US processing giant Cargill has announced plans to close its beef processing plant in Plainview, Texas next month.
The company blamed the closure on tight cattle supply, as a result of prolonged drought, and said the 2,000 employees at the plant would receive “company support”, including financial packages and help in finding alternative work.
Once the plant is closed on 1 February, cattle will be diverted to Cargill’s two other Texas beef processing pants at Friona and Fort Morgan. A spokesperson said the company’s Canadian beef processing plants were “unaffected” by the decision.
Cargill has chosen not to sell the plant, instead ‘idling’ it, with the possibility of reopening it should beef cattle supply recover to the extent that additional processing capacity is required. However, the company said it did not expect the US cattle herd to increase significantly for a few years.
John Keating, president of Cargill Beef, said: “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.
“While idling a major beef plant is unfortunate because of the resulting lay-off 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 US 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.”
Keating added that Cargill was “unwavering” in its support of the US beef industry, pointing out the company had invested over $766 million in its processing infrastructure.
“We are optimistic about the long-term prospects for US beef demand from American and international consumers, and that the drought in Texas and the Southern Plains will become a memory,” he said.