(The Center Square) – A new beef processing plant will be built in the Texas Panhandle, a significant move for Texas in an industry controlled by four multi-billion-dollar companies that aren’t run by cattle producers.
Producer Owned Beef, LLC is building a new beef processing plant in Amarillo that will allow Texas cattle producers to access the value chain and keep hundreds of millions of dollars in Texas.
"'Made in Texas' is a powerful global brand and continues to attract investment from companies serving crucial industries," Gov. Greg Abbott said. "Producer Owned Beef's selection of Amarillo for its new beef processing plant further reinforces the Panhandle as a leader in U.S. beef and beef production."
Unlike the “big four,” the Texas company’s major equity owners are cattle producers, unique to the processing industry.
Four giant meatpackers have traditionally influenced the processing market for decades: Tyson Foods of Springdale, Arkansas, Cargill Meat Solutions Corp. of Wichita, Kan., JBS USA of Greeley, Colo., and National Beef Packing Co., LLC, of Kansas City, Mo. The packers, which are also connected to or own feedlots, producers argue, control the price of beef in the U.S.
While smaller family-owned ranchers and producers struggle to raise cattle while battling environmental and other elements, the four giant packers influence the price of cattle at sale barns and feed lots. They currently harvest roughly 85% of U.S. grain-fed cattle that are made into steaks, beef roasts and other cuts of meat for consumers, about 70% of total U.S. beef production.
While Texas ranks first in cattle feeding, it ranks third in fed cattle processing. Now the Panhandle, the heart of cattle raising country, will house a producer-run processing facility.
Doing so will shore up the supply chain, enhance food security, increase competition and benefit Texas cattle producers, Producer Owned Beef argues. “Competition in the industry is needed to rebalance the scales for producers,” it says.
Its plan is to restore “balance in the beef industry by reversing compensation disparities cattle producers currently face. As owners of the company, producers will receive a percentage of wholesale beef prices for the cattle they supply and a share of the profits from the plant,” it says.
“Many of our ranchers and feeders are third-, fourth- or even fifth-generation producers who have invested their lives in feeding Americans,” Monte Cluck, a Producer Owned Beef Board member, said. “With this model, where producers are also owners, we’re creating economic sustainability for small and medium-sized producers by ensuring they receive a greater share of the financial upside for the hard work they do.”
Building the new facility wouldn’t have been possible without the support of the state and city, the company argues.
It received a Texas Enterprise Fund grant of $12.2 million and $11.1 million, including 610 acres, from the Amarillo Economic Development Corporation. It also received 10 years of tax abatements from the Highland Park School District and City of Amarillo as well as infrastructure improvements for sewer and water.
The plan includes a $670 million processing facility, which will eventually employ up to 1,600 people at full capacity with an expected payroll of $121 million annually. The groundbreaking is expected to occur in the first quarter of 2023; operations are expected to begin by late 2025.
“Beef and beef production are part of Amarillo’s culture and history, with nearly 28 percent of cattle fed in the United States coming from the Texas Panhandle region,” Amarillo Mayor Ginger Nelson said. “Beef is a staple of the Amarillo economy, and the addition of Producer Owned Beef, LLC, enhances Amarillo’s role in the beef industry on a national scale. This addition to our economy takes what has long been a strength for Amarillo – the beef industry – to another level and confirms that Amarillo is in an historic season of economic growth."
By 2027, it’s expected to generate $1.27 billion gross product annually and 12,863 jobs in the Amarillo/Panhandle area and $1.53 billion in gross product and 14,884 jobs in Texas, including multiplier effects, the company says.
Over 10 years, the cumulative impact of incremental profits to local operations is expected to include $649.4 million in gross product and 6,737 job-years of employment the Amarillo/Panhandle area, it says, and $795.3 million in gross product and 7,853 job-years in Texas, including multiplier effects.
The potential increase in tax receipts from construction and related activities is expected to be $41.6 million in receipts to Texas and $25.1 million to local government entities. Increased tax receipts from the first year of plant operations are estimated to generate $75.5 million in receipts to Texas and $53.3 million locally.