget about the formalities.

Tell you what, you get the Canadian govt. to make a law where producers like rkaiser can get their cattle cut for what the packers say they cut them (3.88 profit per head) and retain ownership to get the real value from them out of the market place and you will accomplish two things: 1) Allow producers to keep the value added they bring with their management and genetics and 2) Keep people like Agman honest with the numbers of per head profit he posts. You do like killing two birds with one stone, don't you? It is the most efficient way, you know. Don't you know the genetics you bring to the table are not worth a whole lot if cattlemen are going to be robbed when they sell the cattle?
 

rkaiser

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Jason -
Nothing of substance to add I see.

The plant didn't work out. The gov't backed the loan, they lost the money.

Conman says gov't loans shouldn't be used to back a plant, your beef is with him because that is where you want the loan backed from.

Nothing that you want to hear Jason.

The Big C plant was proposed to be owned by the producers of Canada. And my choice was a mandatory levy to build and operate this plant. Do you see the word "was" in both of those sentences Jason?

I hardly agree with government money being the main loan source for Private companies but it happens all the time.

We "were" (do you see that word "were" Jason) attempting to go the government loan route to make the government aware of the ridiculous situation they helped to put this industry in. Just because Jason the brown nose thinks that two packers are all that Canada needs doesn't mean that that is close to reality. A third large packer in Canada would have helped even a brown nose like Jason.

Nothing to offer again hey Jason.
 

Sandhusker

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Jason, "Sandbag chimes in with some money laundering scheme. Laundering what money for whom?"

What are you, SH of the North? First of all, I didn't mention anything about any laundering scheme, I merely pointed out that government backed loans are not uncommon. Secondly, it's MR SANDBAG to any packer backer.
 

Jason

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Because I see the realities of business you guys attack me thinking I only support Cargill and Tyson?

I have told you before I have had Cargill bid on cattle but have never sold directly to either Tyson or Cargill.

I support more packing capacity in Canada, but don't support those plants poorly planned that are thinly veiled to promote 1 or 2 cattle breeders, or to put some wanna be CEO in a position where he is in over his head.

Asking for donations before even a basic business plan would be not having a clue.

The inconsistancies of the "we hate the big packers" group would be funny if some good people didn't get swept along with it.
 

rkaiser

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It's always about the extremes; isn't it Jason. On one hand you defend yourself for your views and on the other label people as the "we hate the big packers" group.

Can't stop and admit that the events of the past few years have been ridiculous economically to say the least, but can certainly label anyone who does, a packer blamer.

Talk about reality Jason, you could use a dose.
 

rkaiser

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I guess I have to ask about the hundred bucks that folks donated to BIG C at our meetings Jason. Was this big chunk of investment money considered a scam by a few cattle breeders in your mind. Didn't come close to covering our costs to make people somewhat aware of the reality that you chose to ignore.

When we finally garnered enough cash to conduct our own preliminary feasability study, our ideas of competeing with Cargill and Tyson on a plant level quickly subsided.

Our study involved minds with less bias than yours or mine and showed us that we need to take a different approach. Guess what Jason - we listened.

Unlike the USDA and our ass kissing CCA who follow one road and one road only.
 

pknoeber

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rkaiser said:
When we finally garnered enough cash to conduct our own preliminary feasability study, our ideas of competeing with Cargill and Tyson on a plant level quickly subsided.

Our study involved minds with less bias than yours or mine and showed us that we need to take a different approach. Guess what Jason - we listened.

Why couldn't you compete?

Were the economies of scale so large that it would take a tremendous investment to make it operate on par with theirs?

Is the marketing/regulatory environment so difficult that only the largest companies can wade through the jungle?

I would guess that the study revealed that:

1. Economies of scale crush small plants. And large plants need to keep killing or they will fall by the wayside also.

2. Gov't regulation and the complex/convoluted marketing system that has evolved will effictively stop small plants cold. National grocery chain stores want to deal w/ 1 company w/ the capacity to service their entire chain. Circles back around to the economies of scale. Cargill, Tyson and National have already developed most of these skills. Or they've made enough "political contributions" to make it through.

There is no good answer, but I would say USPB has to this point created the model to follow. It's a big packer owned by producers. They compete just like Cargill & Tyson, but the owners are the producers.

Who knows what the profits from packing really are, there are so many accounting tricks when you have that much cash running around that a half-assed CPA could probably make it look like -$100/head or +$100/head.

No real point to this, but I would like to know what the study found.

Phil
 

Econ101

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These companies are still playing the concentration game. It will continue (and other firms will have a hard time getting going) until they have a stronger hand on the market and the remaining participants. They have already mastered that in poultry. Low margins are the loss leader to more concentration in the industry. Meanwhile they will continue to seek govt. help in paying for their operations (as I have posted on this forum before) to secure their grip on the markets even more with taxpayer money (as they did in Canada and with their little locations all over getting taxpayer deals).
 

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