We Need More Meatpacking Capacity
The rash of catastrophic events hitting the beef industry during the past year, including COVID-19 has led some experts to conclude the industry needs more meatpacking capacity.
Dustin Aherin with Rabo AgriFinance explains says the extra packing capacity can come from a variety of areas.
“Number one, it could come from technology at existing plants. Another potential would be smaller to medium sized plants that really specialize in niche markets, talking 1,000 to 2,000 head daily capacity. And its not cheap. We estimate about $100 - $120 million of investment per 1,000 head of capacity, and we have to have enough capital to survive a full cattle cycle. If we start building a plant today, by the time that plant is running we are probably going to be in a tighter cattle supply situation.”
“The beef industry has really capitalized on a lot of successes over the last couple of decades. We’ve gained export market access, improved genetics and improved meat product quality, but we can’t simply rest on past successes. We have to really be focused on the consumer, being ready to innovate and creative because if history is making changes and jumps, we don’t want to be caught flat-footed.”
Aherin concludes the industry needs to be thinking five to ten years ahead, because that’s only a couple generations of beef cattle.