Beef Buzz News
Economic Factors Create Hesitancy in Beef Plant Expansion Plans
Wed, 02 Nov 2022 11:03:33 CDT
During the pandemic, beef packers had more cattle to source than capacity, giving the packers the upper hand in negotiations with feedlots and increased revenue and profits compared to other parts of the beef pipeline. Senior Farm and Ranch Broadcaster, Ron Hays, is visiting with Iowa State University Livestock Economist, Lee Schulz, about beef packers having second thoughts on plant expansion.
Many federal dollars were moved toward plant expansion and many plans were announced during the pandemic to increase that capacity. Schulz says now that those plans have been announced, there may be some rethinking going on.
“There has been a lot of publicly announced plans for beef packing capacity additions- and I call them additions because they are really two-fold: new plants and expansion of existing plants,” Schulz said. “First, we have got to remember that projects of this size, take a lot of time. There is a lot of initial planning that goes on in the follow-through.”
Many of these publicly announced plans for additions, Schulz said, pre-date the Biden administration committing a billion dollars of American Rescue Plan funds to this expansion of independent processing capacity.
“According to reports, maybe about 20,000 head per day of possible expansions,” Schulz said. “That is quite a bit when we realize we slaughter about 125,000 head or so a day.”
While the target for many of these federal dollars is for smaller plants that harvest a couple of animals a day at the most, Schulz said the larger plants are the ones having second thoughts.
“Some of these planned additions have already been paused indefinitely,” Schulz said. “Others that are still in the works have changed some timelines. Some probably will not come to fruition, and probably some new projects that we are not even talking about now will materialize.”
Schulz said many factors are influencing the pause on expansion for some plants, such as increases in material prices, interest rates, and labor availability.
“There are two job openings available for every unemployed person, and that is a statistic that the Bureau of Labor Statistics uses,” Schulz said. “So, when we look at the ability to operate these packing plants, and operational capacity is key there, that is really constrained by this labor market.”
Another big factor, Schulz said, is cattle supply.
“Supplies are holding right now, at least when we compare to year over year, but there is a lot of anticipation that we are going to see tighter supplies,” Schulz said. “There are forecasts over the next two years we could see a 10 percent decline in cattle numbers. As you look at the availability of cattle and the price of those cattle, I think that factors into decisions about packing capacity additions as well.”
Click the LISTEN BAR below to listen to Ron Hays and Lee Schulz talking about hesitancy in beef packing plant expansion.
The Beef Buzz is a regular feature heard on radio stations around the region on the Radio Oklahoma Network and is a regular audio feature found on this website as well. Click on the LISTEN BAR below for today’s show and check out our archives for older Beef Buzz shows covering the gamut of the beef cattle industry today.
Listen to Ron Hays and Lee Schulz talk Packing Plant Expansion
right-click to download mp3
WebReadyTM Powered by WireReady® NSI
Beef News
January Cattle on Feed Report Three Percent Under Year Ago- Derrell Peel Says Tighter Supplies Will Be Around for Awhile Mon, 23 Jan 2023 05:15:04 CST
Derrell Peel Talks Latest Cattle on Feed Report- Showing Fewer Cattle on Feed, Lighter Placements and Stronger Marketings. Mon, 26 Dec 2022 08:19:00 CST
