Dive Brief:
- Cattle producers hailed Tyson Foods’ decision this week to keep its Denison beef-processing plant open.
- In 2010, Tyson said it was considering closing the plant that employs 400 workers because of decreasing cattle supplies in the area.
- However, the combination of high beef prices, low feed prices, and the movement of the cattle industry makes the Denison location more valuable to the company, which had $8.9 billion in sales last year.
Dive Insight:
States favored for cattle, from Texas through the Dakotas, have been pummeled by drought conditions that began in 2010. Consequently, more cattle production has moved further north. Iowa is the nation's top corn-producer, a key component for low feed cost and another benefit for the state. So for now, conditions favor Denison, though some experts warn that the reprieve for the plant may prove short-lived. They believe that record-low inventory will keep efficiency at plants down for the next two to four years. That would make further plant shut-downs almost inevitable.
What's good for Tyson's business in the long-term may not prove good for workers in the area when it does decide to close the plant that employs them. The economics of such centralized control over the meat industry is the subject explored in a new book, which focuses on Tyson.