In this file:
· Cargill meatpacking plant cuts 2,000 jobs in Texas
· Cargill to Idle Texas Beef Plant as Cattle Supply Cut
· Cargill axes beef plant, giving up on herd revival
· Cargill idling not complete surprise
· City, county brace for impact of Cargill plant closure
Cargill meatpacking plant cuts 2,000 jobs in Texas
West Texas Cargill meatpacking plant to lay off 2,000 workers due to tight cattle supplies
By Betsy Blaney, Associated Press
via Yahoo! New Zealand - Jan 17, 2013
LUBBOCK, Texas (AP) -- Cargill Beef announced Thursday that it will idle one of its two West Texas meatpacking plants and lay off all 2,000 workers because of a tight cattle supply following years of drought.
The number of cattle in the U.S. has been dropping for years, but the pace accelerated during the past two years as ranchers in central and southwestern states sold off millions of animals they couldn't afford to feed after drought dried up pastures and sent the prices of hay and other feed skyrocketing. The slaughter began to slow in the fall as many ranchers tried to hold on to the relatively few cattle they had left.
Ranchers have said it will take years to rebuild their herds once the drought ends, and Cargill said it didn't expect business to rebound soon.
"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," Cargill President John Keating said in the release.
The company said workers in Plainview will be let go Feb. 1, and plants in Friona, Texas, Dodge City, Kan., and Fort Morgan, Colo., will get cattle that previously would have been sent to Plainview.
Cargill is the largest employer in Plainview, said Mayor Wendell Dunlap.
"Our town has about 22,000 people. We lose 2,000 jobs, it's bound to have a major effect on our economy," said Dunlap, who's been mayor since March 2012 in the city about 50 miles north of Lubbock.
Cargill will take applications for its other plants from workers targeted for layoffs, and the city will have its own job fair in early February, Dunlap said.
"But we have a long-range plan in the works for attracting new businesses and bringing new jobs to the city," he said.
Cargill Beef, which is based in Wichita, Kan., also has plants in California, Nebraska, Pennsylvania and Wisconsin, along with two in Canada. It said it would try to move some workers from Plainview to its other operations.
The United Food and Commercial Workers Union, which represents workers at the Plainview plant, expressed concern in an emailed statement about transfers to other Cargill plants, saying workers should retain their seniority and other rights.
Cargill said it could reopen the Plainview plant if cattle numbers rebound in coming years...
Cargill to Idle Texas Beef Plant as Cattle Supply Cut
By Shruti Date Singh - Bloomberg
Jan 17, 2013 2:53 PM CT
Cargill Inc., the largest U.S. beef processor, will idle a Texas processing plant after the size of the cattle herd fell to a 60-year low and drought increased feed costs. Cattle futures dropped.
The Plainview plant will stop operations at the close of business on Feb. 1 to reduce the strain on the company’s beef business, John Keating, president of Cargill Beef, said today in a statement. The plant employs 2,000 people and those affected by the closing will get help finding jobs elsewhere, Minneapolis-based Cargill said in the statement.
“Given the overcapacity that exists with four major beef plants in the Texas Panhandle and a dwindling supply of cattle in the region, idling Plainview will allow Cargill to operate its other beef plants in Texas, Colorado and Kansas more consistently on a five-day-per-week basis,” Keating said.
The U.S. beef-packing industry has 10 percent to 15 percent excess capacity, with the highest level in the southern plains where Plainview is located, said David Nelson, an agricultural global strategist for Rabobank International in Chicago. Herd liquidation intensified in that region during the 2011 drought, he said in a telephone interview today.
While the U.S. in the last year has been hit by the worst drought since the 1930s, Texas is among states that have suffered from dryness and lack of rain since 2011. Drought conditions are expected to persist through the Great Plains and spread across most of Texas, according to a three-month U.S. outlook by the Climate Protection Center.
“The industry does need to rationalize capacity to match up to lower cattle supply,” Nelson said. Idling the Plainview plant will help Cargill “alleviate that situation,” he said.
Cattle futures for April delivery fell by the 3-cent exchange limit to $1.297 a pound earlier today on the Chicago Mercantile Exchange, while feeder-cattle futures for March settlement declined by the 3-cent exchange limit as well.
Cargill’s remaining beef processing plants in Texas, Kansas and Colorado will receive cattle destined for Plainview, according to the statement. Cargill beef facilities in California, Wisconsin, Pennsylvania and Nebraska and two plants in Canada are unaffected.
Cargill doesn’t plan to sell the Planview plant, Mike Martin, a spokesman for the closely held company, said in a telephone interview today. He declined to comment on how long the plant will be idled.
“We don’t think there will be a reversal in the national cattle herd for a number of years,” he said.
Idling of the Plainview plant may be positive for Tyson Foods Inc. (TSN), said Tim Ramey, a Lake Oswego, Oregon-based analyst for D.A. Davidson & Co. who has a buy rating on the shares. Cargill is the largest U.S. beef processor followed by Tyson, according to Tyson’s 2011 Factbook.
Tyson rose 3.9 percent to $21.26 at 3:20 p.m. in New York. The shares gained as much as 4.8 percent earlier, the biggest intraday gain since Nov. 19.
In November, Tyson said the number of cattle that are available for slaughter may decline 2 to 3 percent in the year ahead. While it expects adequate supplies for its plants, there may be periods of imbalance and its beef-segment profit may be below its “normalized range” of 2.5 percent to 4.5 percent...
Cargill axes beef plant, giving up on herd revival
23:32 UK, 17th Jan 2013, by Agrimoney.com
Live cattle futures plunged their daily limit after Cargill revealed it was closing one of its beef processing plants, after giving up on a rebound in US cattle numbers from 60-year lows.
