August 14, 2020

Agri Beef plans new processing plant in Idaho

True West Beef, a partnership between Agri Beef Co. and cattle ranchers and feeders in the US region of Jerome, Idaho, recently announced their intent to build a new state-of-the-art regional beef processing plant, Tri-State Livestock News reported.

Plans for the processing plant are in the permitting stage with the town of Jerome. Thefacility has a planned daily capacity of 500 head. It is said to be an alternative model in the beef processing segment where large facilities have come to dominate the industry, being smaller and flexible in scale and unique in structure, with livestock producers directly involved in equity ownership.

The Agri Beef team is quick to point out that planning is still in the early stages, and there are many questions they cannot answer yet, including how their ownership structure will look, what their cattle supply chain will be, and their timeline for construction and opening. "All we can say is, it will be as soon as possible," says Wade Small, executive vice president of business development for Agri Beef. Nonetheless, the new facility has received endorsements from Idaho's governor Brad Little, Idaho's director of commerce and director of agriculture, and members of the Jerome economic development community.

In addition, the new facility is not a reaction to the COVID-19 pandemic, and was in the initial stages of planning before the pandemic hit, and progress was stalled for a few months but has now resumed. "We've been looking at expanding for a long time," says Small, as demand for their Agri Beef branded beef, which include Snake River Farms, Double R Ranch, St. Helens Beef and Rancho El Oro, had exceeded the capacity of the Agri Beef-owned Washington Beef processing plant.

Keeping the cattle business going in the northwest is pretty important to us. We need it and everybody producing cattle needs it," says Small. "It's a good way to create a scenario that allows partners in the cattle feeding industry in Idaho and the West to benefit."

Cameron Mulroney, executive director of the Idaho Cattle Association, adds, "Having a facility here in the state is a huge asset," he says. "One thing we've learned through these tribulations with COVID and the (Tyson packing plant) fire is that we need the capacity to process these cattle and more ability to do that across the nation. It helps in price discovery, it helps in competition."

A recent study of the packing industry by the USDA shows that the beef supply backlog is consistently at the packing level. The Tyson packing plant fire of August 2019 was estimated to halt five to six percent of the country's beef processing capacity, and resulted in a price spread between dressed fed cattle price and Choice boxed beef cutout value of $67.17 per hundredweight. Then in April 2020 the COVID-19 pandemic idled nearly 40% of US beef processing capacity, resulting in a price spread of the same comparison of over $279 per hundredweight. An investigation by the U.S. Department of Justice into allegations of anticompetitive practices engaged by the meatpacking industry is ongoing. A movement to support and grow more local custom butchershas also come about.

"If we can add another dollar at each stop, it will benefit cattlemen across the US," says Mulroney.

"This development is exciting for us and the region and the cattle industry," says Small. "It's something we're planning will help improve the sustainability of the cattle business in the West for sure and hopefully the entire country."