Cargill to sell two feed yards to Green Plains Cattle Co.
April 26, 2017
by MEAT+POULTRY Staff
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Green Plains will become the fourth largest cattle-feeding operation in the US.
WICHITA, Kan. – Cargill has reached an agreement to sell two of its beef cattle-feeding operations to Kismet, Kansas-based Green Plains Cattle Company for $36.7 million, excluding working capital. Green Plains Cattle Co. is a subsidiary of Omaha, Nebraska-based Green Plains Inc., a vertically integrated ethanol producer. The transaction includes feed yards located in Leoti, Kansas, and Yuma, Colorado, and will add capacity of 155,000 head to Green Plains’ operations.
Green Plains will supply cattle to Cargill through a new multiyear agreement from the Leoti and Yuma locations, as well as Green Plains' existing feedlot in Kismet.
"Selling our two remaining feed yards aligns with our protein growth focus by allowing us to redeploy working capital away from cattle feeding operations to other investments," said John Keating, president of Cargill's Wichita-based protein business operations and supply chain. "By partnering with Green Plains in a multiyear supply agreement, the Yuma and Leoti yards will continue to supply cattle to our beef processing facilities at Fort Morgan, Colorado, and Dodge City, Kansas, ensuring consistent, high-quality beef products for our customers."
Todd Becker, president and CEO of Green Plains, said, "The growth of Green Plains Cattle achieves one of our strategic initiatives of further diversifying our income streams and investing in adjacent businesses. This purchase also aligns with our overall strategy to meet growing global protein demand in downstream markets that take advantage of our supply chain, production platform and commodity management expertise. A key component of the acquisition is the long-term agreement with Cargill under which Green Plains Cattle will be a strategic supplier of their beef-packing demand.”
Currently there are approximately 90 people employed at Cargill's two feed yards. They will be offered positions within the Green Plains’ operation. Green Plains Cattle Co. currently owns a 70,000 head cattle-feeding operation near Kismet, Kansas, and a 30,000 head operation near Hereford, Texas. Upon completion of the acquisition, Green Plains will become the fourth largest cattle-feeding operation in the US with total capacity of more than 255,000 head.
"One of the inherent benefits of this transaction is the scale of internal demand for our co-products produced at company-owned ethanol plants. Our cattle business will now consume more than 300 thousand tons of dried distillers grains and 40 million lbs. of corn oil annually," Becker said. "The ability to effectively control our feed supply cost provides our cattle business with a strategic operating advantage resulting in more predictable and stable cattle-feeding margins while enhancing Green Plains' knowledge of ration dynamics. Since our entry into cattle feeding a few years ago, the meat and protein market fundamentals have remained favorable and the business has been accretive to Green Plains' earnings.”