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Chinese beef deal includes Montana slaughterhouse

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Feed lots and slaughterhouses are few and far between in Montana, but that could change as Chinese investor pledges $100 million to build a local processing facility.

This is part of a deal announced Wednesday between, Senator Steve Daines and Montana beef producers.

The deal is huge for Montana's economy, as it is expected to increase our state's beef exports by 40%.

But ag experts say building large-scale local slaughterhouses has its pros and cons.

MSU associate professor of agriculture economics, Brian Belasco, specializes in livestock marketing.

His reaction to china's commitment to buying at least $200 million of Montana beef wasn't one of surprise.

"I think it's a great thing for the future," Belasco said. "I think it's something that the Montana Stockgrowers Association recognizes as important going forward and Senator Daines has really been on the forefront of pushing that deal as well."

But when he saw the part of the deal including a $100 million investment into a local slaughterhouse...

"That was a bit of a surprise to me, you know the majority of our beef gets processed in concentrated areas right now. About 80% of it is in Texas, Kansas, Nebraska, Colorado and outside of there you don't see a lot of big processing facilities, and Montana is included in that."

Belasco says most large slaughter and pack houses are in very close proximity to big feed lots.

"Even though we do have a lot of cattle here, it's hard to keep them here because we don't have a lot of corn we don't have a lot of barley to really feed all the cows, so keeping them in the state becomes a challenge."

For Montana ranchers, local processing facilities would help them save on the transportation costs of shipping cows out and packaged beef back in.

It would also keep meat totally local. 

"There's a lot of pride in Montana beef product and that's one thing you heard with the China deal," Belasco said.

But on the flip side, Belasco says processing facilities are low-margin high-volume businesses that have a history of going belly-up.

"There was a processing facility in South Dakota that opened up and failed pretty quickly and I think you hear a lot f stories like that."

One thing Belasco really wants to emphasize is scale. Would adding slaughterhouses and feedlots to Montana really be more profitable and efficient than shipping cattle out of state?

"It's not just in beef it's across agriculture. You know we think of transportation costs as being something that is going to stop people from producing in a certain way. But it turns out those costs are pretty small when you see all the benefits you can get," Belasco said.

Belasco says an obvious perk is processing facilities would create jobs from inspectors to butchers.

The location has not yet been announced, but there is talk of Billings area, Great falls area or even around Bozeman.

Sen. Daines said in his announcement, construction of the processing facility could start as soon as 2018.

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