Cargill’s Diamond V to return about $2 million in state tax credits

Cargill’s Diamond V plans to return $2 million in tax credits awarded in 2016 because of a lack of jobs created, Iowa Economic Development Authority’s board said Friday.

The board received a letter from the Diamond V subsidiary requesting termination of the contract that gave the tax credits with the requirement of adding 16 full-time-equivalent jobs. IEDA approved the termination.

Diamond V, an animal nutrition manufacturer acquired by Cargill in 2017, has added only three full-time-equivalent jobs, according to an IEDA document.

The company has exceeded the $43 million project cost, though, spending $48.4 million so far.

It’s unclear how much of the $2 million in tax credits already had been issued.

The initial project deadline was Sept. 30, 2019, but IEDA’s board granted an extension to May 31, 2021, at last December’s board meeting.

“This request is due to delays in our project completion and hiring of new full-time jobs, as Diamond V encountered several market challenges, in addition to being acquired by Cargill Inc. in 2017,” Michael Goble, Diamond V’s global managing director, wrote in a letter to IEDA’s board ahead of the December meeting.

Goble pointed to COVID-19 and an African swine fever outbreak that was “decimating pig operations” in Southeast Asia as some of the specific obstacles.

Diamond V expected to fulfill the job creation requirement by the end of March 2021, according to Goble’s letter.

A May letter to the IEDA board from Mike Johnson, Cargill’s strategic marketing and portfolio director, said Diamond V “will not meet the head count obligations as planned” five months after Goble’s letter.

Johnson said “ongoing global impacts to our markets from a variety of sources” has kept Cargill’s Diamond V subsidiary from making the hires.

Both letters indicated Diamond V’s $14 million investment to “grow and diversify our product offerings” in Cedar Rapids by mid-2021 remains on track.

David MacLennan, Cargill’s chief executive officer, said in January 2020 the company plans to invest $100 million in Cedar Rapids, including at Diamond V’s plant.

“We are committed to our people, the City of Cedar Rapids and the State of Iowa to continue our growth and global leadership position in animal nutrition and health,” Goble wrote.

Cargill also began construction last month on a $6.5 million, 28-acre rail yard on Stewart Road SE that has been met with significant opposition from residents.

A district court judge ruled in favor of Cargill, but residents, including Democratic state Sen. Rob Hogg, have appealed the ruling to the Iowa Supreme Court.

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