A smaller, drought-stressed cattle herd and elevated feed costs have led the nation’s largest beef process, Cargill, Inc., to shut down its Plainview plant at the end of the month. The president of Cargill, John Keating, said the closure comes as a result of the smaller cattle herds caused by two years of drought conditions and escalating costs for feed.
According to Dr. David Anderson, Texas A&M AgriLife Extension livestock economist, the on-going drought marked the biggest one-year decline in Texas cow numbers ever with more than 600,000 sold by cattle producers.
Texas Department of Agriculture (TDA) officials say while the entire beef industry suffered last year from drought conditions that stretched across most of the central United States, Texas suffered its second consecutive year of severe drought, a development that forced many cattlemen to reduce herds significantly. In Stephens County, 80 percent of the cow herd was liquidated according to Leslie Neve, AgriLife Extension agent.
According to USDA, the U.S. beef packing industry has up to a 15 percent excess capacity in the Southern Plains alone and the forecast for a possible continuation of drought conditions this year could further stress an industry that has downsized for two years in a row.
In a possible response to Cargill’s announcement, cattle futures for April delivery fell yesterday to $1.297 a pound on the Chicago Mercantile Exchange and feeder-cattle futures for March settlement also dropped by the 3-cent exchange limit.
And while the news of the plant’s closing is worrisome to cattle producers concerned about the preservation of the U.S. beef cattle infrastructure, it is down-right devastating to the almost 3,000 employees that will be out of a job. The company is the largest employer in Hale County and the effect of the plant’s closure on the local economy could be very costly.
Company officials have no current plans to sell the facility. Texas Agriculture Commissioner Todd Staples said that he has directed TDA staff to work with the company and community leaders toward an expeditious resumption of business.
Cargill officials say Texas cattle earmarked for the Plainview plant will be delivered instead to other company plants in Texas, Kansas and Colorado.
“Cargill and it Plainview employees are the latest in a long line of victims claimed by our historic 2011 drought,” said Staples in a statement last week. “As cattle herds diminish, so too do jobs and the livelihoods of our fellow Texans.”
For more information about this topic contact the A&M AgriLife Extension office, Clay County at (940) 538-5042.