Even though cattle producer Lee Reeve doesn’t have a contract with the Tyson Fresh Meats plant scarred by fire this weekend, he’s still bracing for the effects.
“Whenever you lose – hopefully temporarily – a market, it hurts everybody,” said Reeve, who operates a feed yard in Garden City about 10 miles from the plant.
Days after the crippling fire at one of the largest beef plants in the United States, the consequences are still rippling through the cattle industry, both in Kansas and across the country.
The large fire that lashed the Tyson plant in Holcomb on Friday shuttered its operations indefinitely. The company has promised to rebuild and will pay the more than 3,500 employees in the meantime. Gov. Laura Kelly has also pledged her administration’s help.
Still, the market reaction has been brutal.
On Monday, cattle futures sank by the largest daily amount allowed. At least one Kansas beef producer predicted the closure would lead to higher beef prices at the grocery store.
“I think, again, in the short term there will be” a consumer impact, said Matt Perrier, who runs Dalebanks Angus near Eureka.
Shutting the Holcomb plant down, even if just for a few weeks, will place greater strain on the cattle-feeding industry. The plant represents about 6 percent of the country’s cattle processing capacity, and about a quarter of Kansas capacity.
The shutdown leads to a “bottleneck” of cattle waiting to be processed, said Rep. Steven Johnson, an Assaria Republican who’s also a farmer.
Ryan Flickner, senior director of advocacy at the Kansas Farm Bureau, called the situation a “logistics nightmare.” Producers who were set to send their beef to the Holcomb plant are now scrambling to come up with alternatives.
“How do you line up trucking and transportation and logistics?” Flickner said of what producers are facing.
The industry is currently running at capacity, “so there’s not a lot of room for adjustments,” said Scarlett Hagins, a spokeswoman for the Kansas Livestock Association. Cattle-feeding states, like Kansas, will need to increase capacity by an estimated 8 percent or more to compensate for the temporary loss of the plant, she said.
Before the shutdown, the plant was harvesting about 6,000 cattle a day. Now, all those cattle must go somewhere else to be slaughtered.
“We’ve got to find someplace for those cattle to go and in the short term it’s going to be other plants and other Tyson plants trying to increase their capacity to take over what’s missing at the Holcomb plant,” Hagins said.
Reeve expressed hope that other plants can pick up the slack, but he acknowledged the closure will hurt the markets. What’s unknown is how long the markets will suffer, he said.
“Everybody’s kind of running at capacity anyway … they’re going to have to fit a few more cattle in and we’re hoping they can do that,” Reeve said.
On the plus side, consumer demand for beef is excellent, Perrier said. That means meat packers like Tyson are making good profits and have a bigger incentive to get the plant back online quickly.
And other plants have an incentive to work more efficiently so they can accommodate the cattle that would have been processed at Holcomb, he said.
“We in the beef industry like to be pretty market driven and let those markets work,” Perrier said. “And this is one case where I am optimistic – these folks are capitalists, most of us in the beef industry are, and they’re going to find a way to find homes for those cattle and get them processed into beef.”