Archive: August 2020

Scoular Co. Enters into Licensing Agreement with Montana Microbial

28 August 2020
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By Holly Demaree-Saddler, Montana Manufacturing Extension Center

The Scoular Co. has entered into an exclusive licensing agreement with Montana Microbial Products to produce and sell a barley protein concentrate (BPC) in North America and Asia.

BPC is a sustainable, plant-based alternative protein used in aquaculture feed and pet food. It is produced from non-GMO barley.

Scoular said it plans to build a $13 million manufacturing facility to accommodate production of BPC. The facility location has not been finalized but is expected to be in Idaho for better access to barley producers. The facility is anticipated to be operational by May 2021.

The new facility is projected to process 1.9 million bushels of barley annually, with production expected to expand over the next several years. A high-energy liquid feed supplement for cattle feeders will be co-produced, Scoular said.

“We’re excited to work with Montana Microbial Products to commercialize barley protein concentrate and look forward to collaborating with many industry stakeholders,” said John Messerich, senior vice president and division manager of Feed Ingredients at Scoular. “In a world of growing protein demand and an uncertain economic environment for farmers, BPC will contribute to Scoular’s mission of adding value to multiple industries with sustainable products.”

Montana Microbial Products produces barley protein concentrates. It operates a pilot plant in Melrose, Mont., and a research lab in Missoula, Mont.

SBE Comments on Freeloaders of US Innovation

28 August 2020
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Small Business & Entrepreneurship Council (SBE Council) president & CEO Karen Kerrigan issued the following statement in response to President Trump’s Executive Order (EO) regarding an International Price Index (IPI) for drugs, which imposes foreign-based price controls on U.S. pharmaceuticals, along with the move to develop rules to allow for drug importation:

 “Many countries across the globe freeload off of U.S. innovation, and that is particularly the case when it comes to bio-pharmaceuticals. Our innovators spend countless years and billions of dollars investing in the development of pharmaceuticals and breakthrough treatments, and foreign economies gladly use these life-saving drugs but put them under price control regimes. The U.S. cannot cede to this doomed model.

 “Price controls never work, and when it comes to life-saving drugs and innovative medicines, today’s EO will undermine America’s strong leadership and competitive advantage. Rather than embrace price controls, the Administration needs to boldly address this imbalance through trade agreements with countries that are ripping us off. Fully opening markets to U.S. drugs, protecting the IP of these innovations, and negotiating to lift price controls will help our companies more fairly recoup their investments, which will lower drug prices for all. Small pharmaceutical companies dominate this critical U.S. sector, and these entrepreneurial firms will be the hardest hit by the move to adopt foreign price controls as American policy. In the end, patients, innovation, and our economy will all suffer.

Pass Through Businesses Pay Half of All Taxes, Montana Has Most

27 August 2020
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The Tax Foundation

Pass-through businesses, such as sole proprietorships, S corporations, and partnerships, make up a majority of businesses in the United States. The owners of these firms pay individual income tax on income derived from these businesses. The marginal tax rates vary for pass-through firms depending on the state where they operate, as states tax individual income differently.
In 2018, pass-through firms made up over half of nearly every state’s private sector employment. The share of private sector employment provided by pass-through firms ranges from 49.7 percent in Hawaii to 72.5 percent in Montana.
Top marginal tax rates faced by pass-through firms also vary by state, ranging from 40 percent in states with no state and local income tax, like Wyoming and Florida, to 53.7 percent in California. These combined rates include federal, state, and local income taxes in addition to payroll tax.
Montana imposes a marginal tax rate of 46.9 percent.
A driver of variation in top marginal income tax rates faced by pass-through firms is whether a state taxes individual income and what the top marginal rate is. For example, states without individual income taxes, such as Alaska, Florida, South Dakota, Texas, Washington, and Wyoming, apply lower combined income tax rates on pass-through firms.
By contrast, states like California (with a 13.3 percent top marginal individual income tax rate) and New York (with a top marginal rate of 8.82 percent) subject pass-through firms to top combined marginal rates exceeding 50 percent. (Nevada does not have an individual income tax but has an uncapped payroll tax called the modified business tax that is levied on wages at a rate of 1.475 percent, which increases its top tax rate for pass-through businesses.)
Three states—Alabama, Iowa, and Louisiana—allow taxpayers to deduct a portion of their federal taxes paid from their taxable income. This reduces the amount of income subject to state income tax and lowers the top marginal rate faced by pass-throughs. Other states, such as Missouri, permit some deductibility but limitations to the deduction mean the top marginal rate is not affected.
Most of a pass-through firm’s tax burden is from federal income and payroll taxes. Pass-through firms must remit payroll taxes to fund programs such as Social Security and Medicare in addition to paying federal individual income tax with a top rate of 37 percent.
Qualifying pass-through firms may use Section 199A, commonly known as the pass-through deduction, to deduct 20 percent of their qualified business income from federal income tax. However, the pass-through deduction is subject to limitations for firms earning above certain income limits that operate in a “specified service trade or business” (SSTB) and other guardrails that limit the size of the deduction. This means that many pass throughs are not eligible for Section 199A and face top marginal income tax rates without it.
Pass-through firms make up a large part of the American economy and workforce, providing over half of private sector employment in nearly every state. The combined top marginal tax rate faced by these firms is a product of federal, state, and local individual income taxes. Policymakers should keep in mind the combined tax burden levied on these businesses when considering changes to tax policy.

