Packing Plants will Likely Expand
By Colter Brown, Northern Ag Network
In the last few years, it’s become evident that the beef industry needs more processing capacity. That only became more clear this spring, when a bottleneck in U.S. cattle processing created a backlog of harvest-ready cattle. It does appear though that more shackle space will be created in the next year or two.
Last week, a new meatpacking plant in Idaho Falls announced plans to open in the fall of 2021. Intermountain Packing will build a new $20 million facility that will have the capacity to process 500 head of cattle and bison per day. The new packing plant is connected to Intermountain Bison, a vertically-integrated operation that raises and processes bison.
This is the second announcement this summer of a new packing plant coming to Idaho. In late July, Agri Beef announced its plans to open a facility in Jerome, ID. That facility will also process 500 head of cattle per day.
These new plants are not huge in scale when compared to many of the packing plants that operate largely in the Midwest. But increasing harvest capacity will allow for more competition in the packing segment and more marketing avenues for cattlemen.
Last week, in Certified Angus Beef’s virtual Feeding Quality Forum, CattleFax CEO Randy Blach said that its clear the industry needs more harvest capacity. Blach said, the industry-wide estimated 40-hour processing capacity decreased from 550,000 thousand head in 2007 to 465,000 head in 2016. Now for 4 consecutive years the industry will have processed more than the 40 hour capacity as packers are currently incentivized to run extra shifts.
“The cow-calf producer needs to be more profitable,” Blach said. “The good thing is the profitability is in our industry but we need a little more harvest capacity to balance who’s getting what share of that. That’ll sort itself out over the next few years. Beef cow numbers are going to contract a little bit and some additional packing capacity will be coming online in the next 12 to 24 months.”
As evidenced by the new plants in Idaho and smaller processors around the region that have expanded, the U.S. beef packing capacity will increase. The hope of many ranchers is that will help to shift some of the leverage and profitability in the industry over to the cow-calf and feeding segments.