Hitch Enterprises, a privately held livestock operation, has reached a deal whereby it will sell cattle from its three feedyards solely to National Beef Packing, an agreement that Hitch leaders believe will produce better prices for its customers.
The “handshake” agreement started in January and will continue indefinitely, Hitch Chairman Jason Hitch told Reuters in an interview.
The marketing agreement is similar to those used at other large cattle feeding operations. Hitch operates three feedyards, two in Oklahoma and one in Kansas, for a total one-time capacity of about 160,000 head.
“We agreed, for a nonspecified period of time, to sell 100 per cent of our cattle to National,” said Hitch.
Such agreements can provide feedlots premium prices for higher-grading cattle and can assure beef plants of a ready supply of quality cattle.
Hitch ranks among the top 15 largest U.S. cattle feeding operations, according to the Livestock Marketing Information Center. Five Rivers Cattle Feeding, a unit of Brazilian meat company JBS SA, is the largest with a one-time capacity of more than 800,000 cattle, said LMIC.
National Beef is the fourth-largest U.S. beef company and operates beef plants in Liberal and Dodge City, Kansas, and in Brawley, California.
Cattle-marketing arrangements with beef companies have drawn criticism because they reduce the number of cattle traded in the open market, thereby lessening the bargaining power of feedlots to negotiate prices.