Ranch House Meats Buys Packing Plant

27 August 2020
Evelyn Pyburn
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By Evelyn Pyburn

The owners of Ranch House Meats and S & T Project Meats, Shane and Tanya Flowers, have purchased Quality Meats of Montana in Miles City in order to facilitate an expansion of their business.
They will rename the Miles City business Pure Montana Meats.
Since the Miles City facility, which has been in business since 1946, is a federal USDA inspected plant, it “helps us get more beef out there to consumers sooner,” said Flowers. While the Shepherd plant at 6608 Highway 312, is a state inspected facility, the Flowers are working on meeting federal requirements at that plant and making it a USDA inspected facility, as well, which will enable them to broaden their marketing area.
They want to increase their distribution area and to up their on-line sales, which at present are minimal, due primarily to the fact that plants that are not federally inspected are currently not allowed to ship product across state lines. That restriction holds the prospect of changing with a bill that is making its way through the US Congress that would allow movement across state lines of meat products coming from state inspected facilities – the Flowers are not waiting.
There will be a total separation of the operations of the Miles City and Shepherd plants, said Flowers. Animals will be harvested and processed in Miles City and shipped to Shepherd to make the retail products, including the jerky and bacon for which the company has become so well-known – and a lot of hamburger. Acquisition of Pure Montana Meats brings another whole new product line to their business including Custer Steak Strips and a popular cube steak.
Both facilities are undergoing some redesign and remodeling to better fit their needs and to keep them appearing fresh and professional. Flowers said that each will have a re-grand opening when the remodeling is complete.
The purchase dovetails with a lot of changes that are occurring in their industry. The recent market disruptions of the meat industry brought about by impacts of COVID-19 boosted retail sales for Project Meats and Ranch House Meat by 400 percent. After two months, the sales dropped gains to a more manageable 250 percent, says Shane Flowers, but the experience introduced a lot of new customers to their business which was already starting to burst at the seams.
Earlier this year, the company moved Ranch House Meats in Billings from Grand Avenue to 3203 Henesta, off King Avenue. The move was a good one, said Flowers, in that it has generated a lot more business.
Flowers notes that the phenomenon of the COVID impact was industry wide; most meat processing facilities in the state and in other states experienced increased sales as consumers found empty grocery store shelves and started looking for local providers. The COVID virus unveiled the precarious nature of a meat processing supply chain in the US which is very narrow, concentrated in the hands of a few large processors, which had to shut down when many of their workers contracted the disease and social distancing became necessary. Past restraints on the industry had diminished the number of alternative processors.
In some respects the consumer shift was good for small meat processing facilities because it brought awareness and an appreciation by consumers for what they do, said Flowers, but it was very frustrating for the industry in general. While meat prices were very high at the grocery stores, the producers were getting very low prices, dealing with a glut of product. They also were unable to get their meat processed because of a lack of facilities able to do so.
During that period, Flowers said that they tried hard to keep their prices low, while offering the local ranchers higher prices than they were getting elsewhere in the market.
Flowers expects the COVID boost to encourage, even more so, what has been a strong trend among consumers to buy local. The trend has contributed greatly to the young couple’s business, which has steadily grown since they began in 2007. The recent market upheaval brought consumer attention to the meat industry’s problems, and with that insight Flowers believes many more will shift their support to local processors.
There is a shortage of local processors in Montana, one that has been evident for quite some time. Producers and wholesale purchasers of meat are finding longer and longer wait periods to get their animals processed.
“There is a demand for custom processing,” said Flowers, noting that they will not be doing much of that. Their business model is taking them in a different direction, selling retail products to consumers, restaurants and grocery stores.
The processing backlog is in part due to a shortage of trained and skilled workers, a problem with which the Flowers will be contending as they expect to be hiring more people for both their Shepherd and Miles City operations.
Flowers is very supportive of the recent news that Miles City Community College hopes to be able to offer, this fall, a program to train meat cutters. Being located in Miles City he is hoping that they can participate in some manner with the program. But, said Flowers, he is willing, as an employer, to train people on the job.
In total, the Flowers employ 35 people, and plan to be hiring as many as ten more in Miles City, and a few more in Shepherd, as their businesses get into full production and begin to grow.