The agribusiness giant, one of the world's biggest privately-owned companies, said that it would at the start of next month close its Plainview, Texas site, which employs 2,000 people.
The "difficult" decision to close the site, which processes some 4,500 animals a day, followed "an exhaustive analysis" of North America's cattle supply and processing capacity, which highlighted the threat to industry profits from a US herd which has shrunk to its lowest since 1952, Cargill said.
The prospect of consolidated buying power weakened cattle futures, but sent shares in Tyson Foods, a major rival to Cargill in US meat, up 3.8% to $21.23, their highest finish since September 2007.
No revival for a while
"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," said John Keating, president of Cargill Beef.
"We delayed the decision to idle Plainview as long as possible. We were hoping the drought would break, pasturelands would be restored, cattle ranchers would retain heifers and the national herd trend of declining numbers over the past few years would be reversed.
"Unfortunately, the drought has not broken, feed costs remain higher than historical averages and the herd continues to shrink."
While Cargill that it was "optimistic about the long-term prospects for US beef demand", and was to retain the Plainview site for a potential reopening if US cattle numbers rebound, the group said that it "does not expect the US cattle herd to significantly increase in size for a number of years".
More than other states
The US cattle herd fell below 90m animals last year for the first time since the 1950s, and down from a 1974 high of 132m head, according to US Department of Agriculture data.
The Texas herd has shrunk particularly fast, dented by drought last year and in 2011, besides the high grain costs which affected the industry around 2007-08 as well.
"Texas cattle numbers have gone down more than any other state," Ben Parks, at FCStone's Kansa-based livestock division, said.
Being a distance from the main Midwest corn-growing areas, "feed costs are perhaps 90 cents a bushel over futures in Texas, compared with maybe 30 cents a bushel in Nebraska".
'Something was going to give'
Mr Parks added that Cargill's announcement had caught markets unawares.
"It was not a surprise that there was a closure at some point this year. But by Cargill, and today, that was a surprise," Mr Parks told Agrimoney.com.
"We felt something was going to give, but did not know where or when."
Live cattle futures for February fell the 3.00-cents a pound maximum in Chicago before recovering to close at 126.60 per pound, down 1.925 cents, or 1.5%, on the day.
Return to profit
Beef packer margins on Thursday were some $37 per head in the red, according to HedgersEdge.com...
Cargill idling not complete surprise
By John Perkins - Brownfield
January 17, 2013
According to one livestock market analyst, Cargill’s idling of a major beef packing plant in Texas is a reflection of the current economics of the industry.
Derrell Peel, Livestock Marketing Specialist at Oklahoma State University, tells Brownfield the idling wasn’t a complete surprise, “We’ve said for several months that given the cattle supply situation that we were in, we would not be surprised to see, perhaps, one major beef packing plant, and also some feedlots, close. We’ve had chronic excess capacity in cattle feeding and in meat packing for many years. There’s been some economic pressure which has ramped up significantly in the last year or so and will be fairly strong for the next year to two years…It’s consistent with the market making very long term adjustments.”
USDA’s next set of cattle on feed numbers is out January 25.
City, county brace for impact of Cargill plant closure
The Plainview Herald (TX)
Jan 17, 2013
Citing tight cattle supplies resulting from years of drought, Cargill announced Thursday it will idle indefinitely its beef processing facility in Plainview.
Approximately 2,000 people work at the Plainview facility. The closure is effective Feb. 1.
Upon notification of the company’s announcement, the Plainview Hale County Industrial Foundation, Plainview Chamber of Commerce, city and county officials met and began preparation for steps to address community impact.
“We feel for the current Cargill employees and all those directly affected by the closure ... We also know that this will have a negative impact on our local and area economies,” the Chamber said in a prepared statement. “However, this is not the first setback that our community has faced and may not be the last.”
Cargill said the decision wasn’t easy.
“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,” said John Keating, president of Cargill Beef, based in Wichita, Kan. “While idling a major beef plant is unfortunate because of the resulting layoff 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,” Keating continued.
“The U.S. 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.”
The company said Cargill’s Plainview employees affected by this decision will be provided support as well as assistance in finding and filling open positions at other Cargill locations or with other employers.
Cargill said it will continue to honor its community support commitments at Plainview for 2013. The company’s remaining beef cattle processing plants in the region, at Friona, Dodge City, Kan., and Fort Morgan, Colo., will receive cattle that were previously destined for processing at Plainview. The company’s regional beef facilities at Fresno, Calif.; Milwaukee, Wis.; and Wyalusing, Pa., as well as its beef plant in Schuyler, Neb., and two beef plants in Canada, are unaffected.
“Given the over-capacity that exists with four major beef plants in the Texas Panhandle and a dwindling supply of cattle in the region, idling Plainview will allow Cargill to operate its other beef plants in Texas, Colorado and Kansas more consistently on a five-day-per-week basis to meet our customers’ requirements, while helping us maintain our position in the U.S. beef sector,” explained Keating. “Our long-term commitment to U.S. beef production is unwavering. Over the past 10 years we’ve invested more than $766 million in our U.S. beef plants to ensure they remain best in class in the industry.”
The plan to close Cargill’s Plainview facility includes measures for preserving its infrastructure for potential reopening if the U.S. cattle herd rebounds and requires additional processing capacity. However, Cargill does not expect the U.S. cattle herd to significantly increase in size for a number of years.
“We delayed the decision to idle Plainview as long as possible, due in part to our outstanding team and ongoing excellent support from the community. We were also hoping the drought would break, pasture lands would be restored, cattle ranchers would retain heifers and the national herd trend of declining numbers over the past few years would be reversed,” Keating said. “Unfortunately, the drought has not broken, feed costs remain higher than historical averages, and the herd continues to shrink...