Mandan, N.D.-based Cloverdale Foods announced this week that it has closed its Minot, N.D. hog processing plant.
Cloverdale’s new business model no longer includes owning hog processing operations, according to Cloverdale CEO T.J. Russell, “The hog industry is not as strong as it was when the company opened the plant 30 years ago.”
Minot was hit with historic flooding earlier this summer. While the flood forced Cloverdale to suspend operations it did not cause major damage to the plant. Russell says the flood contributed to the decision to close the plant which had a $1.5 million annual payroll and employed 45 people.
While its capacity is relatively small at 600 hogs per day, the closure points up a potential processing log jam for the hog industry. “The Cloverdale closure brings to light a potential pitfall for the pork industry,” according to the CME Daily Livestock Report. “The industry can hardly expand given today’s packing capacity.”
Closing slaughter plants is a recurring theme in the pork industry. “Oscar Mayer is still the best example of a company that exited slaughter operations and simply focused on processing and leveraging valuable brand names,” according to the report.
The nation’s weekly hog slaughter capacity currently is approximately 2.35 million head, according to the CME report. Since 2008, the highest slaughter weeks have been near the capacity limit. While next year’s slaughter capacity may be slightly higher, Cargill’s plans may absorb the extra capacity due to its expansion plans announced for the company’s Texas operations.
Meanwhile, questions remain on where processing facilities will be found for increased hog numbers, should the need arise.
Source: AP, CME Daily Livestock Report