Roundabout Completed at Hwy. 312 and Five Mile Road

27 August 2020
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The Montana Department of Transportation (MDT) announced that the paving of a single-lane roundabout on Old Highway 312 and Five Mile Road is complete. Work will now entail installing new signs, rumble strips on Five Mile Road and interim striping. In the next weeks, concrete finish-work and landscaping will occur, followed by chip sealing at the end of August. Drivers are advised to travel safely and be prepared for flaggers, workers, heavy truck traffic, and equipment entering.

Other Pipelines Expand in Face of Shutdown of Dakota Access Pipeline

27 August 2020
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As the Dakota Access pipeline deals with lawsuits aimed at closing it, other pipeline companies are anticipating an increase in demand for transportation and are expanding their pipelines. Also, the higher –risk and higher- cost alternative of transporting oil by tanker cars on railroads is seeing an increase, according the Oil Patch Hotline.
Kinder Morgan’s Highland crude oil pipeline, which carries 88,000 BOPD, which originates near Sidney, the pipeline e could be expanded with the addition of a new compressor to add another 35,000 BOPD in the next 12 to 18 months, according to CEO Steven Kean.
“So we have seen increased activity and interest in HH,” Kean told Wall Street analysts recently. “Our volumes were up this month versus last month. That is a function of, I think, really two things, concerns about takeaway, but also for reasons of priority of access to HH, people do want to maintain their history on the system. So we continue to see barrels that might have otherwise gone someplace else, and they’re continuing to come our way.”
If there was a shutdown of Dakota Access, it could expand the WTI differentials in the Bakken, he added.
Interstate Energy Partners, which is the parent company of Dakota Access, is appealing to the Federal District Court in Washington, DC, a recent decision by a judge to empty the pipeline while a 13-month environmental review takes place. The Dakota Access Pipeline moves 600 BOPD (Barrels of Oil per Day).
“It’s a bad broader message for pipeline infrastructure, but also for our business, particularly on the gathering side,” Kean said.
In the meantime, Crestwood Equity Partners said it is capable of moving 160,000 BOPD of crude oil by rail out of its Epping, ND terminal.
It is one of a dozen terminals capable of moving crude out of the state. About 300,000 BOPD—one third of North Dakota’s daily production, is shipped out daily on unit train tanker cars. Moving oil by rail has a greater environmental impact, poses greater environmental and safety risks, and costs more.
“In the event of a shut-down of the DAPL pipeline, Bakken basis differentials will be negatively affected in the short term until production volumes are reallocated to other pipelines and rail facilities,” said Crestwood President, Chairman and CEO Robert G. Phillips.

