Rabobank’s analysis suggests that an additional 5,000 to 6,000 head daily beef packing capacity would help return US cattle supplies and packing capacity to an historical equilibrium without a sharp contraction in beef cow numbers, while still maintaining packer profitability.
Recent supply chain disruptions in beef packing and processing have amplified the discussion surrounding the need for and feasibility of US beef packing capacity expansion. Adding packing capacity would result in both a larger US beef industry over the long run and more balanced profitability throughout the supply chain. If the US can avoid major herd liquidation in the current cattle cycle, the beef industry will be well positioned to capitalize on growing global protein demand.
“If such expansion can be achieved through in-plant technology improvement and new, consumer demand-driven small and medium-sized plants, profitability will be more evenly distributed throughout the beef and cattle supply chain,” according to Dustin Aherin, Analyst – Animal Protein.
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