It’s fairly well known that one of the problems in the beef industry is not lack of competition per se, but proximity. Some feedlots and many of the mother cows in the country suffer from long geographical distances from packing plants.
Now, two of the best known names in western agriculture, Caviness Beef Packers and J.R. Simplot Co., are partnering to help remedy that situation for Northwest cattlemen, especially ranchers and dairymen. This past July, the two companies announced plans to join forces and build a $100 million, 380,000-sq.-ft. plant. But the roots of the story go back a bit. With all of the packers in the region no longer around for different reasons, Tom Basabe, president of Simplot Livestock Co., knew he had to figure something out.
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| Tom Basabe, president of Simplot Livestock Co. |
“I’ve been chasing this project for five years or better, looking and thinking,” Basabe says. Of course, Simplot has long-time, extensive cow/calf, feedyard and potato and foodservice supply experience. While Basabe says he didn’t have the packing house expertise, he was fortunate to meet Terry Caviness. Then he went to Hereford, Texas, to learn more about the Caviness family’s operation.
Due dilligence
They weren’t new to the cattle business. Pete Caviness bought an old locker plant in Hereford in 1962, capable of processing 15 head per day. When Terry graduated from Texas Tech Univ., Lubbock, in 1969, he joined the business full time. Trevor and Regan are the third generation and have been fully active in the business since the late 1990s. Trevor tells the story of his family’s business. They had gradually increased capacity until the early 1980s but were a harvest-only facility focused on cows and bulls. They shipped carcasses to the upper Midwest and to the West Coast.
In 1982, Caviness purchased Palo Duro Meat in Amarillo, which had both a harvest and a processing floor, handling 70 to 80 head per day. They operated both the harvest and processing floors in Amarillo for a while, and then shifted to using it as a fabricating plant only. At that time, harvest was done at the Hereford plant and the carcasses were shipped to Amarillo for fabrication, approximately 700 head per day. They were still operating carcass, rail-to-rail. But growth was coming faster now.
Caviness started to process some of their own ground beef at the Amarillo plant in 2000.
In 2005, they built a new harvest floor just west of Hereford. At the time, 950 carcasses were going to Amarillo. A new fabrication floor was completed in Hereford in 2008. That meant their harvest capacity at Hereford had been expanded to 1,700 head per day and boneless trim was going up to Amarillo for further processing. Some of the trim goes to ground beef and some gets shipped as boneless trim to customers.
Trevor says they have been looking for some time for the right opportunity to expand. “Our mission has been to continue growing,” he says. “If you’re not growing, you’re falling back.”
Simplot approached Caviness. The firms talked and checked each other out. Simplot had been waiting for the right partner to come along and they certainly felt the need in the region.
The parties next agreed to form CS Beef Packers, as a 50/50 joint venture. Caviness will handle the packing plant, procurement and sales. Simplot has added much help and expertise to the human resources, IT, legal matters and the state permitting and regulatory departments. Trevor explains that Simplot, having been in the community for nearly 100 years, knows those issues all too well. Basabe points out their cattle procurement all over the West and Northwest has given them great knowledge of the logistics of cattle movement in the region.
“We weren’t going to a new area like the Pacific Northwest without someone who had knowledge of that region and had made a living from that area,” Trevor says. “We’re both private companies, Simplot is larger, of course, but family led. It was a good fit.”
The plant is being built in Kuna, Idaho, on property Simplot owned, with infrastructure and utilities already in place.
Of course, permitting on the city, county and state level started from scratch but Trevor says all that work has gone fairly smoothly. They had county and town meetings so the community knew what was going on.
“We’re meeting all the regs, including air scrubbers to eliminate odors, to minimize any disruptions to quality of life,” he says. The new site is in a rural setting which reduces possibilities of conflict.
The plant will have a harvest floor, fabrication, rendering and hide facilities. It was still undecided if a grind facility would be included at startup or perhaps added later.
