Plans to increase beef processing capacity could face challenges with cattle numbers decreasing.
“We’re in the downturn of the cattle cycle, and numbers are tight,” says Lee Schulz, Extension livestock marketing economist with Iowa State University.
Companies in Iowa and Missouri have announced plans to have new plants up and running by the end of 2024.
The Cattlemen’s Heritage Beef Company finalized the purchase of a 132-acre site in Mills County, Iowa, in late December. They plan to process 2,000 head per day at the southwest Iowa facility. The sale price was not disclosed.
“I’m very appreciative of the cooperation, flexibility, patience and professionalism that the owners, their representatives and officials in Mills County demonstrated throughout this process,” said principal developer Chad Tentinger in a company news release.
“Land purchases for projects of this size often take quite a while to complete and they often have unforeseen challenges, but everyone worked together very well from day one and through negotiations until final documents were signed.”
American Foods Group, LLC has plans to open a new plant in Warren County, Missouri, and broke ground in early September.
“Missouri is able to compete for projects of this magnitude because of our strong agriculture community and business-friendly economy,” said Governor Mike Parson in a news release. “As a third-generation farmer and cattleman myself, I know how beneficial having a company like American Foods Group in Warren County will be for Missouri’s farmers and consumers.
“We are excited that Missouri is the planned location and remain committed to supporting the company as this project continues to develop in our state.”
There are plans to expand other sites in Iowa and Nebraska, Schulz says.
“At the moment we have adequate capacity, and as numbers continue to tighten, we’re going to see more bids for cattle,” he says. “We also need to remember that adding packing capacity does not happen overnight, so it’s going to be several years before we see a meaningful expansion of the cow herd.”
Schulz says the industry is in year nine of the cycle, so it will likely be at least two years before there is any growth in the cow herd. He says other items such as drought, labor and input costs also factor into thoughts of expansion.
USDA continues to point to lower numbers in their reports, says Derrell Peel, Extension livestock marketing economist with Oklahoma State University. For example, cattle on feed numbers were down 3% on Jan. 1.
Large numbers of females have also been shipped to the packing plant.
“We’ve let numbers get so low that it’s going to take longer to rebuild this time,” Peel says.
He says packers and feedlots will likely see red ink this year as competition for cattle becomes more intense.
“The cow-calf guys are going to do pretty well,” Peel says. “They’re in the driver’s seat for the next couple of years or so.”
He added smaller cattle numbers could also result in a postponement of plans to expand current processing capacity.
