Sustainable Beef, a rancher-owned beef processing facility in North Platte, is set to open this spring. The facility is expected to process 1,500 head of cattle per day, roughly 40 truckloads, and ship 22-26 truckloads of beef when fully operational. The genesis for the facility was spawned a few years ago when cattle producer frustrations with the processing sector were widespread. At the time cattle were plenty, cattle prices were low, and beef cutout prices were relatively high. Plant shutdowns and slowdowns due to COVID, fires, and cyber-attacks were a frequent occurrence. Cattle producers were losing money. Processors were generating record profits.
Fast forward to today and market conditions are vastly different. Cattle numbers have declined to multi-decade lows, cattle prices have hit record highs, and retail beef prices are even higher. Today, ranchers are experiencing record profits (Figure 3). Feedlots have opportunities for positive returns (Figure 4). Now it’s the processors who are unprofitable. Drovers reported in February that beef packers saw operating losses of $174 per head. Other reports have suggested processor losses exceed $200 per head.
FIGURE 3. ESTIMATED AVERAGE COW-CALF RETURNS
