PALMER (AP) -- The state received no offers at auction for the state-run slaughterhouse in Palmer, despite a rockbottom price of $1 a year.
It was the second time in two years that the Mount McKinley Meat and Sausage plant, run with prison labor, has been on the auction block.
''It was about as attractive (a proposal) as you could get it, and they still didn't do so well,'' said Wally Roman, who helps oversee the facility for the state Department of Corrections.
In 2000, the state offered the facility for sale for $600,000 and got the same response: none. This time, the state was offering a $1-a-year lease with an option to buy after five years.
Both Roman and Division of Agriculture Director Rob Wells realize the problem. The slaughterhouse is a money loser.
Since the state government began operating the plant in the mid-1980s, the facility has lost about a $1 million, Roman said. That's despite paying prisoners $1.25 an hour or less for their work and having a built-in buyer -- the prison system.
A private operator would have to pay employees much more, and find markets, because the state prison contract would not be guaranteed, he said.
A private operator would also face stiff competition from Lower 48 companies that can sell meat cheaper in Alaska than local producers can, Wells said. A private operator would likely have to play up the Alaska-grown angle like farmers do with locally raised turkeys and eggs, he said.
What will happen next is unclear. The current contract with Corrections to run the plant expires at the end of this year. Roman said state corrections officials would try to avoid a shutdown.
The plant started as private operation in 1983, but was taken over by the state in 1985 when the owner defaulted on government loans.
State agriculture officials and farmers argue that the slaughterhouse is key to Alaska's livestock industry.
It is one of four federally-certified meat processing facilities in Alaska. Only two are accessible by road, this one and a much smaller, privately-run plant in Delta Junction. The certification allows meat to be butchered and then sold to the general public.
Without the Palmer plant, many farmers wouldn't be able to sell their livestock, Wells said. About 2,000 animals a year are currently slaughtered at the plant, mostly cattle and hogs.
State prison officials say the facility gives inmates valuable skills that help them get jobs and avoid returning to prison. Several former workers have been hired as meat cutters at grocery stores in Alaska and elsewhere, Roman said.
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