Beef Buzz News
Meat Packing Industry Needs To Add About 6,000 Head To Daily Capacity, Says Dustin Aherin, Rabo AgriFinance
Thu, 03 Sep 2020 08:37:48 CDT
The rash of catastrophic events hitting the beef industry during the past year, including the fire at the Kansas beef processing plant and COVID-19 has led Dustin Aherin, animal protein analyst for Rabo AgriFinance, to conclude we need more meat packing capacity.
Ron Hays Beef Buzzes With Dustin Aherin
Aherin was a featured speaker at the recent Feeding Quality Forum sponsored by the Certified Angus Beef program.
We need to expand packer capacity to make the supply chain more resilient, Aherin said.
It has to be driven by economics and profitability, he said.
Aherin suggested we need to add about 5-6,000 head per day. It could come from existing plants, but it could also come from new construction.
Small to medium sized plants that specialize in niche markets with 1-2,000 head per day capacity, could fill the gap, he said.
The cost of building a small to medium size packing plant comes with a large price tag.
The animal protein analyst estimates it takes about $100 to $120 million investment per 1,000 head of capacity when building a new plant.
We need to have enough capital to survive a full cattle cycle, Aherin said.
The beef industry has really capitalized on many of the successes over the past decades, but we can't rest on past achievements, Aherin said.
We need to be thinking 5 to 10 years out because in reality that is only a couple of generations of beef cattle, he said.
Click on the LISTEN BAR below to hear more comments from Dustin Aherin.
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