Simplot Beefing Infrastructure
To Increase Feedlot Capacity

BOISE, Idaho —(AP)— The J.R. Simplot Co. plans to build a more than $4 million rail transfer station for feed grain west of Mountain Home as part of a major expansion of the Simplot Livestock feedlot north of Grand View.

Simplot intends to expand its feedlot from the current capacity of 110,000 head of cattle to 150,000 this year, said Tom Basabe, president of Simplot Agricultural Group.

The company expects a strong cattle market in the future, he said, and the commodity-based, low-margin feedlot business is "all volume and economics of scale."

Big feedlots are getting bigger, and many of the smaller yards are getting out of the business, Basabe said.

"We are bullish as we go forward, but we've probably got 90 to 120 days of tough market conditions ahead because too many finished cattle are available now across the U.S.," he said.

After that, Basabe said he expects the number of cattle arriving at feedlots to diminish and prices to improve.

"As we expand, corn usage is going to increase. We need to be able to acquire the corn as cheaply as possible so we can compete" with Midwest cattle feeders in the Cornbelt and Texas feeders close to it.

The rail transfer facility near Mountain Home will increase the amount of grain Simplot can bring in and will give the company a price break on transportation charges from Union Pacific Railroad, Simplot officials said.

Basabe said the facility should pay for itself in about 3½ years.

Jon Brennan, manager of commodity operations and business analysis for the Simplot Agricultural Group, said the feedlot's on-site feed supply dwindled to about five days' worth last fall during a logjam in Union Pacific service.

"The impact was that grain movement basically came to a standstill," Brennan said. "As we continue to grow the feedlot, one of the biggest concerns will be the supply route."

The Mountain Home facility will be able to handle 100-car trains compared to the 50 or 75-car trains that come to the existing facility. Brennan said it will have a storage capacity of 1.5 million bushels and will be able to unload about 40,000 bushels of grain per hour. Trucks will carry the grain from there to the Grand View feedlot, about 20 miles away.