New Beef Plant In Okla Panhandle Could Harm Idustry

US - A $200 million beef processing plant that is to be built in the Oklahoma Panhandle could be financially harmful to the beef industry, an industry analyst said.
calendar icon 21 October 2006
clock icon 1 minute read

Smithfield Beef Group and ContiGroup Cos. Inc. announced Wednesday they had formed a partnership to build a 650,000-square-foot beef processing plant near the Texas County town of Hooker and process 5,000 head of cattle per day.

In a story published on the online meat industry Web site,  JP Morgan Chase analyst Pablo E. Zaunic said a processing plant that size would add too much capacity to the industry and the beef processing industry's financial performance could suffer.

The plant would add about 3.6% to the industry's current capacity and that's "particularly bad news for those (processing plants) in the Texas, Colorado, Kansas areas because of their proximity to the planned Oklahoma plant," Zaunic was quoted as saying in the article published under the headline "New Plant Could Be Bad for Industry."

He also questioned whether the announcement was part of a Smithfield Beef Group strategy to force a competitor, HM Capital Partners, to sell the Swift beef processing plants it already operates.


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