Aberdeen beef plant recruiting in Texas

Farm Forum

The closing of a Cargill beef processing plant in Texas could provide Northern Beef Packers with a competitive edge, as well as access to more workers.

Northern Beef has sent recruiters to Plainview, Texas, to interview laid-off workers for possible employment in Aberdeen, said Laure Swanson, marketing and public relations director for Northern Beef.

The Cargill plant, which employs 2,000 workers, closes on Feb. 1.

Northern Beef wants to hire 150 more workers, Swanson said. Currently, the plant has 401 employees, she said.

A variety of positions are open, but the plant especially needs experienced meat cutters.

“It is like with any new business, we need a mix of experienced workers as well as workers that can be trained,” she said. “There hasn’t been a beef plant in South Dakota for many years, so we don’t have a pool of experienced workers to draw upon.”

The plant closure in Plainview could help Northern Beef with not only its work force needs, but will also reduce competition.

The Cargill plant had a slaughter capacity of 4,650 cattle per day. It is one of the larger plants owned by the Minnesota-based company and represents about 4 percent of all slaughter capacity in the United States, according to Cattle Buyers Weekly.

The number of cattle nationwide has decreased in recent years, leaving the country with excess beef processing capacity, according to the CMI Group’s daily livestock report.

“In the short term, the closing of the facility will reduce the demand for cattle and better align capacity with available supplies,” according to the report.

“The idea of closing one or more of our major beef processing plants is not a big surprise,” said Derrell Peel, a livestock specialist at Oklahoma State University’s agricultural extension service, in an article in the Minneapolis Star Tribune. “It’s been a matter of who blinks first.”

The Plainview plant is in the Texas panhandle, where there are several packing plants and not enough cattle to support the operation of those plants, said Warren Rusche, cow/calf field specialist with South Dakota State University.

In recent years as feed prices have risen, producers have moved the cattle closer to where grain and hay are raised, he said.

Feed prices have risen since the national drought began in the summer. Corn prices peaked at $8.50 a bushel in August and are still above $7 a bushel.

“I don’t want to oversell them (Northern Beef), but the plant closure in Texas and the shift in herd numbers to the north is to their benefit,” Rusche said.

Herd sizes dropped 10.5 percent (966,000 head) in Texas and 11.75 percent (288,000 head) in Oklahoma between 2011 and 2012, Rusche said.

In contrast, Nebraska added 112,000 head of cattle and now is the second largest cattle producer in the country. Herd sizes in South Dakota remained stable, with a drop of only 1.3 percent.

“What we are seeing is a regional shift,” Rusche said. “Nebraska and the Northern Plains are holding up really well.”

Fewer packing plans, however, hurt cattle producers in the short term because there is less competition for cattle which can drive down the price.

“The slaughter cattle market took a hit after the plant closure was announced,” Rusche said. “The packers don’t have to bid as aggressively for cattle when there is more competition.”

That could have an effect on rebuilding herd sizes, according to the CMI Group Daily Report.

Gary Taylor, SDSU agricultural economist, said he agrees that the cattle numbers in South Dakota and the closure of the Texas plant could benefit Northern Beef, but there are many other factors to consider.

“South Dakota is still exporting most of its calves to other states to be fed,” he said. “Our numbers are not as strong as they look on paper. Also, if Northern Beef is going to succeed, area producers have to make a change in their marketing.”

Producers in the state have been taking their cattle to plants in Schuyler and Dakota City, Neb., and other out-of-state plants for many years.

“A cattle producer has to have a strong reason to want to change, ” he said. “There has to be incentives like price or other benefits.”

While decreased transportation costs are an incentive to local producers, there are other factors as well.

There are also intangible benefits involved, such as a trust and a relationship history, Taylor said.

“There are trends that might favor Northern Beef Packers, but we have to see what happens over time,” he said.