NFIB Credits PPE for Business Recovery

27 August 2020
Dennis Pyburn
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The engine of the American economy is trying its best to start smoothly humming again, according to today’s release of the latest Small Business Economic Trends report (also called the Optimism Index) from National Federation of Independent Business, the nation’s leading small-business association. Now, can the surge in coronavirus cases abate long enough to take that engine for a test run on the road to recovery?
“What our latest Index tells me is that the Paycheck Protection Program is helping as planned and,  combined with the grittiness natural to all small-business owners, is slowly getting our economy back on track,” said Riley Johnson, Montana state director for NFIB. “If only we could get the foot of the COVID-19 crisis off the Superman’s cape of those small-business-owning job creators, we could expedite our national economic recovery.”
Eight of the 10 Index components rose in June, most sharply of all in the ‘real sales expectations’ component, followed distantly but solidly by ‘job openings,’ ‘good time to expand,’ and ‘job creation plans.’ The net percent of owners expecting higher real sales volumes improved 37 points to a net 13% of owners. The historic 61-point drop over March and April has been followed by a 55-point increase over the past 2 months as owners are expecting higher sales with business re-openings.
The NFIB Research Center has collected Small Business Economic Trends data with quarterly surveys since the 4th quarter of 1973 and monthly surveys since 1986. Survey respondents are drawn from a random sample of NFIB’s membership. The report is released on the second Tuesday of each month. This survey was conducted in April 2020. For more information about NFIB, please visit NFIB.com.
“Small businesses are navigating the various federal and state policies in order to reopen their business and they are doing their best to adjust their business decisions accordingly,” said NFIB Chief Economist Bill Dunkelberg. “We’re starting to see positive signs of increased consumer spending, but there is still much work to be done to get back to pre-crisis levels.”

ND Fighting Back Against Adverse Dakota Access Ruling

27 August 2020
Dennis Pyburn
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From the Oil Patch Hotline

North Dakota’s top state officials geared up for a tough legal fight to join in overturning a Federal Judge’s decision to shut down the Dakota Access Pipeline after warning that action could be devastating to the state.
“He (the judge) did not appreciate the economic devastation to our citizens and community,” said Gov. Doug Burgum.
“The massive economic impact is enormous,” said Atty. Gen. Wayne Stenhjem. “It impacts roads, schools, jobs and companies, taxes and royalties.”
They were reacting to the decision by Federal Judge James Boasberg to shut down the $3.8 billion crude oil pipeline and remove all oil by Aug. 5 while an environmental review by the US Army Corps of Engineers takes place.
Energy Transfer Partners, the parent company of Dakota Access, is expected to appeal the judge’s decision after he rejected the company’s stay.
“Shutting down the pipeline will have a greater negative impact on safety than any environmental benefit the court is claiming to gain, putting more trucks on our roads, and more rail cars on the tracks, nearly 900 railcars per day,” said Ron Ness, president of the ND Petroleum Council. “Shutting down the pipeline will cut off North Dakota oil producers from the safest, most reliable and economic method of transporting our high-quality Bakken oil to the best markets in the country.”
Increasing crude oil hauling by train will also impact the state’s farmers during harvest season, he said.
Justin Kringstad, executive director of the ND Pipeline Authority, said 300,000 BOPD is being shipped out of state now on unit trains each carrying 70,000 BOPD.
Briefing the ND Industrial Commission headed by Gov. Burgum, Kringstad said converting more crude oil to rail shipping will be costly, adding at least $5 a barrel on top of the $8 a barrel transportation costs now.
There are 11 loading stations in the state, Kringstad said, but it will take time to ramp up additional rail cars and crews for more rail shipping. At its peak in 2012, the state was moving over 850,000 BOPD by rail.
The Enbridge pipeline running to Clearbrook, MN can handle 145,000 BOPD while the True Oil and Kinder Morgan pipelines also move smaller volumes south through Wyoming.

MSU-B Offers Free Tuition to National Guard

27 August 2020
Dennis Pyburn
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This fall, Montana National Guard members will be able to attend Montana State University Billings tuition-free.
Members of the Montana National Guard are eligible for scholarships, federal tuition assistance, and the GI Bill. The tuition waiver is available for Montana National Guard members as a “last-dollar award,” meaning it will make up the difference between the total cost of tuition and the sum of other funding, such as grants and scholarships that are received.
“This waiver will ensure that tuition is not an obstacle for our Guard members to pursue their higher education,” said Dawn Githens, retired Col. Air Force, director of the Military and Veterans Success Center. “It is one more service we can provide to those who serve our country.”
The waiver will be available starting Fall 2020 semester to all Montana National Guard members who do not have a bachelor’s degree or higher and who meet the admission requirements of MSUB or their Montana University System school of choice. In addition, waiver recipients must be certified as a Montana National Guard member in good standing by the Adjutant General.
“This tuition waiver will help keep members of our National Guard here in Montana, united with their families, continuing their education and strengthening our state’s workforce,” said Chancellor Dan Edelman. “Members of our Montana National Guard fulfill a crucial role for our state and our nation in times of need. Increasing access to higher education in our state with this tuition waiver is also a recruitment benefit for the Montana National Guard.”

