Meat & Livestock News

Beef Packing Expansion Amidst Declining Cattle Numbers

The beef packing sector is experiencing a growth in construction projects, despite a noticeable decrease in the national cattle herd. The Upper Iowa Beef plant, which processes nearly 470 cattle daily, primarily exports its beef to retailers on the East Coast and to 11 countries in Asia.

Even with a national reduction in cattle processing, ongoing projects could potentially add a daily capacity of 6,900 head.

Ed Greiman, the general manager of Upper Iowa Beef, expressed his appreciation for a recent visit from U.S. Agriculture Secretary Tom Vilsack to their Lime Springs facility in Iowa. The USDA has allocated $8.8 million to Upper Iowa Beef, which will be invested in expanding carcass coolers, freezer space, cattle pens, and notably, enhancing the wastewater capacity.

The current infrastructure in Lime Springs is insufficient to cater to the plant’s entire wastewater needs. Greiman highlighted the importance of this funding, pointing out its potential to generate jobs and increase cattle purchases from producers.

Bob Noble, president of the Iowa Cattlemen’s Association and a cattle feeder from Riceville, Iowa, echoed this sentiment. He emphasised the association’s continuous push for greater processing capacity in Iowa. At present, less than 25% of Iowa’s fed cattle are processed within the state.

This figure might be even lower when accounting for cattle brought in from other states for processing. Noble underscored the significance of having diverse cattle buyers, as it introduces competition and positively impacts local markets.

On a national scale, the situation is more complex. While there’s a keen interest among smaller and mid-sized entities to expand beef meatpacking capacity, the cattle herd is diminishing.

Three ongoing packing plant projects in Missouri, Nebraska, and Texas are poised to increase capacity by up to 6,900 head of cattle daily, equating to almost 6% of the national daily average slaughter.

Key projects include:

  • American Food Group: Situated near Wright City, Missouri, this company, headquartered in Green Bay, Wisconsin, is progressing with an $800 million plant. This facility, set to start operations in January 2025, is projected to process 2,400 heads daily.
  • Sustainable Beef: Located on the outskirts of North Platte, Nebraska, this initiative, supported by Walmart, is expected to commence processing in 2025. Sustainable Beef aims to process 1,500 head daily at full capacity.
  • Producer Owned Beef: Close to Amarillo, Texas, a consortium of cattle feeders is developing a $670 million plant. Construction began in September, with the facility anticipated to process at least 3,000 heads daily by 2026.

Additionally, a proposed venture, Cattlemen’s Heritage Beef, on the Iowa-Nebraska border, plans a $450 million packing plant south of Council Bluffs, Iowa, with a capacity of up to 2,000 head daily.

Despite the enthusiasm surrounding these projects, Greiman voiced concerns about the challenges that smaller establishments might face in the upcoming years, especially with an anticipated daily shortage of about 6,000 head in the next two years.

David Anderson, a livestock economist at Texas A&M University, drew attention to the dwindling cattle numbers. The USDA’s July report indicated 29.4 million beef cows, the lowest since 1971, marking a decline for the fifth consecutive year.

The disruptions during the COVID-19 pandemic and the subsequent profits observed by packers have ignited interest in building more packing plants. The Biden administration has also pledged $1 billion to enhance packing capacity.

However, Anderson warned that by the time these new facilities are operational, the opportunity might have diminished, leading to tighter margins and heightened competition for a dwindling cattle supply.

In summary, while the future may present challenges for cattle supplies, industry experts like Greiman remain hopeful, believing that unforeseen events will always influence the cattle market.