Central Valley Meat (CVM) Holding Company, who already owns four different facilities — Central Valley Meat in Hanford, Harris Ranch Beef Company, Harris Ranch Feeding and CLW Foods — will be California's largest beef producer in a deal with Kansas-based Cargill.
The Hanford beef processor has entered an agreement to purchase the Cargill Meat Solutions beef processing facility in Fresno. This move marks a significant expansion in Central Valley Meat’s operational capacity. Already CVM employs more than 2,000 people.
In a news release May 7, CVM says this will strengthen their processing capabilities, enhancing their ability to meet market demands while reinforcing their commitment to support the cattle and dairy industry in California and the western region.
“Our decision to acquire the Cargill Meat Solutions beef processing facility in Fresno, California aligns with our long-term vision of strengthening our offerings to better serve the needs of our customers," said Brian Coelho, CEO and Owner of Central Valley Meat. "We're excited to work alongside cattle producers in the state.”
Both companies say they are committed to retaining as many employees as possible and retaining beef processing capacity for producers. Cargill has almost 1,000 employees at their Fresno beef plant.
”Cargill will continue to operate its neighboring ground beef and hamburger patty facility in Fresno. The additional capacity gained through acquiring the beef processing facility will enable Central Valley Meat to be more adaptable, ensuring that they remain agile in meeting evolving industry trends," the release stated.
Nationwide, consolidation in the beef, pork and chicken industry has raised concerns about lack of competition and high prices and locally this transaction has done the same in the San Joaquin Valley, a big beef and dairy production region.
Monopoly concerns
Weeks ago, local dairy industry representatives contacted the offices of Congressman Valadao and Congressman Costa about the rumors that this deal was about to happen. They were concerned that livestock owners here would have fewer buyers for their product similar to what is happening across the US.
Four giant companies Tyson, Cargill, and Brazil-based National Beef and JBS, now control 85% of the U.S. beef market. WH Group (Chinese), JBS, Hormel, and Tyson control about 67% of the pork market. Tyson and Pilgrims Pride control about 45% of the chicken market.
Ironically, Cargill might argue they are reducing their current competitive advantage by selling this division to a local beef company. Cargill Meat Solutions is a subsidiary of Cargill Inc. — a family-owned agribusiness company said to be the largest privately held firm in the US.
With the merger with Harris Ranch in 2019, Central Valley Meat was said to be the seventh largest beef producer in the US.
Dairy industry view
Tulare County dairyman Tom Barcellos says, "Everyone in the dairy business has some degree of concern."
"Brian is a good friend and I believe his heart is in the right place but as a producer when there's less competition at the sales yard or at auction, there is cause for concern with fewer buyers," he added.
The Barcellos dairy ships 6,500 gallons of milk each day to the Land O’Lakes plant in Tulare, which produces 80 percent of the Land O’Lakes butter sold nationwide. These days Barcellos says the beef side of the business is more important than before, due to the rising price of beef and the opportunity to breed drop calves for beef.
Local dairy industry representative Cornell Kasbergen of Tulare says, "We could be left with only one buyer. Our income from beef is pretty significant, and we may be paid less than producers in other areas."
From the consumer side, there's the same concern.
"I would hope the Justice Department would do a review of the transaction before it is finalized," he added
Kasbergen is chairman of the Milk Producers Council Board of Directors.
Hormel settlement
Last month Hormel Foods reached a settlement in a pork-price fixing case. The case involves allegations of price-fixing within the pork industry. The settlement, totaling millions of dollars, addresses claims made by three different classes of pork purchasers.
The settlement agreement involves a payment of $2.4 million to the commercial indirect purchaser class, $4.8 million to the class of direct pork purchasers, and $4.5 million to the consumer indirect purchaser class. These settlements come after a series of legal proceedings that began with the consolidation of 27 cases in December 2022, involving 146 parties.
The lawsuit revolves around accusations of collusion among pork processors, who collectively control over 80% of the wholesale pork market.
Hanford stockyard must test for flu virus
Efforts to better understand and curb the spread of H5N1 avian influenza in dairy cows have livestock auction yards in a scramble as new federal testing requirements took effect last week.
Under the U.S. Department of Agriculture rule, all lactating dairy cows must test negative for the flu virus before they’re allowed to cross state borders. Businesses that market livestock say they’re trying to adapt to the mandate, which has impacted sellers and buyers of milking cows.
Tyson Howze, a representative of Overland Stockyard in Hanford, said the company conducts a lot of dispersal sales for dairies across the West and Southwest. The auctions are held live and online, with buyers from as far as a thousand miles away bidding. He estimated more than 25% of the dairy cows from a typical California dispersal sale goes to out-of-state buyers.
The stockyard has been preparing for a dispersal sale next week of milking cows and dry cows from a Fresno County dairy. During such sales, Howze said there’s usually “quite a bit of commerce” between California, neighboring states such as Arizona and other major dairy states such as Texas. But with this upcoming sale, he said he does not anticipate moving any lactating cows out of state due to the new testing requirements, as buyers in other states will be reluctant to bid. That will hurt the dairy selling the cows, he said.
“It’s going to have to be that way until everybody gets a handle on how the testing goes,” Howze said.
So far, there have been no confirmed cases of avian influenza in California dairy cows. But the testing mandate puts dairy farmers in a difficult position. Howze said farmers and stockyards want to follow the rules and cooperate with officials, “but nobody wants to be the first to test positive either.”
A positive test would trigger more testing and animal traceback. Even false-positive test results could bring disruptions to the dairy, he said, including restrictions on shipping animals out of state for 30 days.
“Nobody wants everybody coming into their dairy to start testing things if they don’t have a problem,” Howze said.