Last Friday, in an effort to remain competitive in a tighter and more volatile fed cattle market, a consortium of cattle feeders in California significantly sweetened the pot to entice National Beef Packing Co. to keep the doors open and the lights on in its Brawley, CA, packing plant.
Monday, National responded, saying thanks but no thanks.
“We have considered all of the alternatives but, unfortunately, the barriers to profitably operate the plant facility continue to exist, National Beef CEO Tim Klein said in a statement. “Even with the proposed incentive package, the declining supply of fed cattle available for the Brawley facility remains the key driver of our decision to close the plant.”
The feeders group, called Imperial Valley Cattle Feeders (IVCF), offered in excess of $9 million in additional cattle price discounts for years 2014 and 2015. The discount is in addition to $15 million in discounts previously given National Beef on Jan. 1, 2013. Annual discounts beyond $24 million would put local feeders at a disadvantage when trying to compete with other markets, according to Bill Brandenberg of the IVCF group.
"National lost a stable supply of cattle from Arizona and some IVCF members had plans to increase their supplies but those plans are now on hold. Imperial Valley cattle numbers are at 25- to 30-year highs. Valley feeders understand National's need for more cattle and are ready to accommodate those needs to the best of their abilities," Brandenberg said.
In addition to price incentives, the offer also included utility rate reductions. “The response was quick, thoughtful and well organized across many agencies,” National said. “We have listened to the feedback and are grateful to all who were involved in the effort to support the continued operation of the facility. We truly regret the impact this may cause to our employees. Their loyalty and dedication has been remarkable and we will be offering assistance to help them transition to other opportunities,” the statement said.
With today’s announcement, plans to close the facility April 4 are going forward.
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