July 11, 2016

Cargill is in the news again. The company continues its restructuring and shifting of its meat business upstream with the announcement that it agreed to sell its two Texas-based cattle feedlots in Bovina and Dalhart to Friona Industries for an undisclosed amount. Cargill will retain its feedlots located in Leoti, Kansas and Yuma, Colorado.

The Dalhart lot has a yearly capacity of 160,000 head of cattle, while the lot in Bovina has an annual capacity of 120,000 head. Friona has been a long-standing, key supplier of cattle to Cargill, and after the deal closes, both lots will continue to supply cattle to a separate Cargill facility for processing.

The sale of the feedlots aligns with the company’s strategic plan to re-imagine its protein business, and will free up working capital for investment along the company’s North American supply chain. Over the past 12 months Cargill has announced acquisitions and capital investments totaling $500 million including the purchase of a beef processing plant in South Carolina and a custom cooked meats, soups and sauces business with plants in Texas and Tennessee; conversion of a Nebraska ground beef plant to a specialized cooked meats plant; a new beef distribution center at the company’s Dodge City, Kan., beef processing facility; and an expansion of egg processing capabilities at a Michigan plant, according to a company statement.

“Anticipating the future direction protein demand is headed, we believe it is wise to redeploy capital away from feed yard and cattle ownership to projects that enhance our capabilities and provide greater value to our customers and consumers, now and in the future,” said John Keating, president of Cargill’s Wichita-based beef business.

In addition to undertaking a wide-sweeping overhaul of its management structure last year, Cargill sold its pork business to JBS USA for $1.45 billion, and more recently announced it agreed to acquire Texas-based Five Star Custom Food Ltd. a company that specializes in the production of cooked protein food products, as well as soups and sauces, for supply to the foodservice and food processing industries. Then, only days ago, the company also announced the sale of its ag-retail unit with 18 locations across Nebraska, South Dakota, Minnesota, Wisconsin, Michigan and Indiana to Agrium.

Speaking of the company’s recent flurry of deals, Mr. Keating notes, “These are concrete examples of our ongoing commitment to grow our protein business. We have a lot of positive momentum and are confident it will continue to build going forward as we continue to help our customers’ businesses thrive.”

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Lynda Kiernan