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INTERVIEW-Hitch in cattle deal with National Beef9:47AM ET on Tuesday Jan 12, 2010 via Thomson Reuters * Hitch Enterprises to sell cattle to National Beef * Fewer beef plants made deal necessary * Cash cattle market shrinking By Bob Burgdorfer CHICAGO, Jan 12 (Reuters) - Hitch Enterprises, a privately held livestock operation, has reached a deal whereby it will sell cattle from its three feedyards solely to National Beef Packing Co LLC, an agreement that Hitch leaders believe will produce better prices for its customers. The "hand-shake" agreement started in January and will continue indefinitely, Hitch Chairman Jason Hitch told Reuters in an interview. The marketing agreement is similar to those used at other large cattle feeding operations. Hitch operates three feedyards, two in Oklahoma and one in Kansas, for a total one-time capacity of about 160,000 head. "We agreed, for a nonspecified period of time, to sell 100 percent of our cattle to National," said Hitch. Such agreements can provide feedlots premium prices for higher-grading cattle and can assure beef plants of a ready supply of quality cattle. Hitch ranks among the top 15 largest U.S. cattle feeding operations, according to the Livestock Marketing Information Center. Five Rivers Cattle Feeding, a unit of Brazilian meat company JBS SA <JBSS3.SA>, is the largest with a one-time capacity of more than 800,000 cattle, said LMIC. National Beef is the fourth largest U.S. beef company and operates beef plants in Liberal and Dodge City, Kansas, and in Brawley, California. Cattle marketing arrangements with beef companies have drawn criticism because they reduce the number of cattle traded in the open market, thereby lessening the bargaining power of feedlots to negotiate prices. Hitch is aware of the criticisms, but he said the loss of two beef plants in Kansas had already hurt competition for his cattle to the extent that he was missing top market prices. "I am just trying to keep my business alive," he said. "I would love to see things more competitive, but I don't think that is going to happen." In 2000, a beef plant in Garden City, Kansas, burned down, and more recently Tyson Foods Inc <TSN.N> suspended cattle slaughter at its Emporia, Kansas, plant. (Reporting by Bob Burgdorfer; editing by Jim Marshall)
This article found at: https://research.tdwaterhouse.ca/research/public/Markets/CommoditiesNews?documentKey=1314-N12187270-1 NOTE: In accordance with Title 17 U.S.C. section 107, any copyrighted material herein is distributed without profit or payment to those who have expressed a prior interest in receiving this information for non-profit research and educational purposes only. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml |
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