Kara Lee with Certified Angus Beef Tells Cattlemen 'Cut the Bull' Fri, 23 Dec 2022 14:30:39 CST
Beef Checkoff Utilizes Digital Marketing Techniques to Interact with Consumers Thu, 22 Dec 2022 16:02:51 CST
Beef Checkoff Research, Education, and Promotion Efforts Point Consumers to Beef Wed, 21 Dec 2022 16:15:46 CST
OSU Economist Derrell Peel Expects US Beef Export Strength to Continue Into the New Year Tue, 20 Dec 2022 08:00:35 CST
NPPC's Michael Formica Feeling Positive About Supreme Courts Upcoming Proposition 12 Decision Mon, 05 Dec 2022 10:08:27 CST
NCBA Fights to Improve Marketing Options for Cattle Producers Fri, 02 Dec 2022 09:58:28 CST
Chinese Consumers Continue to Grow Appetite for U.S. Beef Thu, 01 Dec 2022 09:23:49 CST
Merck Creates Value for Producers and Consumers with Technology and Biopharmaceuticals Wed, 30 Nov 2022 09:55:28 CST
NCBA’s Todd Wilkinson Ready to Fight Back Against Regulatory Overreach in the Cattle Industry Tue, 29 Nov 2022 10:13:33 CST
NCBA and PLC Call ESA Listing Plan of Lesser Prairie Chicken Punitive for Cattle Producers in Southern Plains Wed, 23 Nov 2022 14:51:02 CST
November Cattle on Feed Report Confirms October Pattern of Lower Placements and Tighter Cattle Numbers in Feedlots Tue, 22 Nov 2022 05:07:02 CST
Turning the Corner- OSU's Derrell Peel Sees Tighter Cattle Inventories into 2023 in Latest Cattle on Feed Report Mon, 21 Nov 2022 04:36:33 CST
Turning the Corner- OSU's Derrell Peel Sees Tighter Cattle Inventories into 2023 in Latest Cattle on Feed Report Mon, 21 Nov 2022 04:27:40 CST
Midterm Elections to Set Stage for What Can Be Expected in 2023 Farm Bill Mon, 07 Nov 2022 12:13:57 CST
USMEF's Dan Halstrom Remains Cautiously Optimistic about Strong Beef Demand Going Forward Thu, 03 Nov 2022 09:35:46 CDT
Economic Factors Create Hesitancy in Beef Plant Expansion Plans Wed, 02 Nov 2022 11:03:34 CDT
NCBA's Mike Simone Says Consumer Interest in Fake Meat is on the Decline Tue, 01 Nov 2022 11:41:02 CDT
Beef Remains Valued Product for Consumers as it Allows Them to Stretch their Dollar Mon, 31 Oct 2022 09:15:56 CDT
Hugh Aljoe Provides Methods to Begin and Maintain Good Land Stewardship Fri, 28 Oct 2022 09:30:13 CDT
Implement Soil Health Practices Now to Increase Forage Production when Rains Come Thu, 27 Oct 2022 15:14:07 CDT
Third Beef. It's What's For Dinner. 300 Promotes the Beef Industry on a National Level Wed, 26 Oct 2022 15:32:23 CDT
Latest Cattle on Feed Report from USDA Implies Fewer Pounds of Beef Available in 2023 Tue, 25 Oct 2022 10:17:53 CDT
OSU's Derrell Peel- Lower Placements and Smaller On Feed Number Highlight October Cattle on Feed Report Sun, 23 Oct 2022 12:45:37 CDT
Beef Checkoff Research Continues to Share Beef Sustainability Story with Consumers Fri, 21 Oct 2022 09:23:36 CDT
Beef Checkoff Research Works to Ensure Consumers Beef is a Product They Can Trust Thu, 20 Oct 2022 13:44:44 CDT
Odds for Significant Wheat Pasture Going Lower Daily in the Southern Plains Wed, 19 Oct 2022 14:35:46 CDT
NCBA Weighs in on California's Proposition 12 Tue, 18 Oct 2022 11:32:24 CDT
2022 Stockyards Steak Out Takes Oklahoma Beef to the Next Level Mon, 17 Oct 2022 11:09:07 CDT
Holding Onto Your Cow Herd a Little Longer is Projected to Pay Off, says Randy Blach Fri, 14 Oct 2022 08:14:05 CDT
Randy Blach Confident in Better Cattle Market Conditions Down the Road Thu, 13 Oct 2022 09:43:02 CDT
No Imports or Exports Would Result in a Smaller U.S. Beef Cattle Industry Wed, 12 Oct 2022 16:11:15 CDT
Derrell Peel Explains Why International Trade of Beef is Valuable Tue, 11 Oct 2022 08:19:29 CDT
Animal Agriculture Hopeful for a Win as U.S. Supreme Court Looks at California's Proposition 12 Mon, 10 Oct 2022 09:26:17 CDT