Business/Economy

A North Pole farm family, a struggling Palmer slaughterhouse and a step toward Alaska’s food security

PALMER — Todd Elsberry didn’t set out to buy a long-struggling slaughterhouse.

Elsberry, a former police officer who’s the largest hog producer in the state, was left scrambling to butcher hundreds of animals after the Mt. McKinley Meats & Sausages plant closed earlier this year.

The slaughterhouse is the only U.S. Department of Agriculture certified processing facility in Southcentral. Any red meat headed to commercial markets — grocery coolers, farmers markets, wholesale distribution — needs that federal stamp.

At Elsberry Farm, Todd and his wife, Sherrie, wondered if it was time to leave the business. Elsberry said he considered a mobile slaughterhouse or even building a small plant at the farm.

He asked the director of Alaska’s state agriculture division, who provided advice throughout his decision, if anybody else was filling the void and setting up some kind of butchering option.

Nope.

“It kind of boiled down to us,” Elsberry said in a recent interview. “It was kind of spooky. We could not get out of business. I just could not stop. That’s how fragile this is here.”

So now the slaughterhouse is in new hands: the self-described “elected by default” farmers from North Pole.

Earlier this month, in a ribbon-cutting ceremony on the killing floor, the Elsberrys joined state officials and the real estate agent who’s a minority partner in their new company, Alaska Meat Packers Inc.

The sale is “very exciting news” for food security in the state, Department of Natural Resources commissioner Corri Feige said during the event. “Alaska is at the far bitter end of the supply chain.”

Livestock producers in Alaska face a long list of challenges, including finding affordable feed, hauling animals to the Palmer slaughterhouse from far-flung farms and finding enough large tracts of agricultural land to support a true boom in meat production.

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But getting the Alaska Meat Packers facility up and running is a crucial step, industry members say. Right now, there isn’t enough local red meat to meet current demand.

Mat Valley Meats near Wasilla sells everything from sides of beef to house-made bratwurst and dry-cured bacon.

“We cannot even get in a quarter of the Alaska-grown beef that we can sell,” said manager and co-owner Bailey Stamper.

Elsberry, a farmer who knows what the industry needs, is a promising pick to bring the slaughterhouse into a new era, Stamper said. It’s also a good time to boost Alaska-grown meat markets: Surging meat prices in the Lower 48 have normally pricey local products looking more affordable.

“It feels like this is something Alaska needs to jump on, get our agriculture up to where it needs to be,” she said. “There’s plenty of opportunity for farming, not enough for selling.”

The plant started processing meat this month under manager Chris Miller, to cheers from small livestock producers who say they were scrambling to find butchering services this year.

Rick Melton, a general contractor from Willow, raises cows — his farm offers dairy shares — and hogs. He was in the midst of building a new hog house when he learned the plant, formerly known as Mt. McKinley Meat & Sausage, was closing.

Melton was so excited the slaughterhouse was in new hands that he watched a live stream of the ribbon-cutting. The Meltons own 40 acres and the younger generation hopes to expand the operation.

“It all depends on these guys being here,” he said. “You guys aren’t here and USDA isn’t here, I’m telling you, we’re hosed. The whole thing is hosed ... Alaska needs this.”

Elsberry came to Alaska from Idaho, where he was raised on a dairy farm then worked as a police officer and deputy sheriff before moving to the North Slope Borough to work as a village officer in the late 1990s. He and Sherrie bought the farm in 2000 — a full 640-acre section purchased in a state land sale.

“We have been fighting the battle ever since,” he said. “It’s a lifestyle thing.”

He brings several strengths to the role of running a facility that for decades struggled under state ownership to turn a profit, others say.

For one, he has enough animals to cover operating costs already: 500 or so, with plans to increase production to 4,000 a year, Elsberry said. He’ll be making weekly runs from the 640-acre farm in North Pole to a barn in Delta to the plant in Palmer.

But there are many other farmers who’ll be making use of the plant, he said. “They may be smaller producers, but nevertheless you start totaling up animals, there’s a lot of animals out there. Definitely, that’s what’s going to make this work.”

Elsberry is a businessman with good instincts, said Arthur Keyes, a former agriculture director under Gov. Bill Walker who inherited the slaughterhouse when it was still in state hands.

There is no state or federal money going toward the plant now.

But over a period of decades starting in 1986, the state pumped millions into the slaughterhouse — and it ran in the red, averaging a deficit of about $100,000 a year since 2008.

As of 2015, the plant was staffed by three state employees making a total of more than $360,000 between them. Thirteen prison inmates provided labor. The Legislature had approved just over $2 million to run the plant for a year. Expenses totaled just over $1.7 million and revenues came in $155,000 short of that, costs covered by the state’s Agriculture Revolving Loan Fund.

The plant did run in the black for the last eight or 10 months it remained in state hands, Keyes said. Records at the time showed $42,448 in profit.

The problem through most of the duration of state operations was the intentionally slow pace of processing to allow prisoners to train instead of focusing on butchering, he said. “For 30 years, the plant was being operated as a DOC training facility. So they were limiting the number of animals, limiting processing.”

The state attempted to move the plant into the private sector several times since taking over operations in 1986 when the original owners defaulted on a loan. However, attempts to sell or lease the plant in both 2000 and 2002 were unsuccessful.

The Alaska Board of Agriculture and Conservation in December 2016 voted unanimously to sell the plant to Mike’s Quality Meats owner Greg Giannulis for $300,000, less than its assessed value.

Giannulis decided to sell the slaughterhouse this year because it wasn’t a long-term prospect, he said.

Real estate broker Bill Borden handled the sale. Borden, who was raised on a farm, said he worked with Giannulis and state Division of Agriculture director David Schade once the property was put on the market.

“They were all like, ‘We’ve got to keep this a slaughterhouse,’ ” Borden said.

The people involved are not disclosing the purchase price. Giannulis said he got another offer for more money but wanted to keep the facility as a slaughterhouse.

Along with Elsberry and his wife, the company is partly owned by Borden and the real estate company he owns, High Caliber Realty. Borden has a 1% share and the company has a 13% share, according to state records.

Borden said the minority partnership is basically “delayed compensation” connected to the property sale — rather than getting total payment up front — given the importance of keeping the plant up and running.

“We often talk about Alaska food sustainability,” he said during last week’s ribbon cutting. “It gets overshadowed by the 630-pound cabbages and the 65-pound cantaloupes. We forget about how we need to feed Alaska.”

Daily News photographer Loren Holmes contributed reporting for this story.

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