Montana Highlights August 1 2020

27 August 2020
Dennis Pyburn
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Glacier National Park has been investigating several fires tht are suspicious in nature. Several investigators were on the ground, along with the FBI and National Park Service assisting remotely. Portions of the park are closed due to the investigation

The Billings REI store opened last Friday. The Washington-based outdoor retailer closed all its locations across the country in March. That included postponing the opening of the new Billings store at the corner of Shiloh Road and King Avenue West.

Ramsay residents are still fighting to prevent Love’s Travel Stops from locating a truck stop complex next to Interstate 90 about 7 miles west of Butte. Residents say a Butte-Silver Bow Zoning Board decision that went against them bolstered their case. Love’s has purchased land for the truck stop at Ramsay and obtained a DEQ stormwater permit for general construction activities, but other regulatory approvals are still pending. Some Ramsay residents have opposed the project from the start, saying the truck stop will bring traffic, noise, pollution, transients and crime to the community.

Eagle Mount Bozeman and Julius Lehrkind Brewing have teamed up to make a special release beer in support of the local nonprofit. Eagle Mount provides a variety of camps and activities for kids and adults living with disabilities or cancer. Because of COVID-19, the nonprofit has scaled back much of its activities.

Sidewall Pizza Company opened this month in the Emerson Center in Bozeman. The first Sidewall Pizza Company was started in an old tire shop in South Carolina, hence the name, and the Bozeman Sidewall will be the first outside of that state. The menu features a variety of meat and vegetarian pizzas, all with the option of gluten free crust, and salads.

Slow Drift Shuttle Service has opened in Bozeman offering shuttle service for the Madison River and Yellowstone River.

Fishing on the Big Horn River is slowly recovering from a bad spring due to the coronavirus pandemic. Business has reportedly picked up in the past month and is looking better for following months. Many of the cancellations have been rebooked for October

The Bowman family has been growing cherries on the eastern shore of Flathead Lake for five generations. The family business has grown from a single acre of trees to the two-state operation it is today. As Bowman Orchards celebrates 100 years of operation in 2020, the family looks back at a century of ups and downs. As the orchard grew, so did the cherry crop and the family’s success. In 1935 when a harsh early winter storm destroyed the orchard the family dug in and replanted the orchard.

North Dakota airports are beginning to see a rise in passengers coming through terminals. The eight commercial airports saw around 24,000 people flying, including Williston, Minot, Bismarck and Dickinson – which is only 24 percent of the number of passengers in June of last year. Bismarck Airport says each day numbers continue to climb. In June, they saw more than 8,000 passengers– the highest since the pandemic began.

When the coronavirus hit Montana and non-essential businesses closed, Misty Williams, Froid Grocery store owner, took the radical step of closing the front door of her “essential business,” restricting it to phone and Facebook orders and curbside pickup. Instead of shopping the aisles in person, customers “virtually shopped” by looking at photos of the shelves on the grocery’s Facebook page. Williams says the results were astounding as orders increased fivefold.

Beginning July 20, the City of Livingston announced their offices would be closed to the public since there were four or more active cases of COVID-19 in Park County. All persons on staff will remain available via telephone or email. In-person meetings will only be available by appointment. 

Gallatin County’s residential real estate market saw an increase in pending sales in June, while days on market, the inventory of available homes and new single-family listings decreased. The median sales price increased 6.7%, from $427,700 in June 2019 to $456,325 in June 2020. The average days on market decreased 3.5%, from 57 to 55. The inventory of available homes decreased compared to last year, from 472 to 364, and the month’s supply of inventory decreased 20%, from 3.5 to 2.8.
Sellers received 98.4% of their list price last month, down slightly from 99% last year. The number of new single-family listings decreased 13.4% compared to June 2019, from 269 to 233. Pending sales jumped 32.9%, from 173 to 230, and the number of closed sales fell slightly by 0.6%, from 171 to 170.

Two-Bit Saloon, The Yellowstone Raft Company, Rosie’s Bistro and Red’s Blue Goose Saloon were destroyed by a fire in Gardner, just six weeks after they were able to open following the COVID mandated closures.