By Delimarket.TV Staff
The US beef industry is succumbing to years of drought. Feedlots and major meatpacking plants are closing because there are too few cattle left in the United States to support them - meaning rising costs for beef consumers.
Many feedlots in major cattle-producing hubs have been dismantled, and others remain empty. A recovery isn’t expected anytime soon as high feed prices, droughts, and slow herd-repopulating impede growth.
Owner Bob Podzemny has been taking apart the 32,000-head Union County Feed Yard near Clayton, N.M. It closed in 2009 when a bank shut off its operating capital in the midst of the financial crisis, and Podzemny said he doesn't see reopening after struggling through Chapter 11 bankruptcy, according to Bloomberg Businessweek.
"There just are not that many cattle in this part of the country no more, and it is not profitable to bring them in and feed them, so it is shut down," Podzemny said.
Texas, the largest beef-producing state, has been particularly hard hit with a historic drought in 2011 from which it still hasn't fully recovered.
"Most of the bad news is in Texas," said Dick Bretz, an Amarillo broker specializing in selling feed yards and other agribusinesses. "That is where I see most of the empty yards, that is where I see most of the interest in selling yards and where I see the least interest in buying yards."
One of the nation's biggest meatpackers, Cargill Beef temporarily closed a slaughterhouse in Plainview, Texas earlier this year, laying off 2,000 workers. The operation was one of four meatpacking plants in the Texas Panhandle, and the annual economic loss to the region is estimated at $1.1 billion — a "major chunk of that economy," said Steve Amosson, an economist with the Texas AgriLife Extension Service in Amarillo.
Most experts estimate the cattle feeding industry now has an excess capacity of between 20 and 25 percent, CattleFax market analyst Kevin Good said. Even after the closure of Cargill, the meatpacking industry has an excess capacity of 10 to 15 percent.