Holmes Foods CEO expresses concerns about Nixon water rates

Representatives from Holmes Foods voiced their concerns Monday, Dec. 18, to the Nixon City Council about rapidly increasing utility fees the company has had to pay during the past four years.

CEO Phil Hartung also hinted that if water rates remain exorbitantly high for them, as the city’s largest commercial customer, they may be forced to relocate the plant because of escalating costs.

“The owners and managers of Holmes Foods would like to keep this processing plant here for years to come and we want to work with the city to do that, but we can’t do that (under the new water rates),” Hartung said.

During the past five years, Holmes Foods has seen its utility payments to the city of Nixon increase from $528,394.95 in 2019 to $762,877.59 this year, an increase of 44.4 percent in five years, Hartung said, which was already a burden to the plant.

Prior to October 2023, Holmes Foods was charged $3.25 per 1,000 gallons of water in addition to the monthly meter charge, Hartung said.

“After October 2023, there was a split into residential, commercial and something new that was created that’s called industrial,” Hartung said. “The rate for industrial is $4.65 per 1,00 gallons. We were not talked to, we were not notified and it was not discussed. Fast forward to what we are estimating for 2024, based on these new water rates, and we’re going to spend over $1 million and that’s going to be a 90 percent increase over the last six years. I don’t think the city council is aware of this. ”

The projection for Holmes Foods is to process nearly 39.97 million chickens and to use about 199.85 million gallons of water, which Hartung is indicating will cost $1,005,256.44 in money paid to the city for utilities.

“When (Holmes Foods vice president of operations) Fred (Barlow) was notified of the water rates and that there had been a new industrial category placed and a new rate assigned to it, he tried to reach out to the city manager unsuccessfully,” Hartung said. “I just don’t know that we can live like that.”

In 2019, Holmes Foods processed more than 39.8 million chickens at their Nixon facility. While COVID-19 caused that number to dip slightly to just under 38 million chickens in 2020, production went back up to more than 39.5 million in 2021, nearly 40.9 million in 2022 and just under 40 million in 2023 with one month left to go.

Meanwhile, the plant has been more efficient in its usage of water, going from more than 210.7 million gallons used in 2019 to 199 million in the 2020 COVID year to 201 million in 2021 to just under 208.2 million in 2022 to only 196.5 million used in 2023, Hartung said.

Hartung requested that an ordinance be created so the council can review the budget and “help soften this increase” and that Holmes Foods’ water rates be moved to the previous rates until the budget can be reviewed.

“We want to request that any executives from the city work closely with their largest customer (by far) on any water rate increases for the future and let’s put a plan in place so we know what we’re doing for the next five years,” Hartung said.

Council members voted to review the water rates to determine a course of action and also agreed to placed the matter on the agenda for a January meeting — either regular or special called — to take any action deemed necessary.