HOLCOMB, KS – Tyson’s Holcomb, KS facility that was closed August 9, 2019 following a fire will begin receiving cattle the first week of December. The fire severely damaged hydraulic and electrical systems that supported the harvest floor and cooler areas.
Prior to the fire, Tyson held the nation’s largest market share of beef processing capacity at 29%, (six percent of that was in the Holcomb plant) followed by JBS, Cargill and National at 23%, 22% and 12%, respectively.
After the fire at the Holcomb beef packing facility, both the beef and cattle markets saw significant price movements. Live cattle futures moved limit lower, the fed cattle market disappeared and the cash cattle market plummeted.
At the same time, the beef packing industry was making record-breaking gross margins.
Still today and while markets continue to stabilize , questions remain as to how the temporary shuttering of just one beef packing plant could have created such a market upheaval. That has led to many in the industry believing there was market manipulation.
In August 2019, U.S. Agriculture Secretary Sonny Perdue ordered an investigation into widening prices between cattle and beef. The USDA is investigating whether there is evidence of price manipulation, collusion or other unfair practices. The investigation into beef pricing practices following the fire is expected to wrap up by the end of this year.
Still, others in the beef and cattle trade say the market responded as would be expected – allocating supply and demand fundamentals based on all known dynamics at the time.
First, immediate wholesale supply concerns from groceries, restaurants and institutions, translated to higher boxed beef prices being paid to packers. At the same time, concerns over less processing capacity reduced the demand for cattle that resulted in a price plunge in futures, feeder and cash cattle markets. In addition, it’s argued the costs of diverting cattle to other facilities for processing – which Tyson did – creates a significant increase in a plant’s operating costs, ultimately reflected in net margins.
Officials with the Holcomb plant (that prior to the fire, had a daily capacity of approximately 6,000 head and accounted for about 6% of U.S. beef slaughter capacity) said efforts to resume harvest operations will begin the first week of December, with intentions to be fully operational by the first week of January.
Steve Stouffer, group president, Tyson Fresh Meats said in a release, “Our team is ready to begin the process of ramping back up, recognizing that there will be testing and adjustments over the first few weeks to ensure equipment functionality while maintaining our commitment to team member safety and food safety.”
The company paid workers throughout the shutdown.
