Prestage Farms

Prestage eyes expansion

County OKs incentives for integrator’s AgEnergy division
January 7th, 2016
By Chris Berendt -

Pork and poultry production leader Prestage Farms is seeking to expand its renewable energy division in Sampson County, but said the location of that $10 million investment was contingent on local incentives — local officials approved offering those this week.

Prestage AgEnergy, a division of Prestage Farms dedicated to making animal production sustainable economically and environmentally, has begun construction on a new poultry litter-fueled power plant that will be located at the Moltonville feed mill off Moltonville Road near N.C. 24. The new power plant will bring with it a taxable investment of $18 million, while creating 15 full-time jobs at an average $60,000 salary.

The new plant will be in operation in the first quarter of 2017. It will provide the ability to generate electricity to power the feed mill, while the excess electricity produced would be sold to Duke Progress Energy. Prestage will utilize steam produced at this plant within mill production process, as well as package and sell the ash produced as a byproduct.

In addition to the plant, the company has also proposed to construct — and was seeking incentives for — ancillary operations to include a 100,000-square-foot poultry litter storage building, ash warehouse, ash granulation (pellets) operation and truck wash.

“The specific operations I’m bringing you don’t create jobs but those operations are to be done by the 15 new jobs that are being created as part of the power plant,” said John Swope, executive director of the Sampson County Economic Development Commission.

Those additional operations would provide support services to the power plant and, while not representing new jobs, would bring another $10 million taxable investment — $6 million in equipment, $4 million in building. Jobs for the additional operations would come from existing employment or contractors.

“Prestage AgEnergy is requesting financial incentives from Sampson County to encourage their making this investment at the power plant under construction at their Moltonville feed mill rather than at facilities owned by contractors in Duplin and Wayne counties,” Swope noted.

The Sampson County Board of Commissioners responded earlier this week, although not unanimously, by voting to extend tax breaks. The 4-1 vote came after some concerns were raised by one citizen about the plant, and one commissioner questioned offering incentives with no jobs directly attached, which attorney Joel Starling noted was “a little unusual.”

Under the approved agreement, the county will provide performance-based incentive payments to Prestage AgEnergy of NC, LLC over a 5-year period ranging totaling $188,825. The company would commit to make certain capital investments in the county, which would gain a taxable investment of $10 million and tax revenues before incentives of $716,456 over a 10-year period.

Commissioner Albert Kirby, who voted against the measure, asked Swope leading up to the board’s vote to help him “sell” the idea to one of his constituents.

“Are we just simply providing money to Prestage Farms for who they are?” Kirby inquired, noting the lack of jobs created for the incentives. “Where is the county getting the benefit?”

Swope conceded that while no jobs were being created by that particular investment, Prestage sought no incentives toward the construction of the plant, which itself represented another $18 million investment.

“Prestage Farms has been very good to Sampson County historically,” Commissioner Sue Lee remarked, noting similar incentives proposed, and approved, to Michigan-based NOVI Energy. “I think it’s good to give local.”

“There’s no question Prestage has been good to Sampson County,” Kirby replied, noting that the Prestages were also “good people” in the community. “I’m just looking at the deal compared to what has been done before. It’s a little different, and there are people are out there who would say ‘help me understand what the benefit to Sampson County is going to be.’”

Prestage produces in excess of one billion pounds of turkeys and pork annually, growing its corporate base in North Carolina by expanding its pork division into Mississippi, South Carolina, Iowa and Oklahoma and its Turkey division into South Carolina. Prestage Farms employs approximately 850 people at its Sampson County facilities and some 1,800 associates company-wide, while contracting with over 400 farm families.

Michael Pope, vice president of Prestage Ag Energy, said he looked forward to increasing that Sampson footprint but that would be dependent on local cooperation and incentives.

The company is “strongly considering” new construction and expansion operations at the poultry litter co-generation facility, but was seeking assistance, he noted.

“We are committed to spending an additional $10 million in taxable assets, though the level of commitment from Prestage to the development of those assets in Sampson County is conditional to sufficient grant-back incentives being provided by Sampson County,” Pope stated in a correspondence to the county. “We hope to further increase our investment in this county and look forward to a favorable response.”

The facilities Prestage is seeking incentives for are meant to be auxiliary to the plant, so the jobs “are likely going to be there,” even though it is not specifically outlined in the incentives agreement, Starling noted.

“They are not committing to those 15 jobs,” said Swope, “but if it’s going to operate they have to be there.”

“Otherwise,” said Starling, “it is an auxiliary facility to nothing.”

Commissioner Clark Wooten noted that the did not believe it was up to the board to judge an industry’s financial standing, alluding to Kirby’s comments which he said relayed concerns of others.

“I get that this is not exactly what we’ve done in the past, but supporting our current industry is a high priority for me, no matter who they are or what their financial standing, whether they were a business starting or in this case, Prestage,” said Wooten. “It’s going to be hard for me to not support some type of incentive.”

Wooten praised Swope’s work, and the economic developer said many times existing businesses do feel cast aside when outside industries are offered tax breaks to locate to Sampson.

“When it comes to local business I want to respond, because existing companies do feel left out,” he said. “That’s why I wanted to bring this to you, to give you the opportunity to respond.”

“We’ve just never done this before, so I want to make sure we don’t set a precedent — but if it’s a good precedent that adds to the tax base then I’m for it,” Kirby noted.

Duplin resident Deborah Kornegay, who has spoke to the perceived dangers of incinerators, addressing the county board over the years in opposition to Fibrowatt, again called on the board not to spend “hundreds of thousands of dollars of taxpayers’ monies” that would adversely affect residents’ health.

Swope offered three alternatives to the board for offering incentives to Prestage, which was also out of the ordinary, he conceded. Two alternatives provided grant-back incentives extending over a 10-year period. Lee made a motion to offer them over a five-year period, but to modify the agreement to offer a 56 percent grant-back (in line with approved NOVI agreements) as opposed to a 50-50 split.

The vote came 4-1, with Kirby dissenting.

By Chris Berendt



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