Texas Cargill Beef Plant Closes

The drought of 2012 has affected not only grain farmers, but also livestock producers and companies. On Thursday, January 17th, Cargill announced that it will idle its Plainview, Texas, beef processing facility effective at the close of business, Friday, Feb.1, 2013, resulting primarily from the tight cattle supply brought about by years of drought in Texas and Southern Plains states.

In a press release, Cargill revealed that approximately 2,000 people work at the Plainview facility, and that they will receive company support. Federal, state, county and city government representatives, as well as Cargill customers, suppliers and other key stakeholders were informed today of Cargill’s decision, concurrent with Cargill employees being notified.

“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, based 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 U.S. cattle herd is at its lowest level since 1952. 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.”

Cargill’s Plainview employees affected by this decision will be provided support as well as assistance finding and filling open positions at other Cargill locations or with other employers. Cargill will continue to honor its community support commitments at Plainview for 2013. The company’s remaining beef cattle processing plants in the region, at Friona, Texas; Dodge City, Kan. and Fort Morgan, Colo., will receive cattle that were previously destined for processing at Plainview. The company’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 U.S. beef sector,” explained Keating. “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.”

The plan to idle Cargill’s Plainview facility includes measures for preserving its infrastructure for potential reopening if the U.S. cattle herd rebounds and requires additional processing capacity. However, Cargill does not expect the U.S. 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. 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,” stated Keating. “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 U.S. beef demand from American and international consumers, and that the drought in Texas and the Southern Plains will become a memory.”

Texas Ag Commissioner Todd Staples released a statement on the closing saying,

“The news of Cargill’s plans to idle its Plainview plant next month is a devastating blow to this Texas Panhandle community and the economic health of Texas.

I am told by company officials that Cargill has no current plans to sell the facility, and I have directed Texas Department of Agriculture staff to work with the company and community leaders toward an expeditious resumption of business.

The most immediate priority is helping those Texans left unemployed starting February 1. We are dispatching a team from our business development unit to assist the surrounding communities in finding employment for those hardworking Texans who will find themselves without a job next month.

I am saddened by this distressing news and pray for a quick recovery for all who are impacted.”

Cargill said they are closing the plant due to lower numbers of cattle to slaughter and that they will increase kills in their neighboring plants to offset the closure in TX. Tyson, another processing giant, has double capacity in slaughter plants in the north. In the meanwhile, the remaining Cargill in Friona, Texas, will remain open. The Plainview plant has the potential to reopen if the number of cattle to slaughter increases.

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