Feedlots, meatpackers closing as cattle herds shrink
Meatpacking plants and feedlots have been closing because of the shortage of cattle after years of drought, and the impact will be felt in grocery and restaurant bills as a smaller meat supply means higher prices.
The Associated Press
WICHITA, Kan. — 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.
Some feedlots in major cattle-producing states have already been dismantled, and others are sitting empty. Operators say they don’t expect a recovery anytime soon, with high feed prices, much of the country still in drought and a long time needed to rebuild herds.
The closures are the latest ripple in the shock wave the drought sent through rural communities.
Most cattle in the U.S. are sent to feedlots for final fattening before slaughter. The dwindling number of animals also is hurting meatpackers, with their much larger workforces.
For consumers, the impact will be seen in grocery and restaurant bills as a smaller meat supply means higher prices.
Cattle numbers have been falling for years as the price of corn used to feed animals in feedlots skyrocketed. The drought accelerated the process, but many feedlots were able to survive because ranchers whose pastures dried up weaned calves early and sent breeding cows to be fattened for slaughter.
But now far fewer livestock than normal remain on the farms. And, ironically, if it rains this spring and summer, even fewer animals will go into feedlots because ranchers will hold back cows to breed and rebuild their herds.
Texas, the largest beef-producing state, has been particularly hard hit with a historic drought in 2011 from which it hasn’t fully recovered.
“Most of the bad news is in Texas,” said Dick Bretz, an Amarillo broker who specializes in selling feed yards and other agribusinesses. “That is where I see most of the empty yards, that is where I see most of the interest in selling yards and where I see the least interest in buying yards.”
When corn prices first spiked to $8 a bushel nearly four years ago, about 70 big feed yards went up for sale in the High Plains feeding area that includes Texas, Kansas, Colorado and Nebraska, Bretz said.
Today, there are 10 and 15 feed yards for sale in the region, mostly in Texas. Bretz said he knows of 15 more that are empty, three recently dismantled and two others now being torn down.
Feed yards typically employ one worker per 1,000 head of cattle, so even big ones may not have more than a few dozen workers. But they supply meatpacking plants, which have much bigger workforces, and feedlot closures could herald greater unemployment to come.
Cargill Beef, one of the nation’s biggest meatpackers, temporarily closed a slaughterhouse in Plainview, Texas, 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, spokesman Mike Martin said.
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.