USDA Forecasts Expansion of Record Agricultural Trade Deficit in Fiscal 2025

California mandates that new owner keep Cargill plant running for a year to support dairy farmers.

Dive Brief:

• California has approved the sale of a Cargill beef plant to Western Valley Meat, with the stipulation that the facility remains operational for at least one year to address anticompetitive concerns.
• Western Valley, as part of a state settlement agreement, must keep the Fresno, California facility running for 12 months and retain at least 700 workers during this period.
• California Attorney General Rob Bonta emphasized that this requirement prevents the potential closure of a significant processing plant that handles meat from non-milk-producing or “culled” dairy cows.

Dive Insight:

• With meat processors consolidating operations and seeking cost reductions, regulators are closely examining mergers and acquisitions for potential market competition issues.
• The scrutiny surrounding the Cargill sale reflects broader concerns, as recent plant closures and layoffs in other states have led to lawsuits from farmers and regulatory backlash. For instance, Tyson has faced legal action from poultry farmers over allegations that its Missouri plant closure was an anticompetitive move to drive up prices.
• Attorney General Bonta’s lawsuit, filed last week, aims to address potential negative impacts on dairy farmers in the San Joaquin Valley, where Western Valley would gain control over two major processing plants for culled dairy cattle, possibly leading to reduced competition and lower prices for farmers.
• Cargill and Western Valley settled the complaint without admitting wrongdoing. The two companies collectively manage two of the largest beef processing facilities in the San Joaquin Valley, each processing over 300,000 cattle annually.
• The sale, announced in April, involved an undisclosed amount for the Fresno plant, which employed about 880 workers. Despite recent layoffs of 178 employees, Western Valley is set to retain approximately 700 workers at the facility.
• U.S. Congressman Jim Costa expressed gratitude for the efforts to preserve jobs and provide solutions for the San Joaquin Valley.