IATP Hog Report - Institute for Agriculture and Trade Policy

Section 5
environmental laws, and as they had been rejected by the Winnebago
Tribe of Nebraska, 36, 37 Bell Farms approached the Rosebud Sioux Tribe
(RST) of South Dakota in the spring of 1998 with a proposal to erect a
$105 million hog factory on tribal lands. 38
Rosebud Reservation has an 85% unemployment rate and is located in one
of the poorest counties in the nation. 39 The need for the project was
described as "poverty and lack of economic opportunity among
reservations of South Dakota," while the proposed action was to "provide
opportunity for economic prosperity to the area and tribal members." 40
South Dakota enacted an anti-corporate farming law in 1988 in response
to an effort by National Farms to establish a hog factory there. In fall
1998, South Dakota's Constitutional Amendment E was passed,
strengthening the State's position against corporate farming. However,
because Indian lands are not subject to state laws, in September 1998, Bell
Farms, Sun Prairie, a Nebraska partnership, and the Rosebud Sioux Tribal
(RST) Council entered into a business relationship that would bring hog
factories to the people of Rosebud Reservation. 41 Bell Farms, LLP, signed
an agreement with Sun Prairie to manage the Rosebud Pork Production
Facility. Sun Prairie (the owner) signed a lease agreement with the RST
Council in which Sun Prairie would finance facility construction and
operation while the RST would put up the land, water, and human
resources for sites and operations, along with various infrastructure
improvements such as roads and an electric substation.
Upon completion of both phases of construction, 859,000 hogs per year
were to be marketed under contract to Hormel Foods, Inc., of Austin,
Minnesota. Under terms of the lease agreement between the Tribe and Sun
Prairie, the facilities also would not be subject to governmental fees, sales
or use taxes, real estate taxes, or similar assessments.
In addition to 150 estimated jobs during the construction phase, the
completed project was to bring 220 permanent jobs for tribal members,
with wages ranging from $16,000 to $50,000 per year. 42 Profits from the
completed venture were projected to be $1,168,320 per year. This amount
was to be split 25-50-25 to Rosebud Sioux Tribe, Sun Prairie, and Bell
Farms, respectively, during a 15-year amortization period. At the end of
this period, the lease stipulated that the Rosebud Sioux Tribe could buy
out the facility at 50% of its original cost, or an estimated $50 million.
There is no indication that project proposers ever explained to the RST
Council that the life expectancy of modern hog confinement buildings is
only about 10 to 15 years.
The project was planned in two phases: Phase I, three hog finishing (wean
to market) sites and Phase II, five sow production sites and five additional
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