031011 Tama Beef Secures $12 Million Credit Line

Des Moines , IA - A new beef packing plan in Tama has secured a $12 million line of credit from Wells Fargo & Co. and a $1 million investment by the Iowa Farm Bureau Federation for an expansion.

Iowa Quality Beef, a farmer-owned meatpacking plant which opened July 21, will use the money to finance day-to-day operations, said Joel Brinkmeyer, executive vice president of the Iowa Cattlemen's Association in Ames, which played a leading role in launching the business.

The Tama plant, purchased last year by a cooperative of more than 900 beef producers from a dozen states, opened after extensive modernization work. The plant employs about 380 people, with plans to increase that number to more than 600.

Farmers and others invested about $12.6 million in the project through two equity drives, said Brinkmeyer, who also is president of the Iowa Quality Beef Supply Cooperative, the plant's owner.

Several lenders tapped for financing made proposals, he said, but Wells Fargo in Minneapolis offered the best terms. The financing was closed last week.

Earlier, Iowa Quality Beef received a $5 million long-term real estate loan from Liberty Bank in Cedar Rapids, as well as a three-year, $3 million loan from the Iowa Agricultural Finance Authority.

Officials had hoped to complete the financing sooner, but they said it took longer than expected because of the complexity of the project.

"It just takes time to get all the pieces put together. . . . It's not like a farm or a cattleman or a small business (owner) walking into a local bank and getting financing," Brinkmeyer said.

The Iowa Farm Bureau invested because it saw the project as a way to expand markets for the state's cattle producers, said Craig Lang, a Brooklyn dairy farmer who is Iowa Farm Bureau president.

"Growing the beef industry in Iowa is important to creating jobs, supporting the state's corn and soybean industries and rural Iowa's economic well-being," Lang said.

With its investment, the Iowa Farm Bureau acquired 20,000 shares of Class C preferred stock with a promised annual return of 8% once the plant is profitable.

The plant is the first beef packing plant to open in Iowa in decades. The project stemmed in part from cattle producers' frustration with the loss of the Monfort Co. plant in Des Moines, which closed in 1996.

The plant is much smaller than those operated by major meatpackers, but it is producing specialty and niche products, including kosher beef.

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