Citing a smaller, drought-stressed cattle herd and elevated feed costs, Cargill, Inc., the nation’s largest beef processor, says they will shutter their Plainview, Texas, plant at the end of the month and layoff the 2,000 employees that work there.
John Keating, president of Minneapolis-based Cargill, said in a statement this week the closure comes as a result of smaller cattle herds caused by two years of drought conditions and escalating costs for feed, which have caused a severe financial strain on the plant. He said the company will make every attempt to work with laid off employees in hopes of helping them to find jobs elsewhere.
“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 company is the largest employer in Hale County, in the Texas Panhandle, and local officials say the economic setback that will be caused by the plant’s closure could be “devastating” to the community.
Texas Department of Agriculture (TDA) officials say while the entire beef industry suffered last year from drought conditions that stretched across most of the central United States, Texas suffered its second consecutive year of severe drought, a development that forced many cattlemen to reduce herds significantly. As forage disappeared and feed costs escalated, producers began selling off their herds to survive the drought.
According to USDA, the U.S. beef-packing industry has up to a 15 percent excess capacity in the Southern Plains alone and the forecast for a possible continuation of drought conditions this year could further stress an industry that has downsized for two years in a row.
In a possible response to Cargill’s announcement, cattle futures for April delivery fell yesterday to $1.297 a pound on the Chicago Mercantile Exchange and feeder-cattle futures for March settlement also dropped by the 3-cent exchange limit.
The news hit families in Plainview hard and captured the attention of TDA officials as well.
“The news of Cargill’s plans to idle its Plainview plant next month is a devastating blow to this Texas Panhandle community and the economic health of Texas. As the largest employer in Hale County, the Cargill plant supports 2,000 jobs that will be lost effective February 1,” Texas Agriculture Commissioner Todd Staples said in a statement Thursday. “Cargill and its Plainview employees are the latest in a long line of victims claimed by our historic 2011 drought. As cattle herds diminish, so too do jobs and the livelihoods of our fellow Texans.”
Staples says the state will take immediate action in an attempt to boost the Texas beef industry and to help laid off workers in Plainview.
“I am told by company officials that Cargill has no current plans to sell the facility, and I have directed Texas Department of Agriculture staff to work with the company and community leaders toward an expeditious resumption of business,” he said.
Staples say the immediate priority is helping those Texans left unemployed starting February 1.
“We are dispatching a team from our business development unit to assist the surrounding communities in finding employment for those hardworking Texans who will find themselves without a job next month,” Staples added.
Cargill officials say Texas cattle earmarked for the Plainview plant will be delivered instead to other company plants in Texas, Kansas and Colorado. Cargill also operates beef processing plants in California, Nebraska, Pennsylvania and in Canada.