Cargill plans to resume beef production at a plant in Fort Morgan, Colorado, in September after unionized workers voted to end a labor dispute that halted cattle slaughtering since April, the company said on Monday.
The U.S. beef industry has been in upheaval this year, as prices have soared to record highs while the nation's cattle herd shrank to its smallest size in 75 years. Meatpackers are reporting losses in their beef businesses and closing plants because soaring cattle costs have outpaced gains from higher meat prices.
Employees voted overwhelmingly to accept a contract proposal from Cargill that they previously rejected, said Dean Modecker, who runs the Teamsters Local 455 union that represents workers. Workers had been hoping for better pay in the fourth and fifth years of a five-year deal, he said.
"It's not the deal that we were hoping to get," Modecker said. "But to be fair, our people work for a living and they don't know anything else. We were getting worried just like anybody else."
Cargill said it was happy workers accepted the agreement. The company and rival JBS, which resolved its own labor dispute this year, had pushed back against employees seeking higher pay.
In the first year under the new contract, workers' base pay will increase by a total of $1.40 per hour, Modecker said. Base wages have risen to $23.50 from $15.35 since 2018, according to Cargill, a major producer of ground beef.
Last week, competitor Tyson Foods (TSN.N) said it would close or sell three of its U.S. beef plant and packaging operation sites, citing the cattle shortage.
Supplies dwindled after a persistent drought burned up grazing lands in the western U.S. and Washington blocked imports from Mexico to keep out a flesh-eating livestock pest. Imports are set to resume this month.
"We know the industry is hurting right now," Modecker said. "If they start becoming profitable in the fourth and fifth year, we hope that they bring us along with it."
