Chicago - Commodities giant Koch Industries, the second-largest privately held company in the United States, plans to sell some of its cattle operations after deciding to halt a push to integrate cattle production.
Industry analysts estimate total sales of Koch Industries, based in Wichita, Kansas, at above $30 billion, mainly from its extensive oil, gas and chemicals operations. It is also involved in grain milling, mining, financial services and other businesses.
Koch spokeswoman Mary Beth Jarvis told Reuters the company had tried to vertically integrate its large ranching operations and feedlot operations in U.S. Plains states for more than a year.
“Based on results to date from that integrated strategy, a decision has been made to discontinue it and exit some of our beef businesses,” Jarvis said. “That will be done through a disciplined sale of some of our assets.”
She said there was no timetable for the asset sales, which could include the company's four feedlots and its stocker cattle operations but not its ranchlands, she said.
The firm's Koch Beef unit, which employs about 250 people, is currently the 10th-largest cattle feeder in the U.S., marketing 300,000 head of cattle a year. Its feedlots are located at Lubbock and Hale Center, Texas, and Syracuse and Ulysses, Kansas.
Koch also operates stocker cattle operations in Kansas and Texas. These are feeder cattle production units that grow calves on pastures before moving the animals to feedlots.
Koch's ranches cover some 450,000 acres in Texas, Montana and Kansas, making it the ninth-largest rancher in the U.S.
Rumors that Koch might sell some of its feedlots circulated in August but the company said an exit from the business wasn't planned. In January, Koch had bought the No. 1 animal feed producer, St Louis-based Purina Mills, partly with increased integration in its cattle production in mind.
However, swollen supplies of red meat in general and cattle and hogs in particular have pushed many cattle and hog operations far into the red this year.
After the sales, Jarvis said Koch will remain active in the beef industry through its feed and ranching operations.
“We will continue to pursue beef-related opportunities,” she said, “especially as pairings can be made between us and Purina Mills.”
Purina Mills, which has about 10 percent of the commercial U.S. livestock feed market and produces five million tons of feed a year, has 59 plants concentrated in the Midwest, Great Plains and Southwest. Its 1996 sales totalled $1.2 billion.
Jarvis said Koch never considered operating beef packing plants even when it was aggressively trying to integrate vertically in the cattle production side of the business.
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