(Adds background, company spokesman, analysts comments)
By Theopolis Waters
CHICAGO, July 30 Cargill Inc, one of
the nation's largest beef processors, said on Wednesday it plans
to close its Milwaukee, Wisconsin, beef-processing plant on
Friday, because the size of the U.S. herd has fallen to its
smallest in 63 years.
The ground beef production side of the plant, which employs
about 200 people, will remain open, the company said.
Early last year, Cargill year shuttered its Plainview,
Texas, beef plant, which processed about 4,500 head per day,
because of the scarcity of cattle and overcapacity in beef
processing in the Texas Panhandle.
Fewer cattle are available after several years of drought
have hurt crops, forcing ranchers to trim their herds.
"Closing our Milwaukee beef plant is taking place only after
we conducted an 18-month-long analysis of the region's cattle
supply and examined all other possible options," said John
Keating, president of Cargill Beef, based in Wichita, Kansas.
"The harsh reality is that the U.S. beef cattle herd is at
its lowest level since 1951, with any significant herd expansion
being years away," he said.
The Milwaukee facility has an estimated daily slaughter
capacity of 1,300 to 1,400 cattle, consisting primarily of cows.
Closing the plant would represent roughly 6 percent of the
total U.S. annual cow slaughter capacity of about 7.1 million
head, said John Nalivka, president of Sterling Marketing Inc of
Cows that would be sent to the Milwaukee plant will likely
be absorbed by some of Cargill's nearby competitors, he said.
Cargill's 600 employees affected by the shutdown will be
offered positions at other company locations in the region.
There are no plans to reopen the plant, Cargill spokesman
Mike Martin told Reuters via e-mail.
"The challenge is that there are so few animals, not that
there are surplus animals that will be available to others.
There may a small volume of animals that others benefit from
Cargill not processing," said Martin.
The company operates six other U.S. beef processing plants
in California, Texas, Kansas, Colorado, Nebraska and
"If they were only killing cows, the impact on the larger
cattle and beef markets would probably be pretty low," said
Missouri-based Doane Advisory Services economist Dan Vaught. By
the same token, the closure could be mildly bearish for cow
prices in the area, he said.
(Reporting by Theopolis Waters; Editing by Dan Grebler)