Posted: Thursday, July 07, 2011 10:00 AM
Carol Ryan Dumas/Capital Press
Patrick Florence, owner of Independent Meat in Twin Falls, says lack of cattle supply and feed issues have been big factors in the demise of meat packing plants in Idaho.
Loss of Tyson plant, mad cow to blame, processor says
Red meat production in Idaho has suffered significant declines in the past 10 years, dropping nearly 70 percent from 2000 to 2010.
Cattle ranching and cattle feeding have been injured by a number of things, said Patrick Florence, CEO of Independent Meat pork processing in Twin Falls.
The movement of potato processing out of Idaho produced less byproduct for animal feed. Competition for feed from dairies has also played a factor, and mad cow was a big component, with the U.S. closing the border to Canadian cattle in 2004.
"Some thought it would be a boon. In the case of the Pacific Northwest, it significantly affected the number of cattle available for slaughter," Florence said. "Packers depended very heavily -- 60 percent to 70 percent -- on Canada to make kill."
That led to the loss of a number of kill plants in the Northwest, because there weren't that many fed here anymore, he said. Three large plants in Boise, one in Gooding and one in eastern Idaho shuttered their doors in the last 15 years, all due to lost supply.
Canadian cattle kept the red meat industry alive and viable, said John Nalivka, owner of Sterling Marketing, economic consulting for the red meat industry, Vale, Ore.
The border "opened back up in 2005, but the damage was done. It created so much havoc, you can't turn back the hands of time," he said.
The biggest hit to the industry was the loss of the Tyson plant in Boise in 2006, but there's been more, including the closure of XL Four Star Beef in June, he said. XL processed cull cows, and at 10 percent to 15 percent of a rancher's revenue, it was a good deal for ranchers in the region.
Ranchers' only options now for cull slaughter is to haul cows to JBS in Tolleson, Ariz., or BPI in Fresno, Calif. Freight costs will cut into their profits, he said.
Idaho's slaughter options for steers and heifers have dwindled to JBS Swift in Hyrum, Utah; Tyson in Pascal, Wash.; and AB Foods in Toppenish, Wash.
Idaho cattle are fed here but moved out of state for processing, with local communities losing the value-added economic benefit of processing, Nalivka said.
The processing industry has moved to consolidation due to the shrinking beef herd, he said.
The U.S. cattle herd peaked in 1975 at 132 million head. It's down to 92 million today and will probably be closer to 90 million when all is said and done, he said.
"Economies of scale is a huge deal in packing companies," he said. "They need that capacity of utilization on the kill side."
Plants need to run at least 90 percent of capacity, even more if they're carrying debt, he said.