Can the U.S. beef industry expand packing capacity? This was just one, of the many questions, answered in a recent Rabo Agrifinance report. According to animal protein analyst Dustin Aherin, there indeed is room for expansion in the beef packing industry. “There’s economic incentive to expand U.S. fed cattle capacity by 5,000-to-6,000 head on a daily basis. If the industry does that, it would more evenly distribute profitability across the cattle supply chain.” Aherin goes on to say there are both current and new sources for expansion. However, there are also economic, financial and geographic considerations for the creation of any new beef packing plants. “Building a new plant is expensive. Our estimate is it takes about $100-to-$120 million per 1,000 head of daily capacity. That doesn’t count operating costs. A new facility would likely need to be able to operate for a full cattle cycle.” Hear more from Aherin in this interview.
