Cargill puts Texas beef plant on idle
Jan. 17, 2013
by Meat&Poultry Staff
PLAINVIEW, Texas — Cargill said it will idle its Plainview, Texas beef processing plant on Feb. 1, citing tight cattle supplies.
Roughly 2,000 employees work at the plant, and they will receive company support, in addition to assistance finding and filling open positions at other Cargill facilities or with other employers, Cargill said.
“The decision to idle our Plainview beef processing plant was a difficult and painful one to make and was made only after we conducted an exhaustive analysis of the regional cattle supply and processing capacity situation in North America,” said John Keating, president of Cargill Beef, in Wichita, Kan. “While idling a major beef plant is unfortunate because of the resulting layoff of good people, which impacts their families and the community of Plainview, we were compelled to make a decision that would reduce the strain created on our beef business by the reduced cattle supply.
"The US cattle herd is at its lowest level since 1952," Keating added. 'Increased feed costs resulting from the prolonged drought, combined with herd liquidations by cattle ranchers, are severely and adversely contributing to the challenging business conditions we face as an industry. Our preference would have been not to idle a plant.”
Cattle that were previously destined for processing at the Plainview facility will be redirected to Cargill's remaining beef processing plants in the region, at Friona, Texas; Dodge City, Kan. and Fort Morgan, Colo., according to the company. Cargill's regional beef facilities at Fresno, Calif.; Milwaukee, Wis.; and Wyalusing, Pa., as well as its beef plant in Schuyler, Neb., and two beef plants in Canada, are unaffected.
“Given the over-capacity that exists with four major beef plants in the Texas Panhandle and a dwindling supply of cattle in the region, idling Plainview will allow Cargill to operate its other beef plants in Texas, Colorado and Kansas more consistently on a five-day-per-week basis to meet our customers’ requirements, while helping us maintain our position in the US beef sector,” Keating said. “Our long-term commitment to U.S. beef production is unwavering. Over the past 10 years we’ve invested more than $766 million in our U.S. beef plants to ensure they remain best in class in the industry.”
Prolonged and severe drought conditions in Texas and Southern Plains states contributed to tight cattle supplies. Derrell Peel, Oklahoma State Univ. Cooperative Extension livestock marketing specialist, forecast US beef production to decline 4.8 percent in 2013, the second largest year-over-year decrease in 35 years. Peel attributed the decline to a combination of mostly steady carcass weights and a projected 5 percent or more decrease in cattle slaughter. Beef production in 2012 decreased by approximately 1.1 percent compared to 2011 with a 3.3 percent decrease in slaughter, which was partially offset by a 2.3 percent increase in carcass weights.
Cargill does not expect the US cattle herd to significantly increase in size for a number of years.
“We delayed the decision to idle Plainview as long as possible, due in part to our outstanding team and ongoing excellent support from the community," Keating said. "We were also hoping the drought would break, pasturelands would be restored, cattle ranchers would retain heifers and the national herd trend of declining numbers over the past few years would be reversed.
“Unfortunately, the drought has not broken, feed costs remain higher than historical averages and the herd continues to shrink. The industry has experienced this cycle in the past, although this one is longer and more severe than most. Nevertheless, we are optimistic about the long-term prospects for US beef demand from American and international consumers, and that the drought in Texas and the Southern Plains will become a memory.”