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JBS USA is spending $200 million to expand beef production at two facilities as it prepares for an expansion in the supply of cattle.
The processor will spend $150 million to build a new production floor and expanded beef room at its plant in Cactus, Texas. It will also pay $50 million to construct a new distribution center in Greeley, Colorado.
Construction on the projects will begin this year. The beef giant said it will boost production capacity and add supply chain efficiencies.
JBS USA’s beef operations have faced pressure in recent years amid price fluctuations and livestock shortages. During its most recent earnings call in November, the company’s CFO Guilherme Cavalcanti said its North American cattle operations remain challenged. He pointed to the segment’s net revenue growing 6% year-over-year in the quarter due to higher demand for beef.
Still, margins for beef processors will remain under pressure in the short term as the herd expansion is not projected to begin until 2026 or 2027, according to a CoBank report. The cooperative bank said beef prices will remain “near historic highs” through 2025.
The price of beef and veal jumped 4.9% during the last year, the U.S. Bureau of Labor Statistics reported last month.
Wesley Batista Filho, the CEO of JBS USA, said in a statement the company believes now is “the time to invest in the United States, and we are excited about what the future holds.”
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“Today’s announcement demonstrates our commitment to the U.S. beef industry and the American farmer and rancher,” Batista Filho said. “At JBS, we prioritize ongoing investments in our facilities to ensure our company and the rural areas where we live and work are positioned for success now and in the future.”
The Texas facility employs 3,700 and pays $2.9 billion for livestock annually, JBS said, while its Colorado plant has more than 3,800 workers and doles out $3.1 billion for livestock annually.
The beef giant’s parent company, JBS SA, has been pursuing a listing on the New York Stock Exchange for several years. The Brazilian company has faced opposition to an IPO from environmental and corporate governance groups.