Cargill Closes Plant Due to Drought

by | Jan 22, 2013

Cargill will idle its Plainview, Texas beef processing plant due to a tight cattle supply brought on by years of drought in the region.

The US cattle herd is at its lowest level since 1952, Cargill said. Increased feed costs resulting from the prolonged drought, combined with herd liquidations by cattle ranchers, are severely challenging the beef industry, said John Keating, president of Cargill Beef.

The plant, which employs about 2,000 people, will close February 1. The company’s remaining beef processing plants in the region, in Friona, Texas; Dodge City, Kan.; and Fort Morgan, Colo., will receive cattle that were previously destined for processing at Plainview, Cargill said. The company’s regional beef facilities in Fresno, Calif.; Milwaukee, Wis.; and Wyalusing, Pa., as well as its beef plant in Schuyler, Neb., and two plants in Canada are unaffected.

The company will provide laid-off workers with support as well as assistance finding and filling open positions at other Cargill locations or with other employers. The United Food and Commercial Workers Local Union 540, which represents more than 1,800 workers at the plant, is urging Cargill to ensure employees who are relocated to other plants are not brought on as new hires and will keep their benefits and eligibility for their pension.

Cargill is among a number of agribusiness-related companies impacted by drought in Texas, southern Plain states and the Midwest.

The worst US drought in five decades, which caused more damage than expected to corn and soybean crops, helped push the global food price index up six percent in July, according to a report by the United Nations’ Food and Agriculture Organization.

As a result, meat producers and grain traders, such as Cargill, have been forced to pay more for feed, which in turn has pushed up food prices for consumers. Meat producers also have blamed the federal ethanol fuel mandate for pushing up corn prices, following last summer’s drought that ruined crops in the Midwest.

The drought has continued throughout large portions of four major wheat-growing states including Kansas, Colorado, Oklahoma and Texas. Earlier this month, the USDA declared drought natural disaster areas across 597 counties in 14 states; much of the central and southern wheat belt was included in the declaration.

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