Minnesota-based Cargill has struck a deal to sell its last two cattle feeding yards to ethanol producer Green Plains for $36.7m, after offloading similar cattle farms to Friona Industries in 2016.
The sale of the Colorado and Kansas cattle feed yards to Green Plains completes Cargill’s departure from cattle feed operations, highlighting its focus on meat processing.
In the past two years, the firm has announced more than $500m-worth of acquisitions and capital investment in its US meat enterprise, which includes beef and poultry processing.
All 90 jobs are safe
“Selling our two remaining feed yards aligns with our protein growth focus by allowing us to redeploy working capital away from cattle feeding operations to other investments,” said John Keating, president of Cargill’s protein business operations and supply chain.
“By partnering with Green Plains in a multiyear supply agreement, the Yuma [Colorado] and Leoti [Kansas] yards will continue to supply cattle to our beef processing facilities at Fort Morgan, Colorado and Dodge City, Kansas, ensuring consistent high-quality beef products for our customers.”
Cargill said the 90 staff employed at the two feedlots would be offered jobs by Green Plains.
Subsidiary Green Plains Cattle Company will enter into a long-term deal to supply cattle to Cargill. At any one time, the two feed yards offloaded by Cargill can hold around 155,000 head of cows.
Through its acquisition Green Plains will become the fourth-largest cattle-feeding operator in the US, as the business already owns 70,000 head of cattle in Kansas and 30,000 cows in Hereford, Texas.
“One of the inherent benefits of this transaction is the scale of internal demand for our co-products, produced at company-owned ethanol plants,” said Todd Becker, president and CEO of Green Plains.
“Our cattle business will now consume more than 300,000 tonnes of dried distillers grains and 40 million pounds of corn oil annually.
“The ability to effectively control our feed supply cost provides our cattle business with a strategic operating advantage, resulting in more predictable and stable cattle-feeding margins while enhancing Green Plains’ knowledge of ration dynamics.”
Becker added that the meat industry has had a “favourable” impact on the firm’s earnings since it entered the cattle feed business a few years ago.