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Drought changing U.S. cattle business


February 25. 2013 1:42AM


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WICHITA, Kan. — Years of drought are reshaping the U.S. beef industry with feedlots and a major meatpacking plant closing because there are too few cattle left in the United States to support them.


Some feedlots in the nation’s major cattle-producing states have already been dismantled, and others are sitting empty. Operators say they don’t expect a recovery anytime soon, with high feed prices, much of the country still in drought and a long time needed to rebuild herds.


The closures are the latest ripple in the shockwave the drought sent through rural communities. Most cattle in the U.S. are sent to feedlots for final fattening before slaughter. The dwindling number of animals also is hurting meatpackers, with their much larger workforces. For consumers, the impact will be felt in grocery and restaurant bills as a smaller meat supply means higher prices.


Texas, the largest beef-producing state, has been particularly hard hit with a historic drought in 2011 from which it still hasn’t fully recovered.


“Most of the bad news is in Texas,” said Dick Bretz, an Amarillo broker who specializes in selling feed yards and other agribusinesses. “That is where I see most of the empty yards, that is where I see most of the interest in selling yards and where I see the least interest in buying yards.”


He recently dismantled a 7,000-head feed yard in Hereford, Texas, for a new owner who had bought it for the land, not the business. The previous owner had lost the property to foreclosure, and the facility was in very poor condition and would have cost too much to repair, he said.


When corn prices first spiked to $8 a bushel nearly four years ago, about 70 big feed yards went up for sale in the High Plains feeding area that includes Texas, Kansas, Colorado and Nebraska, Bretz said. Today, there are 10 and 15 feed yards for sale in the region, mostly in Texas. Bretz said he knows of 15 more that are empty, three recently dismantled and two others now being torn down.


Feed yards typically employ one worker per 1,000 head of cattle, so even big ones may not have more than a few dozen workers. But they supply meatpacking plants, which have much bigger workforces, and feedlot closures could herald greater unemployment to come.




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