February 25, 2013

With fewer U.S. cows, feedlots, meatpackers closing

The closures are the latest ripple in the shock wave that a years-long drought has sent through rural communities.

By ROXANA HEGEMAN/The Associated Press

(Continued from page 1)

click image to enlarge

Randy Cree picks up a bale of hay while feeding cattle on his farm near Big Springs, Kan., earlier this month. Years of drought are reshaping the U.S. beef industry with feedlots and a major meatpacking plant closing because there are too few cattle left in the United States to support them.

The Associated Press

Cargill Beef, one of the nation's biggest meatpackers, temporarily closed a slaughterhouse in Plainview, Texas, earlier this year, laying off 2,000 workers. The operation had been one of four meatpacking plants in the Texas Panhandle, and the annual economic loss to the region is estimated at $1.1 billion – a "major chunk of that economy," said Steve Amosson, an economist with the Texas AgriLife Extension Service in Amarillo.

Cargill is moving what business remained at the plant to slaughterhouses in Friona, Texas; Dodge City, Kan.; and Ft. Morgan, Colo. That will allow those plants to run near capacity and more consistently give their workers full paychecks with 40 hours per week, spokesman Mike Martin said.

"By idling, we are retaining both the plant (in Plainview) and the property for potential future use," Martin added. "And the hope is that at some point some years down the line, the cattle herd will be rebuilt and there will be a need for additional processing capacity."

Most experts estimate the cattle feeding industry now has an excess capacity of between 20 and 25 percent, CattleFax market analyst Kevin Good said. The meatpacking industry has an excess capacity of 10 to 15 percent – even after the recent closure of Cargill's Plainview plant.

Given the cost of transporting cattle, most of the nation's feed yards and slaughterhouses are in the big cattle-producing states of the High Plains. While the industry has been gradually shifting north from Texas into areas that are expected to more rapidly recover from the drought, businesses in Kansas and Nebraska are struggling, too.

In southwestern Kansas, Lakin Feed Yard manager Steve Landgraf said his operation is down to 75 percent of capacity and he expects it to be less than half full within the next couple of months. For every two animals now going out of his lot for slaughter, only one is coming into it.

With a capacity of 15,000 head, the yard now employs 14 people. But with normal attrition, Landgraf anticipates he'll be down to 10 or 11 workers by spring, and he may reduce their hours.

Still, with little debt, Landgraf says he's in a better position than some.

"Some people are probably going to go broke because they aren't going to have the occupancy," he said.

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