Morrell closes Sioux Falls beef operation

South Dakota State Roundup

Published July 1, 1992  | July 1992 issue

When John Morrell & Co. announced the closing of its Sioux Falls beef operation in May, it meant more than the loss of over 400 jobs.

While the loss of those jobs will have an immediate impact on Sioux Falls, the longer-term effects of the closing extend statewide through the cattle industry and will likely trigger changes in the way many cattle producers do business.

The loss of an instate market will increase transportation costs and less competition will decrease prices, hence decreasing profits in the cattle industry.

Although Morrell slaughtered only 1,150 cattle daily, a small number compared to newer, larger slaughter operations elsewhere, the company bought about 100,000 cattle annually from the Sioux Falls stockyards, about one- fourth of the cattle sold there. And Morrell was one of few slaughterhouses that typically bought older cattle.

"The small feedlots will likely be the big loser because they don't have the ability to shop around for better prices," says Jim Males, head of the animal and range sciences department at South Dakota State University. Small fed lot operators generally buy cattle and feed them hard for 60 to 90 days before selling them to a slaughterhouse. "There is no other fed cattle slaughterer in South Dakota," Males says.

In addition to feed lot owners, other small cattle producers will face longer distances to markets. "The biggest impact will be on the smallest producer, and we have more small producers in this region of the Great Plains," Males says.

South Dakota cattle producers also lost a budding connection to the Japanese market through Morrell, which planned a beef exporting operation from the Sioux Falls plant—a link that could have increased beef sales in the state by about $100 million a year.

South Dakota's cattle industry, the nation's ninth largest, accounted for nearly 43 percent, or more than $1.5 billion, of farm cash receipts in 1990. "We are a cattle state," Males says.

Morrell's closing is part of a consolidation trend in the livestock slaughtering industry: From January 1990 to 1991 slaughtering plants nationally declined from 4,549 to 4,326, with South Dakota losing seven plants in that same time frame.

Kathy Cobb