Cattle producers put their money…

Prime Cuts with Steve Kay

Beef producers have complained for years about how a few large companies dominate beef processing and how much money they make. That domination is nothing new. It goes back a century or more. But despite what some people think, it has not prevented a small but constant stream of new entrants into the sector.

As for making money, for years fed beef packers in the U.S. were lucky if they saw a one per cent margin on their sales. Only in recent years, and notably last year, did packers finally see margins that were 4.5 per cent or more of sales. Their record profits last year were exceptional but they were caused by exceptional circumstances.

My response to any producer who would listen to me has been always the same. If you think that beef processing is an easy business and a license to print money, then why don’t you invest in it? A few did over the past 30 years and even built new plants or took over existing ones. Invariably, these new entrants quickly discovered the realities of beef processing — that it is a tough business that can be wiped out by one product recall, loss of international markets or a downturn in the cattle cycle.

So I cheered last August when Agri Beef Co., based in Boise, Idaho, unveiled plans for a new beef processing plant in Jerome that will process 500 head per day. It will be an alternative model in an industry dominated by large plants and is exactly what some people had been calling for. The venture will be different in another way. Agri Beef will be the majority owner of the plant but cattle producers and feeders in the region will also be equity owners (as I wrote in my September 2020 column).

Now cattle producers have stepped up to open the first beef processing plant in many years in Missouri. Missouri Prime Beef Packers planned to start operating a 100,000-square-foot facility in Pleasant Hope early last month. The plant’s initial goal is to harvest 500 fed and non-fed cattle per day, which will give the state’s cattle feeders and cow-calf operators their first processing outlet inside the state.

The plant is unique as it is owned by long-time cattle producers who also operate a beef marketing company. Missouri Prime’s co-owners are NextGen Cattle Co., and cattle producer Stacy Davies. He also manages a 1.5-million-acre ranch in Roaring Springs, Oregon, that runs up to 10,000 cows. NextGen Cattle Co., founded in 2016, is involved in seedstock development, cow-calf production and cattle feeding. It and Davies co-own NextGen Beef Co., a beef marketing firm that focuses on consumer demands.

The Pleasant Hope plant previously operated as a pork processing plant under the name Moon Ridge Foods for less than 18 months until 2018. It was originally designed and constructed as a beef processing plant, so upgrades and modifications were relatively straightforward.

Obtaining cattle will likely be no issue for the plant. Missouri is the third-largest cow-calf state in the U.S. It had 2.083 million beef cows on January 1, 2020. Missouri Prime estimates there are one million beef cows within a 50-mile radius of the plant. The state’s big issue is that it has no large feedlots for finishing cattle. It does not feature in the 12 states in USDA’s monthly cattle-on-feed report. To overcome this, Missouri Prime’s owners have worked with at least six small feedlots to get them to become regular suppliers. I wish the new venture the very best.

About the author

Contributor

A North American view of the meat industry. Steve Kay is publisher and editor of Cattle Buyers Weekly.

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