I’ve learned through the years that when a corporation — or a politician, for that matter — puts out a statement over a decision that has been made, you must read the fine print.
For example, here’s the statement put out by JBS when it announced that it was closing its packing plant in Souderton, Pa.: “JBS USA is investing heavily in the United States and in the future of food production. At the same time, we must ensure our operations are efficient, modern and positioned to compete. By investing where we are growing and making difficult adjustments where needed, we are building a stronger and more resilient company,” said Wesley Batista Filho, CEO of JBS USA.
The key word there is “future.” Obviously, JBS doesn’t believe in the future of beef production on the East Coast. So, it’s walking away from Souderton, and in its wake, thousands of workers and beef producers will be left picking up the pieces when the doors close Aug. 14.
Soon after JBS announced it was closing, a major dairy plant announced it was also closing: the St. Albans Cooperative Creamery in St. Albans, Vt.
Just seven years ago, members of the St. Albans Cooperative Creamery approved a merger with DFA, citing the need for plant investments of between $25 million and $30 million. Now, it’s also scheduled to close in August.
No matter what JBS and DFA say about staying committed to local farmers — both have stated they would continue purchasing and shipping from the region — these plant closures are big blows.
But they are also a signal. With so much beef and dairy production in the hands of just a few large players, it’s past time for ag leaders and farmers in the Northeast and mid-Atlantic to focus more on local processing and stop relying on large-scale national markets to save the day.
Given the current economics of both beef and dairy, these closures are not surprising.
Cattle numbers are down by historic numbers. I’ve talked to several experts who all agree the math isn’t working for beef packers.
There are too many “hooks available” and not enough animals going through the plants. And given the fact that you need animals to pay the bills, it’s no surprise to close the plant if it’s losing money. Sources I’ve talked to have told me the aging JBS Souderton was losing money.
Dairy has its own issues. If you read the most recent Dairy Outlook column written by my colleague Mindy Ward, processors are going where milk supply is growing. Michigan, where production-per-cow of 27,695 pounds is the highest in the nation, is getting $1.3 billion of new production capacity over the next couple of years.
New York is getting $3 billion in new plant investments — Chobani and Fairlife among them — and other plant upgrades.
“While other states have grown more, dairy processors believe that New York is the best growth option for producing high-protein beverages and yogurt for the East Coast markets, as these products contain more water when compared to the likes of cheese and whey, and that impacts shipping costs,” said Corey Geiger, lead dairy economist at CoBank, in the column.
The question becomes, if you invest in local processing, will buyers come? Well, I remember a few years back when the COVID-19 pandemic was at its peak and farmers who were selling beef and dairy off the farm couldn’t keep up with demand. They did well.
This is the most densely populated region in the U.S. When people have a choice, and the farmer welcomes them with open arms, they will go to the farm.
I’m not saying all farmers should do on-farm processing. Some farms aren’t set up for it, and some farmers don’t want to do it. What I am saying, though, is that for the farmers who are willing to do it, and especially for young farmers who want to get into the business, the government should make it easier for on-farm processors to get the help they need to grow.
It’s good for them, and it’s good for the future of local farming.
I’m sad to see these two local plants closing. The JBS plant’s roots go back to 1877 when the Moyer family of Montgomery County started a processing business on the family farm. More than 1,000 are employed there.
The St. Albans Cooperative Creamery Inc. dates to 1919 when it formed because of a group of local farmers who wanted to be united and independent — and wanted to gain control in what was historically a buyer’s market for milk.
By late August, they will both be gone.
I hold out hope that some local entrepreneurs will save these plants. A transition to locally owned requires more than hope. It demands coordination from farmers, entrepreneurs, government agencies and consumers willing to support local food systems with their purchasing decisions.
We must look to the future and bring back locally sourced, locally owned processors. Otherwise, we’re risking the long-term future of our farms.