Cargill sells its giant feedlots in Texas

July 9, 2016 GMT

Cargill is selling its two Texas cattle feedlots as it continues to redefine its protein businesses, the company announced Friday.

The agribusiness giant, based in Minnetonka, is selling its feed yards in Bovina and Dalhart, Texas, to Amarillo-based Friona Industries, L.P. The sale is pending and terms have not been disclosed. Cargill will keep its cattle feed yards in Leoti, Kan., and Yuma, Colo.

It is Cargill’s latest in a series of divestments in businesses with low margins, specifically those in meat. A year ago, Cargill sold its entire pork business to BS USA Pork for $1.45 billion, a deal that combined two of the country’s largest pork processors.

“Selling our feed yards in the Texas panhandle allows us to redeploy many tens of millions of dollars annually into investments that will help us grow our protein business — money that otherwise would have been tied up as working capital used to purchase and feed cattle,” John Keating, president of Cargill’s Wichita-based beef business, said in a statement.

Cargill, the largest privately-held company in the U.S., has spent about $500 million in the last year on protein-related acquisitions or facility upgrades with an eye fixed on higher growth markets.

Last month, the company bought Five Star Custom Foods, a Fort Worth, Texas-based producer of specialty cooked meats that are sold to restaurants or used by food makers as pizza toppings, soup ingredients and more. In September, it converted a beef processing plant in Columbus, Neb., to a cooked meats processing plant and opened a new beef distribution center in Dodge City, Kan., in January.

The Dalhart feedlot has more than 160,000 head of cattle pass through its facility each year, while the Bovina lot handles 120,000 head a year. The cattle are sent from both lots to a different Cargill facility for processing. Friona is a major supplier of cattle to Cargill at the company’s four feedlots and will continue selling to Cargill’s beef processing plants.

“Anticipating the future direction protein demand is headed, we believe it is wise to redeploy capital away from feed yard and cattle ownership to projects that enhance our capabilities and provide greater value to our customers and consumers, now and in the future,” Keating said in a statement.

The news comes just two days after the company announced the sale of its 18 U.S. agriculture retail locations in the Midwest to Agrium, Inc., a Canada-based company.

All 90 of Cargill’s employees at its Bovina and Dalhart feed yards will keep their jobs in the transition, the company said.

Kristen Leigh Painter • 612-673-4767