News

Economist says Cargill’s reopening of its Fort Morgan beef plant boosts cattle market competition

Workers at Cargill’s Fort Morgan, Colorado beef plant have agreed to a new five-year labor deal, ending an 89-day lockout, that clears the way for the company to resume processing. 

Livestock economist David Anderson with Texas A&M University says this is much-needed good news for the beef industry.  “We have plenty of capacity for the number of cattle that we have,” he says. “But if I’m interested in higher cattle prices, I would rather have more plants running than less because it’s another buyer. It means that those plants have to compete harder for the available supplies.”

He tells Brownfield while this will increase overall daily slaughter capacity, it doesn’t make up for the abrupt closure of Tyson’s Joslin, Illinois facility last week.  “By losing that plant, we become geographically more concentrated in terms of where cattle are processed, the bulk of our meat packers,” he says. “And so that’s in more and more tighter in The Plains.”

Anderson says that closure will have significant regional implications. “Missouri, Kentucky, Illinois, Indiana, that whole region where we have feedlots,” he says. “They buy feeder cattle, high quality cattle from those areas. And the end result is those cattle are going to be trucked further to a packing plant.”

He says producer profitability will be impacted, and it starts with increased transportation costs. “Somebody’s paying the freight one way or the other,” he says.  “And so, it means, I think lower prices regionally, both for feeder cattle and calves, but for fed cattle as well.”

The Fort Morgan, Colorado facility has been closed since May and is set to resume operations September 7th.  Daily slaughter capacity for the plant is about 4,700 head. Cattle that would have been shipped to Fort Morgan were redirected to other facilities in Kansas, Nebraska, and Texas during the shutdown.  In a statement, Cargill says it will work closely with the union on a phased return to operations to ensure employee safety and that the facility is ready to resume production.