by Derrell Peel, Oklahoma State University

Recent announcements of facility closures from the beef packing industry highlight the continuing challenges that low cattle inventories pose for the beef industry. Beef packing represents large investments in facilities and a long-term perspective. Adjustments in packing capacity occur slowly and are not just the result of current cattle inventories, but the cumulative effects over time. Fig. 1 shows how average cattle inventories have decreased over time.

The majority of beef packing capacity was built from the 1960s into the 1980s, when average cattle inventories were 20-30 million head larger than today. Adjustments to packing infrastructure occur slowly and abruptly with different regional effects. The numbered boxes in Fig. 1 correspond to the major adjustments to fed packing capacity in the past 26 years:

1. ConAgra plant burned, 2000, Garden City, Kan. (unplanned reduction; plant not rebuilt)
2. Tyson plant closed, 2008, Emporia, Kan.
3. Cargill plant closed, 2013, Plainview, Texas
4. Tyson plant closed/Amarillo plant reduced, 2026, Lexington, Neb./Amarillo, Texas

With both plant numbers and capacities fixed in the short run, Saturday slaughter is the principal source of flexibility for the packing industry to adjust to short-run changes in cattle numbers. Fig. 2 shows Saturday slaughter as a percentage of total slaughter for the past 30 years (red symbols correspond to plant closures). When cattle numbers are insufficient, the Saturday slaughter percentage decreases. The previous cyclical low in cattle inventories prompted generally low Saturday slaughter rates from 2009-2015. The one-year bump in 2013 was likely the result of the plant closure that year.