JBS USA to sell its US cattle feeding operations
June 20, 2017
JBS USA plans to sell its massive cattle feeding operation that spans five states and Canada that supplies beef to its U.S. packing plants, a move the company says will be to reduce debt.
In plain English, that means JBS, the largest feeding operation in the world, let alone Colorado, will unload Five Rivers Cattle Feeding, which has $1.8 billion worth of inventory.
“It is a big deal. They’re the largest cattle feeding company in the world. It’s a big deal,” said Steve Gabel, owner of Magnum Feedyard Co. in Wiggins, which competes with Five Rivers Cattle Feeding, and ultimately markets its fed cattle to JBS bound for the packing house in Greeley.
In a press release issued this morning, JBS stated it would sell its assets to “further sharpen the focus of the business on key strategic areas, protect core assets and allow the Company to reduce net debt as it works on plans for future growth.
“Selling these assets is central to a strategy designed to reinforce JBS’ competitive advantage in the global food industry. The sale of feed yard assets will more closely align the JBS business model with key U.S. competitors and allow the company to concentrate its efforts on its core food and value-added products businesses.”
In the interim, Gabel, who competes directly with Five Rivers, said it will take some pressure off of other smaller feeders such as himself, who fatten up to 25,000 head of cattle and sell it directly to JBS and four packers in the country — Cargill Meat Solutions, National Beef Packing Co., Tyson and JBS. The JBS release stated business will continue as usual, “including the purchasing of cattle and commodities.”
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“JBS USA intends to continue agreements to purchase cattle from feedlots associated with Five Rivers Cattle Feeding operations,” the release stated.
The sale affects the following Colorado feed yards: Kuner Feedlot east of Greeley on U.S. 34, Gilcrest Feedlot in Lasalle, Colorado Beef in Lamar, and Yuma Feedlot in Yuma. Other feedyards include four in Texas, one each in Idaho, Kansas, Oklahoma, and Arizona. There also is a feedyard in Brooks, Alberta, Canada.
Gabel said that is initially good news.
“We’re relieved to know that the packing plant will continue to operate and will be functional,” Gabel said, “because we merchandize an awful lot of market ready cattle to JBS.
“On the other hand, obviously as nice as the JBS feed yard facilities are, they will at some point find a buyer, and when they do, that buyer will become competition for us in the feeder cattle or the calf market. So interimly, maybe we get a little relief from their competition until the sale is consummated, in the mean time we’re very relieved the packing portion will continue to be functional.”