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Out of the ground

By Staff | Apr 7, 2017

EAGLE GROVE – Prestage Foods of Iowa’s incoming multi-million-dollar pork processing plant could fuel a resurgence in north central Iowa communities, which have lagged behind the rest of Iowa and the United States in terms of growth, according to a study by Goss & Associates Economic Solutions, of Omaha and Denver, Colorado, that was unveiled Thursday morning.

Webster County, and more specifically Fort Dodge, may see the largest increase in population after one year of operations at the Prestage plant, which will be located five miles south of Eagle Grove, according to the study.

The study, based on economic databases and U.S. Census figures, forecasts an increase of 2,103 people in Webster County, 1,253 people in Hamilton County, and 1,188 in Wright County after construction and one-year of plant operation.

“More of the new workers, at least in the early years, will be located in Fort Dodge,” Ernie Goss said.

Goss presented the findings of the recently released study inside the BioScience and Health Building auditorium at Iowa Central Community College.

About 150 people attended the presentation. Among them were health care professionals, law enforcement officials and members of the farming community.

The study accounted for 922 employees, the minimum number of employees Prestage will hire. The plant could, however, employ as many as 1,000 workers when it opens.

The analysis encompassed 10 mid-Iowa counties: Calhoun, Franklin, Hamilton, Hardin, Humboldt, Kossuth, Palo Alto, Pocahontas, Webster and Wright.

The addition of a facility like Prestage is one way to help reverse decreasing population trends in rural Iowa, according to Goss.

“Iowa, with 99 counties, has several of them with fewer people living in them than in 1930,” Goss said. “This region has grown more slowly than the United States overall and Iowa overall.”

Employment is another aspect Goss highlighted. He said one challenge is getting people to take on jobs that will be available.

“To grow this region, we have to have jobs here that either encourage younger people to stay or, if they go away, to come back,” Goss said. “There has to be a job.”

The research found that between 2009 and 2015, Franklin, Humboldt, Kossuth, Palo Alto, Pocahontas and Webster counties gained jobs, while Calhoun, Hamilton, Hardin and Wright counties lost employment.

Goss said there is likely to be pressure on wages as well as other plants in the region.

“There will be upward pressure on wages,” Goss said. “Other plants may lose workers. There may be some plants that will close.”

With the large increases in population, Goss estimated that $500 million will be spent on new housing in the region.

“There is little excess housing available,” Goss said.

The assertion that a high number of foreign-born workers will be employed at the plant has some validity, according to Goss.

Of the 922 direct workers, the study predicts about 30 percent of them will be foreign-born.

Furthermore, the study concluded that 43 percent of foreign-born Latino workers speak exclusively Spanish.

Average annual wages of employees, including administrative positions, is projected to be $47,000. The lowest paid workers are expected to start out at $13 per hour.

In terms of livestock production, the ability to process more hogs in the region will serve as an economic benefit, and one that is needed, according to Goss.

Iowa leads the nation with 36 percent of all U.S. pork production, but lags in its processing capabilites.

The 10-county region that was studied has 15 percent of the state’s livestock production activity, but less than 1 percent of the state’s livestock processing activity, Goss reported.

Expectations are for the Wright County facility to process 10,000 head per day. The annual output would be 2.8 million head.

Production at the nearly $250 million plant is slated to begin in the fall of 2018.

Prestage broke ground on the new plant, located in southern Wright County, March 23.

The 650,000-square-foot facility is being built on 150-plus acres of land.

Epstein Global, headquartered in Chicago, Illinois, is the general contractor for the multi-faceted project. It’s anticipated that the firm will hire some local contractors and subcontractors for the project.

In recent months, Prestage secured the necessary Iowa Department of Natural Resources permits to continue its plan, Terry Friesth, a spokeswoman for Prestage, reported.

During the construction phase of the plant, 2,310 jobs could be supported within the study area.

In the first five years of operation, economic activity associated with the plant will increase total sales activity in the region by approximately $6.8 billion, the study concluded. Furthermore, plant operations will increase state and local tax revenues in the study area by an estimated $124.5 million.

Prestage plans to buy 40 percent of the hogs for the plant from independent farmers.

Hog farms will also see an increase in revenue and savings, according to Goss.

Transportation savings for the average farm will be more than $16,000 annually, Goss reported.

It’s anticipated that the price of hogs will increase by 3.5 percent, the study found.

The estimated average annual added revenue is expected to be $724 per farm for the 811 hog farms in the 10-county area. The closer the farms are in proximity to the plant, the higher the revenue is projected to be.

Yearly gains range from $304 for the average Kossuth County farm to $2,536 for the average Wright County farm, the study found.

Additionally, the Prestage plant will increase daily regional slaughter capacity by 6.3 percent.

It is estimated the plant will support 193 farms – 97 packer farms, those owned by Prestage, and 96 nonpacker farms.

Schools within the region will see an increase in enrollment, according to Goss.

Approximately 1,700 students are projected to be added to public schools within the 10-county region.

The increase would add $20.8 million in additional state and local K-12 spending, according to the study.

Goss said it’s difficult to determine which schools will see the highest increases.

The trucking industry will also see a boost in connection to the Prestage plant.

In year one of the plant operations, it’s estimated that trucking firms will see approximately $62 million in sales.

Prestage is a North Carolina-based company that was founded in 1983 by Bill and Marsha Prestage. It employs more than 2,000 people companywide to date. The company has been operating in Iowa since 2004. It owns 145 farms in the state.

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