Agribusiness  February 16, 2007

Loss of plant would hurt region’s agribusinesses

GREELEY – The worst-case scenario for Northern Colorado of a sale or merger of Swift & Co. would be the permanent closing of the meatpacking facility in Greeley.

And while such a closure would be devastating to the plant’s 1,700 workers, its impacts would also be profoundly felt in the region’s agribusiness industry, starting with the farmers who grow corn to feed the cattle that are slaughtered at the plant.

“Eighty percent of the market we serve is for the livestock market,´ said Mark Sponsler, director of Colorado Corn Growers Association, based in Greeley. “If they’re having a tougher time, it has a fairly significant impact on our producers, too.”

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Sponsler said most of the region’s farmers prefer to grow corn for silage, basically the entire corn stalk and ears that can be easily converted into cattle feed. While farmers can still sell all of the corn plant through multiple markets, growing and harvesting silage is the easiest way to turn their crop into money.

With a diminished local market for silage, corn farmers would likely turn to grain production for food and ethanol, Sponsler said. While that may sound like a good backup plan for corn growers, Sponsler isn’t sure it would increase their harvest profits or keep recently healthy corn prices high.

“The surest cure for high prices are high prices when it comes to ag commodities,” he said. “We really think that today’s strong corn price is speculative and we’ll see a lot of swinging of the pendulum as perception gets balanced against reality.”

That perception is the ethanol-growing bandwagon that farmers across the Midwest and to a lesser extent in the West have been jumping on. As more ethanol production facilities are built, Sponsler worries that if too many farmers start growing corn for ethanol, a corn glut and depressed corn prices, will result again.

The bottom line? “Any diminishing impact to the livestock industry has a direct impact on our corn producers and any producers of feed material,” Sponsler said.

Dealers, producers take hits

Farm equipment dealers would also feel the loss of a local packing plant operation. Duane Wallin, managing partner of Colorado Equipment in Greeley, said he expects he would have to change the mix of equipment he sells.

“It may shift things considerably and what our mix of equipment would be,” he said, noting that combines for corn grain harvesting would likely become more popular.

“If feedlots reduced in size, we’d still see some acreage in corn but more would be combined rather than cut for silage.”

Wallin said combines for corn “haven’t been a real big deal in our area” but that would change with more grain production. He said a packing plant closure might have a 15 percent to 20 percent impact on the kinds of equipment he sells.

“They’re (farmers) going to do something with their acreage, and the focus would be on different machines,” he said.

But the biggest impact on local agribusiness would be on cattle producers. The packing plant currently processes about 1 million cattle annually, drawing live shipments from northeast Colorado, southern Wyoming, western Nebraska and Kansas and some from Canada.

Bill Hammerich, CEO of Colorado Livestock Association in Greeley, said the effect of a plant closure would be “devastating” on local producers.

“Maybe not overnight, but over the long pull with the additional freight expense and lack of local feedlots, it would be devastating,” he said. “The presence of that processing facility is vital to the cattle industry as we know it in Weld County and in the surrounding counties as well.”

Hammerich said the most likely alternative – shipping cattle to the Cargill Meat Solutions plant in Fort Morgan by truck or by rail – would have a significant impact on a local producer’s bottom line. He also noted there is no assurance that the Cargill plant could accommodate all of the additional cattle that would be diverted from Weld County ranches and feedlots.

GREELEY – The worst-case scenario for Northern Colorado of a sale or merger of Swift & Co. would be the permanent closing of the meatpacking facility in Greeley.

And while such a closure would be devastating to the plant’s 1,700 workers, its impacts would also be profoundly felt in the region’s agribusiness industry, starting with the farmers who grow corn to feed the cattle that are slaughtered at the plant.

“Eighty percent of the market we serve is for the livestock market,´ said Mark Sponsler, director of Colorado Corn Growers Association, based in Greeley. “If they’re having a tougher time, it has…

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