Cargill Idles Texas Beef Processing Plant

Cargill Idles Texas Beef Processing Plant

I’m KayDee Gilkey with today’s Open Range.

Last week, Cargill announced it would be idling their Plainview, Texas, beef processing plant facility on the first of February. In their news release, Cargill cites the years of drought in Texas and Southern Plains states taking its toll in tightening cattle supplies. Currently, the U.S. cattle herd is at its lowest level since 1952.

While the tightening cattle supplies has meant good news for beef producers selling cattle, it has created intense pressure for the other two major segments in the beef industry -- the feedlots and the packers.

USDA livestock analyst Shayle Shagam explains some of the factors leading to the Texas plant being idled.

Shagam: “The U.S. has been in liquidation mode for cattle for a number of years now. The pool of cattle that can be drawn has be diminishing over time. As these supplies tighten, to maintain the level of slaughter implied by the number of meat packing plants, packers were having to bid against each other rather aggressively for these diminished pool of cattle. And we’ve seen very poor negative margins for a number of the packers. In this particular instance, it is apparant Cargill made the decision to shutter this plant simply because from their standpoint they couldn’t justify paying the price for the cattle that they had to pay. The take away from this is that there are very tight supplies of cattle.”