“It will have a very similar footprint to our Hereford plant,” Trevor says. They’re using the same contractor, Wayne Schmeeckle of Schmeeckle Bros. Construction out of Fort Morgan, Colorado, that built their Texas facilities. This will be the newest plant built from scratch in the industry. The plant will incorporate all the latest food safety interventions – everything the industry has learned, the state of the art techniques and equipment, Trevor says. There will be some design updates and tweaks learned from their Hereford plant.
Food safety focus
Interventions will include antimicrobial rinses, 180? F pasteurization and hot water rinses.
Trevor points out that in 1998, microbial testing was a $4,000 to $5,000 per month expense. Now it costs $100,000 per month. But now, the turnaround on results is quicker while product is safer. Caviness supplies the school lunch program, which requires jumping through a few extra hoops.
“There are a few extra steps for the federal school lunch program,” he says. “It is the most rigorous program, with requirements regarding animal welfare to harvest to boneless to grind.” Procedures have to be spelled out and the company follows them, he adds. AMS inspectors are on site for the grind. There is more robust testing for pathogens and certain organisms.
They also produce boneless trim for school lunch programs, tested under AMS guidelines, with different procedures for federal programs, especially regarding removal of five major lymph nodes.
Trevor says the plant will procure from a 600-mile radius of Kuna. They expect to get some bigger-framed cattle in the north and perhaps some higher yields. The plant will also be built to handle processing the taller dairy cows in the region.
While the focus will be on cows and bulls, they will do some fed slaughter for niche programs, as they do in Texas. Those programs will grow over time.
The plant is targeted for opening in February or March 2017. They will start with a few hundred head per day for the first few weeks to get the labor force comfortable and take about six months to work up to their 1,700 head-per-day harvest capacity on a one-shift basis. Fabrication will be matched to harvest. For now, they are expecting to harvest about 60 percent dairy cows and 40 percent beef.
Hiring and recruiting, meanwhile, hasn’t been a huge hurdle. The Boise area has good labor demographics and Trevor says they have been pleasantly surprised at the plentiful response to early job postings. The Boise area boasts good quality-of-life attributes.
The new plant will need up to 700 workers when it’s up and running. Part of the advantage Simplot will bring to the company is their knowledge of the area, their reputation and their relationships with the community.
Terry Caviness says the success of the plant will depend on the success of the workers.
“We grow people,” he says. “We try to develop people from within, especially management. We make leaders out of workers that are capable and willing. If you nurture people, you grow the company. If you don’t develop leaders, you can’t improve and grow the company.” Terry says the company regularly invests in sending managers and supervisors to leadership training.
They will take some supervisors and managers who volunteer to move from Texas to Idaho. Some supervisors and management employees from Idaho will spend some time at Hereford for training, too.
Terry reiterates the helpful response of the community. But he also noted the regulatory environment is very stringent. Having built a harvest facility just 11 years ago, by comparison, it has gotten tougher.
Terry is also complimentary toward their Simplot partners, stressing that they operated under the same culture and philosophy.
“We’ve always been relationship oriented,” Trevor says. “Transparency is important to us and flows from the supply of cattle, through the plant and all the sales and logistics. This is a great regional beef story.”
Basabe would like the partnership to “make some history on this side of the Rockies.” There are big markets on the West Coast, he muses. The old Nampa plant used to export beef products out of Portland, Oregon. And while the basis of CS Beef will be cows and bulls, one can sense Basabe’s interest in seeing the plant do more finished cattle someday. Like any cattle feeder up in the Northwest, he is no fan of long hauls to packing plants.
He also indicated that food suppliers and meat purveyors are showing interest in regional plants that can afford a little more flexibility in their operations in order to handle some specialized programs.
Basabe is also confident of a labor supply for the new plant. There is still a core of experienced workers from the days when others operated plants in the area. The two visionary partners along with many others are anxiously watching progress at the plant, which is about 35 percent complete.
“We’re fortunate that these two family companies found each other,” Basabe says. “Everybody’s dealing with heavy freight bills, both dairy and beef. We’re excited, we’re optimistic and this is something dairymen and cattlemen can agree on.”
