Drought constrained cattle supply, processing overcapacity, persist
Cargill has placed its idled Plainview, Texas, plant property up for sale and the Dallas office of Commercial real estate broker CBRE has been retained by Cargill to market the site and evaluate potential offers. The plant was idled on Feb. 1, 2013, as the result of beef processing overcapacity in the region brought about by the area’s drought-diminished cattle herd, the impact of federally mandated Country of Origin Labeling on cattle supplies and the effects of the prior year uproar over finely textured beef (“pink slime”).
Beef processing overcapacity persists today and plant closures continue even as conditions have improved in some regions and rebuilding of the nation’s herd by cattle ranchers has started. A few years ago, the nation’s beef cattle herd dropped to the lowest number since 1951. Rebuilding the nation’s herd is a slow process, with each heifer/cow producing a single calf yearly.
“For the past two-and-a-half-years we’ve closely monitored the cattle supply in the U.S., hoping for a faster recovery from the drought,” said John Keating, president of Cargill’s Wichita, Kansas-based beef business. “We don’t see conditions in the Texas panhandle improving to the point where it would make sense to reopen our Plainview beef plant, especially with excess processing capacity remaining in the region.”