Cargill has stopped paying roughly 1,700 employees at its beef processing plant in Fort Morgan, Colorado, the workers' union said, closing a new chapter in an escalating labor dispute. The company had suspended cattle slaughtering at the facility nearly a month earlier, and the halt in pay began on Wednesday after plant employees rejected a contract proposal.
The confrontation comes amid broad disruption in the U.S. beef industry. Consumer beef prices have reached record highs this year even as the nation's cattle herd has fallen to the smallest in 75 years. Packers are processing fewer cattle because supplies are constrained, and several firms are reporting losses in their beef operations because the surge in cattle costs has outpaced increases in meat prices.
Privately held Cargill said it enacted a lockout at the Fort Morgan site - about 132 kilometers northeast of Denver - after employees turned down an offer the company described as fair. Cargill said the proposal represented approximately $33.4 million in investment for employees and added that "this was not the outcome we wanted." The company also said slaughtering at the plant has been halted since April 23 and that cattle have been redirected to other plants because the Fort Morgan facility's costs exceed its returns.
The Teamsters Local 455, which represents the workers, described the pay stoppage as a lockout initiated by the company following the contract rejection. Dean Modecker, who leads the local, said Cargill proposed a five-year contract that would include a 70 cent-per-hour raise in the first year and a 30 cent-per-hour raise in the fifth year. The union said employees were seeking a $1 per-hour increase in the first year and preferred a three-year contract to address volatility in the beef market.
"We can't afford to pay our bills," Modecker said, noting pressure from higher gasoline prices. "This is a multi-billion-dollar corporation, yet we can't get a dollar-an-hour raise?"
Cargill noted that since 2018 it has raised base wages at the plant from $15.35 per hour to $23.50 per hour. The company also said it continued to pay workers while slaughtering was paused, but the payments stopped after workers rejected the contract proposal, according to the union.
Workers' dissatisfaction extends beyond pay, the union said. Modecker described frustrations over limited bathroom breaks, saying some employees have been forced to remain at work despite urgent needs. Cargill responded by saying it is committed to providing employees adequate restroom access and to treating them with dignity.
The dispute at Fort Morgan echoes other labor tensions in U.S. meatpacking. This spring about 3,800 employees at JBS's beef plant in Greeley, Colorado, staged a strike over pay and working conditions. Separately, Tyson Foods eliminated thousands of jobs this year after closing a beef plant in Nebraska and scaling back operations at a Texas facility. Cargill and peer processors, including JBS, Tyson Foods and National Beef Packing Company, have pushed back on elevated pay demands even as they navigate tight supplies and rising input costs.
Political attention has also focused on packers' pricing. The president has accused meatpackers of contributing to higher beef prices through collusion and has directed the Department of Justice to investigate the industry - a move that has added to scrutiny of major processors' conduct and margins.
Summary
- Cargill locked out about 1,700 workers at its Fort Morgan beef plant after employees rejected a contract offer, and the company ceased paying those workers on Wednesday.
- The plant had suspended slaughtering since April 23, with cattle redirected to other facilities because the Fort Morgan site's costs surpassed its returns.
- The dispute forms part of wider turmoil in the U.S. beef sector, where record prices, tight cattle supplies and rising costs have strained packers and labor relations.
Key points
- Labor action at Fort Morgan involves roughly 1,700 workers and follows a month-long suspension of slaughtering at the plant.
- Contract talks centered on wage increases and contract length - Cargill proposed modest phased raises over five years while the union pushed for a $1 raise in year one and a shorter, three-year contract.
- Market-wide pressures - record consumer prices, the smallest cattle herd in 75 years and rising cattle input costs - have affected packers' profitability and bargaining dynamics.
Risks and uncertainties
- Further work stoppages or prolonged lockouts could disrupt cattle processing and supply chains, affecting meatpackers and related agricultural sectors.
- Ongoing disputes among major processors may heighten political and regulatory scrutiny, with potential legal or enforcement actions that could affect industry operations.
- Persistently rising input costs for cattle contrasted with slower gains in meat prices may pressure packer margins and lead to additional plant closures or capacity reductions.