national beef packing plant closure impacts CA cattle producer

Brawley Plant Closure Leaves Cattle Producers Looking For Options

National Beef Packing Co. closed its Brawley, CA, plant in May. By some estimates, anywhere from a third to a half of the region’s 400,000 head of cattle have left the valley, perhaps never to return.

The Imperial Valley is a different place now. Long the center of California’s cattle feeding industry, this southeastern-most part of California, nestled against Mexico to the south and Arizona to the east, was rocking and rolling as 2014 dawned bright and clear. Just a few short months later, the region had taken on a decidedly different atmosphere.

What’s different is that the National Beef Packing Co. plant at Brawley shut its doors in May. By some estimates, anywhere from a third to a half of the region’s 400,000 head of cattle have left the valley, perhaps never to return.

It was Jan. 31, when National announced it would close the plant and everything got thrown up in the air, says Bill Brandenberg of Meloland Cattle Company at El Centro, CA. “From that point forward, everybody has been trying to figure out what the next step will be.”

The region specializes in feeding Holsteins, which go on feed very young and light. Following the National announcement, many of the lighter calves were trucked to feedyards in Texas, Kansas, Colorado and elsewhere. As those cattle headed east, feedyard customers didn’t replace them, Brandenberg says.

However, thanks to a summer fed-cattle market that defied even the wildest expectations, the cattle that were slaughtered in June and early July made a profit.

“Even though we had to put wheels under them and send them out of here and pay a lot of freight bills, the cattle are making money,” Brandenberg says. The cattle aren’t making the profit they would have if they’d stayed at home. But if there’s a positive in the current situation, Brandenberg says it’s that the plant didn’t close a year earlier. “If it was a year ago when fed cattle were losing a lot of money, it would have been a disaster,” he says.

Feedlot vacancies and employee layoffs

As it is, it’s still not a good situation, says Steve Snow with Phillips Cattle Co. at El Centro, CA. He says that the Imperial Valley, without a packing plant, will never return to the 400,000 head that were on feed the beginning of the year. “We’re likely going to become a 150,000 to 200,000-head feeding area, those of us who survive.”

Using his situation as an example of what happened throughout the valley, Snow says his 24,000-head feedyard was nearly at capacity when National announced the closure. Three months later, he’d lost half his cattle and laid off 10 employees.

For Snow, the latter effect may be the most difficult aspect of the situation. Those employees were valued members of his team, and letting them go, he says, “was very difficult for me.”

According to Brandenberg, feeders are experimenting to figure out what will work and what won’t. Snow agrees, saying all the feedyards are trying different things. Some are looking to become more of a backgrounding-starting operation: taking Holstein calves, feeding them to feeder cattle weight and then shipping them to feedyards in the Southern Plains.

In addition to Holsteins, Snow feeds both native and Mexican crossbreds. “I’m bringing in Mexican calves still, but maybe I’ll feed them at Harris Ranch if they can take them. Or maybe I’ll sell them as feeders, put them on the video. I’m also going to try feeding natural cattle,” he says.

With the Brawley plant shuttered, the next closest and only viable alternative is the JBS plant at Wellton, AZ, which processes Holsteins. “The other thing we’re trying to do — Mexico has some capacity, and they’re USDA-approved. We’re trying to come up with protocols for being able to ship cattle down there to be killed,” Snow adds.

“Until we get done feeding those cattle at all the places we’ve got them, it’s pretty hard to tell” what will work, Brandenberg says. Those displaced cattle will be gone by this fall, giving Imperial Valley feeders a short time frame to plan their next moves.

Imperial County struggles

In the meantime, Imperial County and its communities are struggling. The Brawley plant was the largest private employer in the county, with a workforce of 1,300. That’s significant anywhere, and especially in the Imperial Valley, which historically struggles with high unemployment.

As on-feed numbers drop, the ripple effect is felt region-wide. In addition to letting 10 good people go, Snow says, “I’ve idled equipment, I’m not building new pens, I’m not buying the supplies I used to buy in town and I’m not bringing in outside mechanics to fix equipment.”

He’s had to cut expenses in half, meaning he’s not buying as much of everything, whether it’s parts at the parts store or hay from neighboring farmers. “And I’m not the only one doing this. Every feedlot owner is spending less money in the valley,” Snow says.

What’s more, the area is bracing for another hit: An immigration detention facility is slated for closure by year’s end.

Brandenberg says a local economist estimates that the total impact of losing the packing plant will be around 2,000 jobs. Throw in the 500 jobs at the immigration center, and unemployment is estimated to be 30%-31% by the end of the year.

“The economist estimated it will drop the gross domestic product in Imperial County by 4%-5%,” Brandenberg says. “If you mention that to the average guy on the street, he doesn’t think it’s a big deal. But if you tell him that’s a bigger impact than the recession of 2008, then he understands what the economic impact is.”

The Brawley plant’s future

While rumors continue to circulate about the packing plant’s future, neither Brandenberg nor Snow are aware of any viable options. “For somebody to come in and buy this plant, it doesn’t make sense,” Snow says, “because the supply just isn’t there until cattle numbers come back up.”

feedlot placements

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The composition of feedyard placements has undergone some significant changes since 2000. See the trends here.

He says any potential buyer would have the same problem that caused National to shut the plant down to begin with. “We could provide maybe 60% of the cattle from this valley. They’d have to go outside for the other 40%, and the cattle just aren’t out there anymore.”

That leaves Imperial Valley cattle feeders scratching their heads and speculating on a future with limited options. “We’ll just keep putting one foot forward,” Brandenberg says. “I guarantee you a year from now, things will be different than they are today.”

Just how different, however, is anybody’s guess.

 

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