JBS USA announced last week that it plans to close two facilities in Pennsylvania and Tennessee. The company said it’s part of a broader strategy to focus on growth, modernization, and long-term competitiveness in the U.S. Brad Kooima, a livestock market analyst with Kooima, Kooima, and Varilek Trading, said there could be more infrastructure changes ahead in the U.S. beef sector, including herd expansion.
“It doesn’t take a big leap of imagination to think you could lose another plant. Let’s say you lost more capacity. Well, between beef on dairy and the basic human nature, that you know what, it’s finally raining in Texas. Texas is the number one cow state in the United States. If they’ve got feed, and they’re incentivized by price, and if they think it’s finally safe to go about in the woods after they get through this screwworm thing, of course, they’re going to expand. That’s what they’re going to do. The people ask me, ‘Do you think they’re really going to expand?’ Well, I know they are.”
He said expansion will come, but he wants it to be under control.
“I know they are where there’s grass. I know they are in the Dakotas, and I know what’s going on for the beef-on-dairy thing. There’s no question that that’s increasing the available supply going into the thing. So, I just don’t want us to get down the road two years from now, and then we’re going back into the ‘Oh my gosh, now we can’t get a bid, and too many cattle, and not enough hook spaces, and blah blah blah, and you got the packer that’s only taken care of his people that have a relationship with them,’ right? I worry that that’s the next step. I was there in 1998 when the hogs had that whole flip over, and then the whole industry changed. I don’t want to see that in ours, and so, hopefully I’m overreacting, but I don’t think I am.”