Ron Prestage admits he is a bit nervous about the opening of his company’s hog processing plant, scheduled for March 4.
“We had originally planned to start next week, but things got delayed for a variety of reasons,” he said. “The technology in this plant is incredible, so there are still some things we need to do before we can get rolling.”
The Prestage Foods plant, located near Eagle Grove, Iowa, will add an additional 10,000 pigs per day in capacity for Midwestern producers, or roughly 50,000 per week.
Prestage said with a faster line speed, that capacity could grow to 12,000 hogs processed per day.
“We have told our contractors that we will start taking hogs the first week of March,” he said. “We are doing that even though it means taking our own hogs to other markets. The contracted pigs are our priority.”
The north central Iowa plant will eventually employ between 400 and 450 people, Prestage said. He said 50 to 60 have already been hired and will oversee production.
“I’m scared to death when it comes to labor,” Prestage said. “We are trying to hire a secure and stable labor force, and I’m confident we can get that labor to start the plant. We just need to be able to keep it.”
The opening of the Prestage Foods plant adds to a hog packing capacity that has seen growth over the past couple of years, including new plants in Sioux City and Coldwater, Michigan.
The timing has been perfect as record numbers are being marketed, said Steve Meyer, economist with Kerns & Associates in Ames, Iowa.
“A couple weeks ago, we slaughtered 2.717 million head, which was the largest week ever,” he said. “We still have big numbers coming next fall, but we are in good shape when it comes to packing capacity.”
Meyer expects hog numbers to grow by about 3 percent in 2019, which will keep plants busy. In addition to the Prestage plant, the Seaboard Triumph Foods plant in Sioux City continues to add to its second shift production.
Seaboard Triumph's 942,000-square-foot plant, which opened in September 2017, will increase its daily slaughter capacity from 10,000 to 20,000 hogs per day as total employment grows to around 2,000.
"We are continuing to hire, continuing to ramp up," STF Chief Operating Officer Mark Porter said in October. "Six million hogs (annually) is our destination, late 2019 is where we see reaching that."
In addition, Hormel Foods has sold its Fremont, Neb., plant to WholeStone Foods, a company based in southwest Minnesota that is affiliated with the Pipestone System and is largely owned by producers.
Meyer expects that plant to be functioning sometime in 2020, at the earliest.
On the beef side, packer profits continue to be high, said Lee Schulz, Extension livestock marketing economist with Iowa State University. He said a reduction in packing capacity from 2013 to 2015 has created a healthy situation for packers.
“There is a great deal of competition right now for fed cattle,” Schulz said. “We don’t see any short-term problems with capacity, but we could see some issues if we continue to grow in the future.”
Both export and consumer demand for beef remains very strong, he said.
“If we see new capacity, I don’t think we will see the large plants that were built in the past,” Schulz said. “I think we will see plants geared to a more specific market, like what they are doing in Tama (at the Iowa Premium Beef plant) — providing high-quality beef for the food service industry.”