Why is distrust the foundation for any new beef plant? Cattle ranchers distrust beef processors and clamor to build new cattle/beef processing plants in the face of underutilization of current industry capacity.

Is beef consumption growing? No, per capita consumption has been declining for years (Source: NASS, ERS). Beef demand, a more accurate measure, also shows a 15.4% decline since 1980. (Source: Professor Glynn Tonsor, Kansas State University, Meat Demand Index table). Thankfully, the US population keeps growing, and when coupled with production efficiency of more beef from fewer cattle, the overall beef industry grows. At the same time, the industry has consolidated with fewer processors dominating the expanding cattle herds, and distrust continues to fester.

Better beef marketing, which may offer a solution for both producer and processor, is left in the dust of new plant construction. Producer Owned Beef (POB) is the latest attempt to bypass this distrust.

In Meatingplace, 8-30-2023, POB announced that the state of Texas and city of Amarillo are helping in its development of what they claim will be the nation’s sole processing plant owned by ranchers and feeders. Maybe they can eliminate the distrust by forming a partnership of producers and processors.

In disbelief, I went to the POB website to better understand their proposed partnership. POB’s start up beef plant will be supplied in part by Amarillo’s surrounding cattle ranchers and feeders. How can this group of cattle ranchers, feeders and Amarillo citizens think their new beef plant can prosper in today’s oligopolistic US beef production and sales reality?

The POB website introduced their new venture’s management as follows, “A veteran management team with a commitment to doing things better in every aspect of beef processing sets Producer Owned Beef, and the delicious products we’ll make, apart.” The seven “Our Team” members and four “Consultants” are steeped in cattle and beef production. But, I could not find one mention on the website of how the beef from processing 3,000 head per day will be marketed. Not one of the team members or consultants touted beef marketing as a significant part of their background. And, what is worse, only one woman was among the 11 listed team members or consultants.

Lest we forget, women are still the primary purchase influence in finding and buying beef for home consumption. Is this omission just a “good ole boy” chauvinistic oversight or a very shortsighted new plant justification?

Amarillo’s unemployment rate is 2.6%, the lowest in Texas. Where will the 600 or so plant employees come from? They won’t be Amarillo citizens; they already have jobs. Amarillo is some 438 miles from the border city of Ciudad Juarez, Mexico. For years, our industry has been principally an immigrant business. The new POB plant will be no exception.

Here’s my “back of the envelope” math for this new plant: 3,000 head per day is 75 live haul tractor and trailers showing up every day at the plant’s doors. At a 63% yield for each of these 1,350 pound animals equals 2.5 million carcass pounds. A 75% carcass-to-beef yield results in 1.9 million pounds of beef to be sold, every day, not to mention the blood, guts and hides. All of that beef, etc., is why marketing is important. It seems that POB doesn’t think so, as they don’t mention marketing of any kind on their website.

Growing up on my parent’s orchard, I went with my Dad to the bank as he tried to negotiate a loan on the apples and pears we would harvest each fall. That has given me some empathy for cattle ranchers who must go to their bankers and negotiate loans for that year’s cattle. Bankers know that they can quickly turn the rancher’s “cattle collateral” into cash should they have to call the loan. But, if that rancher has pledged his savings to finance a new beef plant, there is little room left for financing cattle.

The current capacity utilization of US beef plants is 85%. It’s a fool’s errand to build a new plant, adding to that underutilization thinking it will be profitable any time soon. Lost in POB’s wake will be invested money and cattle ranches.

Another new beef plant: Where will the beef go?

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