Butler letter to editor
Published 12:00 am Friday, October 26, 2007
Where’s the beef? Where’s the money?
We know from the records of the Mississippi Office of the State Auditor that Commissioner of Agriculture Lester Spell piloted the Beef Plant debacle until it ran aground. Amazingly, he now claims no responsibility.
According to the auditor’s report, Spell was aware of a 1999 Mississippi State memo which clearly states, “Current industry trends do not support building a new beef slaughter facility in Mississippi.”
Spell now tries to blame the debacle on a 2001 report produced by Mississippi State. However, the report is full of common sense warnings about the project. Here are a few of those warnings.
1. The report clearly states that price sensitivity is a crucial issue. It states that profit margins in this industry are extremely thin and a net profit before tax of only 2.5% should be expected. It stated that a few cents increase in liveweight price has a dramatic impact on profitability. The ideal scenario portion of the report used a recent 4-year average of $35.50 per hundred weight for cattle purchases. However, the cattle industry economic standard is a 10-year cattle cycle and the report contained a warning that the use of this price of $43.11 per hundred weight for cattle purchases was warranted. This is a 21% increase in cost.
2. The study also stated that the plant should be located centrally in the state to ensure market availability of cattle as well as to limit transportation costs.
3. The study used a projected cost of $21,750,000 which included $4,350,000 for owner equity. However, Richard Hall did not have this money. As we now know the real cost to Mississippi taxpayers was more than $55,000,000.
Now, Lester, what is your excuse? Where did all this money go?
Benton, formerly of Batesville