Sioux Falls pork plant will move

SIOUX FALLS — Smithfield Foods plans to move its pork processing facility from downtown Sioux Falls to a new plant on the northern edge of the city that will be built by the end of 2028, according to a Monday announcement of a deal that includes a $50 million gift from philanthropist T. Denny Sanford to help make it happen.

Sanford is the owner of First Premier Bank and Premier Bankcard, both headquartered in Sioux Falls. His donation will go to the Sioux Falls Development Foundation so it can acquire and demolish structures on the existing, 120-acre Smithfield site for future redevelopment.

Smithfield, meanwhile, plans to build a $1.3 billion plant in Foundation Park, an area developed by the Sioux Falls Development Foundation near the intersection of Interstates 29 and 90 that is home to an Amazon distribution center and a $550 million frozen-food production plant that’s under construction by CJ Foods. Smithfield’s project will include a new wastewater treatment operation.

The Smithfield plant in downtown Sioux Falls, formerly known as Morrell’s, has been a mainstay of the city since 1909. Many people know the plant by its odor, which regularly wafts over scenic Falls Park. The relocation of Smithfield, coupled with the impending move of the state penitentiary — which is also near Falls Park — to a new prison planned in northeast Sioux Falls represents what city and state leaders described in the lead-up to Monday’s announcement as a “once-in-a-generation opportunity.”

Sioux Falls Mayor Paul TenHaken, who is not seeking reelection this year, said the impact of Smithfield’s move away from central Sioux Falls will be far-reaching.

“This is going to carry on long after I’m in office, and I look forward to dreaming with our residents, even though I won’t be in the chair, on what this could be, and what this extension of our downtown could be,” TenHaken said during a Monday announcement at the Canopy by Hilton hotel.

The rest of the package facilitating Smithfield’s move involves state and city incentives.

The incentive package
Bill Even, commissioner of the Governor’s Office of Economic Development, said the state is committing $12 million in grants from its Future Fund to the Sioux Falls Development Foundation to help with the project. The money will help reimburse the foundation for the land where the new plant will be located, and for costs associated with preparing it for construction.

Even said discussions about the move started shortly after Gov. Larry Rhoden appointed Even in April. Even’s pork-industry background includes farming, leading the state Department of Agriculture, and serving as the CEO of the National Pork Board.

The Future Fund was created in 1987 at the request of then-Gov. George Mickelson. It was placed under the governor’s exclusive control, enabling the governor to respond quickly when economic opportunities arise. South Dakota employers contribute a fee to the Future Fund when they remit payroll taxes for unemployment benefits.

Some state lawmakers want more oversight and control of the Future Fund after former Gov. Kristi Noem used it for a fireworks show at Mount Rushmore, a Rapid City-area shooting range that legislators refused to pay for, a Governor’s Cup rodeo in Sioux Falls, and a workforce recruitment campaign that Noem starred in.

South Dakota lawmakers have introduced a slate of bills this legislative session seeking greater transparency and accountability for the fund, although none of the bills have yet earned final passage. Earlier this year, Rhoden — who is a candidate this year to keep his job — sought to preempt those efforts with an executive order outlining his procedures for handling Future Fund awards.

TenHaken said the city plans also to create a tax increment financing district for the project, but he provided no further details. The districts, known as TIFs, capture revenue from the new and higher property taxes generated by development projects to pay off the financing that helps the projects get started — often involving infrastructure such as streets and connections to water and sewer lines.

Move comes amid anti-China political rhetoric
Smithfield, which is part of the publicly traded WH Group based in Hong Kong, has 3,200 employees in Sioux Falls earning $200 million in wages annually.

TenHaken told the crowd at Monday’s event about a study from the University of Nebraska estimating the closure of a Tyson Foods beef processing plant in Lexington, Nebraska, will have a $3.3 billion negative annual impact on that state. He said the economic pain for South Dakota would be similar if Smithfield closed or moved out of state.

“So, the fact that they’re staying here in this state, we just cannot thank you enough for continuing this partnership here in South Dakota,” TenHaken said.

An architectural rendering shows what a proposed new Smithfield Foods plant in northern Sioux Falls might look like. (Courtesy of Smithfield Foods)

An architectural rendering shows what a proposed new Smithfield Foods plant in northern Sioux Falls might look like. (Courtesy of Smithfield Foods)

Smithfield sells pork products under numerous brands and has facilities in multiple states. It was acquired in 2013 in a multi-billion-dollar deal by WH Group, based in Hong Kong, which is a special administrative region of China. Smithfield recently announced a $450 million merger deal to absorb Nathan’s Famous, known primarily for its hot dogs.

For years, Republican South Dakota lawmakers and governors have framed foreign ownership of agricultural land and areas near military bases, especially by entities from nations deemed “hostile” such as China, as a national security risk. The state’s secretary of agriculture has even said that China sent spies to agricultural operations in South Dakota several years ago.

That rhetoric has produced new laws to ban certain agricultural land purchases by foreign entities, tighten reporting around land ownership, and add enforcement penalties.

Shane Smith is the president and CEO of Smithfield. In response to South Dakota Searchlight questions, he said Smithfield’s management team and workforce are American, and 99% of its products are consumed in the country.