GREELEY, Colo. — Western U.S. sheep ranchers are worried because meatpacking giant JBS USA just purchased the nation’s second-largest lamb slaughterhouse and plans to convert it into a beef plant — a blow to the lamb sector’s processing capacity.
Frank Shirts, an Idaho sheep rancher, said he has watched the industry consolidate for decades — he’s bought out 32 flocks himself — but this calamity, he said, may lead him to “walk away.”
Shirts said he processes about 15,000 sheep at the facility, Mountain States Rosen in Greeley, Colo., annually. Now, he said, that infrastructure won’t exist.
“We’re just at their mercy,” he said of JBS.
According to the American Sheep Industry Association, the West has only seven commercial lamb packing plants. Mountain States Rosen has processed about 20% of U.S. lamb annually and served ranchers in at least 15 states, including California, Idaho, Oregon and Washington.
Until July, the plant was owned by Mountain States Lamb Cooperative, 150 ranch families.
The lamb plant is across the street from a JBS beef processing facility. JBS owned and operated the plant before selling it to the cooperative in 2015.
This spring, facing COVID-19 losses, Mountain States Rosen filed Chapter 11 bankruptcy.
According to the American Lamb Board, the industry was hard-hit by restaurant closures and smaller-than-usual sales for Passover and Easter.
The co-op’s leaders told the Capital Press they hoped the Chapter 11 filing would allow a Mountain States subsidiary, Greeley FAB LLC, to win the bankruptcy auction, refinance and keep its 222 employees.
But in a July 16 auction, JBS had the winning bid of $14.25 million.
JBS plans to use the plant as an “added-value beef operation,” according to company statements.
The lamb industry was caught by surprise.
The co-op’s staff and board members say they’ve been getting calls the past few weeks from worried ranchers.
The frenzy caught the attention of about a dozen legislators in five Western states. Headed by Sen. Mike Lee, R-Utah, the group on July 29 sent a letter to the U.S. Department of Justice.
JBS’s acquisition of the facility, they wrote, creates an anticompetitive situation.
“Through this acquisition, JBS will eliminate a major domestic competitor in the region and could replace significant quantities of American-raised lamb with imported products,” the letter said.
Cameron Bruett, a spokesman for JBS, told the Capital Press Monday JBS has agreed not to make any material changes to the facility for 30 days while under Department of Justice scrutiny.
“We welcome their review,” Bruett said, though he declined to tell the Capital Press the starting or ending dates for the 30-day period.
The U.S. Department of Justice did not immediately respond to a request for comment.
Bruett of JBS also said a new lamb processing plant will open in the region this fall. He was referring to a new lamb plant coming soon to Brush, Colo.
Robert Ball, Idaho sheep producer and board member of the Mountain States Lamb Cooperative, said the new plant will be helpful, but likely won’t have all of the necessary capabilities.
“It could take some pressure off, but not enough,” said Ball.
Kevin Quam, general manager for Colorado Lamb Processors, told the Capital Press he expects the plant will have a capacity of 8,000 to 10,000 head a week. At least initially, the facility will do only harvesting and not fabrication.
“From a harvest standpoint, I think we’ll be a viable option for a lot of producers,” said Quam.
Quam said the team is rushing to get the new plant “up and running.” The plant is estimated to open Sept. 14.
Industry leaders urge sheep producers to call and write their senators and representatives, asking them to put pressure on the Justice Department.