My View From The Country

The Ever-Growing Price of E. Coli

XL Foods announced this week that it had entered into an agreement with JBS for the option to purchase its two XL Foods plants in Canada, a 70,000-head-capacity feedlot, and two plants in the U.S.

The Canadian meatpacking company, XL Foods, announced additional recalls this week. The company has been rocked with a score of recalls beginning in mid September and resulting in a temporary shutdown of its Brooks, Alberta, processing plant due to E. coli O157:H7 contamination. By mid-October, the total amount of beef under recall involved several million pounds and more than 1,800 products.

This week, however, XL Foods announced it had entered into an agreement with JBS for the option for JBS to purchase its two plants in Canada, a 70,000-head-capacity feedlot and thousands of acres of farm ground adjacent to the lot. The two plants have a processing capacity of 5,000 head of cattle/day. JBS also has the option to purchase XL Foods’ two plants in the U.S., one in Omaha, NE, and one in Nampa, ID, which together have a processing capacity of 2,200 head.

If exercised, JBS will pay $100 million, half in stock and half in cash. JBS will begin managing the larger beef plant in Alberta immediately.

A Closer Look: XL Foods At Center Of Cross-Border Contamination Issue

Ironically, prior to the Canadian recall, the beef industry in North America had been quietly celebrating one of the more successful summers relative to E. coli. The industry has spent billions of dollars in building a safer food supply since the tragic Jack-in-the-Box case in 1993, and it’s made incredible strides in reducing the occurrence of food-borne outbreaks.

The XL Foods contamination aftermath illustrates once again the imperative nature of food safety. This is true not only from the perspective of the obvious costs and concerns regarding human suffering, and the devastating financial impacts on the companies involved, but also the secondary effects on the industry from a demand standpoint. The situation also illustrates that only the biggest of the big operators can hope to survive a food safety concern of any magnitude, and potentially not even then.

The industry’s progress in ensuring a safe beef supply has been great, and the risk of contamination is falling, but the risks as a result of potential contaminations are increasing.

Discuss this Blog Entry 1

drbutterweck (not verified)
on Oct 19, 2012

The beef industry is too fragmented to do anything more. It will probably just gradually go the way of the sheep industry has gone in North America. A slow death with fewer cattle and less beef consumption. Brazil will pick up some of the business

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What's My View From The Country?

As a fulltime rancher, opinion contributor Troy Marshall brings a unique perspective on how consumer and political trends affect livestock production.

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Troy Marshall

Troy Marshall is a multi-generational rancher who grew up in Wheatland, WY, and obtained an Equine Science/Animal Science degree from Colorado State University where he competed on both the livestock...

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