Swift, Iowa beef co-op may strike deal on cattle
Iowa Quality Beef Supply Cooperative could send 1,000 cattle a week to a packing plant in Nebraska.
By JERRY PERKINS
REGISTER FARM EDITOR
June 24, 2005
Nevada, Ia. - Swift & Co.'s beef packing plant in Grand Island, Neb., may buy 1,000 head of cattle a week from the Iowa Quality Beef Supply Cooperative if an agreement is completed, said Gene Rouse, president of the cattle co-op.
After an informational meeting Wednesday attended by 110 cattle co-op members, Rouse said negotiations with Swift are continuing, but the agreement could be put to a vote by beef co-op members in 30 to 45 days.
Swift, based in Greeley, Colo., is the second-largest processor of fresh beef and pork products in the world and has a pork plant in Marshalltown.
Just 24 miles from Marshalltown, in Tama, the Iowa beef co-op owns an idled cattle processing plant.
The co-op closed the plant last year after its beef-processing partner, American Foods Group of Green Bay, Wis., left the venture.
About 800 cattle a day were being processed by the co-op when the plant was closed, and 540 employees were let go.
Co-op officials have been searching for a new beef-packing partner to help them reopen the plant, but poor profit margins in the beef packing industry have prevented that.
Rouse said Swift wants half of the weekly cattle sale to be "source verified," meaning that their origin can be traced to the farm where they were raised.
Terms of the agreement call for Swift to pay $1.50 more a hundredweight for the 500 cattle a week that can be source verified, Rouse said.
The rest of the cattle will be purchased by Swift on a grid basis, which pays producers for beef quality and other desirable cattle characteristics, according to the packer.
"Swift is saying that source-verified cattle will be more important in the future, and we want to start working on that," Rouse said.
Jim Herlihy, Swift spokesman, said the company doesn't comment on where it gets its cattle.
The company's U.S. beef business has been hurt by the loss of export markets because of the discovery 18 months ago that a single U.S. cow had mad cow disease.
Despite problems in its beef division, Swift's company-wide sales increased $132.7 million in the quarter to $2.26 billion, compared with $2.13 billion in the same period a year ago.
Swift also recently announced that Sam Rovit had been named chief executive officer and a member of its board of directors.
Rovit is considered to be an expert in food industry mergers and worked for Bain & Co. as head of global mergers and acquisitions.
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