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Archive for Wednesday, March 23, 2005

Creekstone Farms to expand, add workers

March 23, 2005

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— Shored up by a new investor, a Kansas meatpacker forbidden by government regulators from testing all its cattle for mad cow disease said Tuesday it would expand its Arkansas City slaughterhouse and hire more workers to meet growing demand for its all-natural beef.

Creekstone Farms Premium Beef's move to double its production capacity comes at a time when the nation's major meatpackers are cutting back kills amid higher costs for cattle.

It would not be the first time Creekstone Farms has bucked industry trends.

The meatpacker made headlines around the world a year ago when the Agriculture Department refused to allow the company to test all its cattle for bovine spongiform encephalopathy, or BSE, commonly called mad cow disease.

In the meantime, the company has developed Creekstone Farms Natural Black Angus Beef -- cattle produced without supplemental growth-promoting hormones and antibiotics and raised on a vegetarian diet since birth.

Construction at Creekstone Farms' facility in Arkansas City is expected to start within 30 to 60 days, said manager Kevin Pentz. He declined to talk about specifics, but said the expansion would double the plant's slaughter capacity.

Creekstone can butcher 1,000 cattle daily but has not reached its capacity since losing lucrative export markets such as Japan. The company now runs the plant five days a week, processing 3,500 animals weekly, Pentz said.

The expansion comes in anticipation of growing the business as the company adds new clientele and moves to an all-natural business, he said.

Also in March, Sun Capital Partners Inc. announced that its subsidiary, Creekstone Holding Corp., had acquired majority interest in Creekstone Farms Premium Beef. Company founder John Stewart retained a minority interest and has continued to run the company.

"We are excited to have a new partner and are moving forward," Pentz said.

The sale came just months after Creekstone laid off 150 workers, citing closed export markets. Before the nation's first case of mad cow disease, Creekstone Farms exported 35 percent of its beef; today it exports fewer than 5 percent, Pentz said.

The company anticipates those 150 laid off workers -- in addition to an unspecified "few more" -- will be hired within the next 12 months, Pentz said. The company now employs about 650 workers.

The United States closed its Canadian border to live cattle imports after Canada's first case of mad cow disease was found in May 2003. Canada had supplied 1.2 million head of cattle in the year before the ban.

Mad cow disease is a brain-wasting ailment that in humans causes a variant form of Creutzfeldt-Jakob disease, a degenerative, fatal brain disorder.

Higher costs for cattle since the United States closed its Canadian border has affected the entire meatpacking industry, including small processors such as Creekstone.

On Monday, National Beef Packing Co. LLP shut down its plants in Liberal and Dodge City for a day to reduce slaughter. Wichita-based Excel Corp. also further reduced production last month at its plants nationwide.

U.S. meatpackers lost an estimated $1.7 billion to $1.8 billion in gross sales revenue of boxed beef and byproducts because of the ban on Canadian cattle imports, according to a Kansas State University study.

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