End of an era: L&H Packing to close
Wilson County NewsAugust 13, 2014 4,391 views 1 comment
With the news of L&H Packing’s closure, cattlemen are speculating how the packer cow-bull market will react.
L&H Packing Co. in San Antonio will cease operations Friday, Aug. 15, and one more plant will be added to the Texas packer closures list. This is the third Texas plant to close recently. In 2013, San Angelo Packing in San Angelo and Cargill (beef processing) in Plainview closed their doors.
An announcement was made Aug. 6 that the plant, located on Steves Avenue near U.S. 90 in San Antonio, will close due to the drought and the decline in cattle inventory. This was the last of several packer plants that were operational near the Union Stock Yards in San Antonio.
L&H officials said approximately 325 workers will be laid off. Some of these workers (approximately 74 to 100) will transfer to one of its sister companies -- Surlean Foods (formerly Surlean Meat Co.) or New Earth Soils & Compost. The San Antonio plant will be used as storage for Surlean Foods.
While the drought of 2011 spread across a large part of the nation, the beef-cow inventory reached levels below the 1962 inventory. A large number of Texas cattle were shipped out of state, while others were slaughtered.
Today, packer cow and bull prices are also at historic highs. The packers are paying more to entice cattlemen to sell their cows versus keeping the heifers and cows to build up their herds, said Josh Tielke, owner and operator of Karnes City Auction Inc., Aug. 7.
At Karnes City Auction in July 2011, No. 1 packer cow prices were 62-65, and packer bulls, 74-79. Last week, the prices for No. 1 packer cows reached 112-120 and packer bulls, 136-145.
Otto Luensmann, owner of Seguin Cattle Co., said Aug. 7 this closure will affect the packer cows and bulls market, but not feeder cattle, since this meat is used for ground meat and sausage.
Luensmann said he was shocked to hear the news of L&H Packing closing.
He said cattlemen are lucky that the number of cows being sold is not as high as during the drought of 2011 in Texas.
At that time, 15 to 25 percent of the total weekly volume of cattle being sold at Seguin Cattle Co. was packer cows and bulls. Today, the percentage is less than 10 percent.
As some cattlemen continue to disperse their herds due to shortage of water or ongoing drought-like conditions, Luensmann said most cattlemen are culling unproductive cows. Some young cows are being sold, with cattlemen receiving high premiums.
How the closing of L&H Packing will affect the cattle market will be seen in a couple of weeks, Luensmann said.
Freight costs and shrinkage will be the major factors cattle buyers will use when purchasing for packers.
With the closing of L&H, the closest packers identified by Luensmann and Tielke are H&B Packing in Waco, Lone Star Beef Processors in San Angelo, and other smaller plants scattered across the state.
Both men said the condition of the cows will affect the prices received by ranchers. The trip to the plants will be tough, especially in the fall and winter seasons, Luensmann said. No. 1’s and No. 2’s will make the trip; for No. 4’s and No. 5’s, the trip will be hard.
While no changes in packer cow and bull prices were seen in two auctions -- Atascosa Livestock and Seguin Cattle Co. -- held at the time of the announcement, Tielke said cattlemen could receive a 10- to 15-cent-per-pound decrease in the future.
Tielke and other auction owners are already preparing for L&H’s last day.
“We are going to do our part to protect our customers,” Tielke said, and added “Long live cowboys.”
A demand for beef is there, and more imported box meat will continue, Luensmann said. “It will work out in the long run,” he said.
Sources: L&H Packing Co. website; San Antonio Business Journal; meatingplace.com; and bloomberg.com.
L& H Packing Co. history
Al Leonard and Dwayne Harral started L&H Packing in 1963. Throughout the years, the cow boning and trading operation expanded to include slaughtering. In 1979, Surlean Meat Co. was formed, “to capitalize on the food service industry.”
In 1984, the plant was modernized to kill and bone more than 260,000 cows annually. This made L&H “the largest processor of lean beef in the Southwest.”
Source: L&H Packing website
Nixon Livestock Auction Sales
Total heads Cows Bulls
2010 992 149 10
2011 2,583 629 24
2014 1,012 105 13
Note: From Aug. 23, 2010, Aug. 21, 2011, and Aug. 4, 2014