Cargill sells its giant feedlots in Texas

The agribusiness giant is moving its meat business farther up the supply chain.

July 9, 2016 at 1:48AM
On April 30th, 2014 at the Cargill feedlot in Dalhart, Texas, pen riders Raoul Urquijo and Donnie Messick are some of the employees responsible for managing the herd, some 86,000 heads of cattle including sequestering sick animals that will be given medicine.]richard.tsong-taatarii/rtsong-taatarii@startribune.com
Cargill is selling two Texas feedlots, in Dalhart and Bovina, to Friona Industries, LP. It’s the latest in Cargill’s series of divestments in business with low margins. (The Minnesota Star Tribune)

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, LP. 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 JBS 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, Kan.-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.

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


On April 30th, 2014 at the Cargill feedlot in Dalhart, Texas, the steers and heifers are given silage that is boosted with vitamins .]richard.tsong-taatarii/rtsong-taatarii@startribune.com
The sale of the two feedlots in Texas is meant to continue the effort to redefine Cargill’s protein business. (The Minnesota Star Tribune)

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Kristen Leigh Painter

Deputy Business Editor

Kristen Leigh Painter is deputy business editor.

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