The abrupt closure of Cargill Inc’s beef processing plant in Plainview, Texas, this month could signal consolidation in the beef packing industry due to the cattle herd shrinking to the smallest in over 60 years, an industry leader said on Thursday.
“We are probably going to see some consolidation, economics will dictate that,” said Scott George, incoming president of the National Cattlemen’s Beef Association, told Reuters in an interview at the organization’s annual gathering.
NCBA is the nation’s largest cattle organization and many of its members have struggled the past few years as drought shriveled pastures, high prices for feed and fuel have increased cattle production costs, and a recession hurt beef sales.
Even with historically high cattle prices this past year of more than $125 per hundredweight, cattle producers have lost money. Many have responded by reducing their herds.
When agribusiness giant Cargill, one of the nation’s largest beef processors, announced the closing of its Plainview beef plant it blamed the dwindling cattle herd and soaring feed costs following the worst drought in half a century.