By P.J. Huffstutter
CHICAGO, Aug 13 (Reuters) - Tyson Foods said on Thursday it will close or sell three of its beef plant and packaging operation sites, further shrinking its beef footprint as a historic U.S. cattle shortage deepens losses for the largest U.S. meatpacker.
The company will end operations at its beef facility in Joslin, Illinois, and its case-ready beef facility in Eagle Mountain, Utah, and pursue the sale of its beef plant in Pasco, Washington. Tyson said it will move the processing
capacity from these locations to other sites, and anchor its beef business around its plants in Dakota City, Nebraska; Holcomb, Kansas; and Amarillo, Texas.
The closures mark the latest signal of trouble for the nation's meat processing sector, currently dealing with a 75-year trough in supply. U.S. meatpackers have been steadily losing money in their beef businesses because rising cattle costs have outpaced gains from soaring prices for steaks and hamburger meat.
Tyson shares have struggled since their post-COVID recovery ended in mid-2022, having lost nearly 30% of their value over the last five years. Tyson said in a statement that it is trying "to create a more competitive footprint amidst one of the most historic cattle shortages the country has ever experienced."
The company declined on Thursday to say how many workers will be affected by the closures or how many cattle these plants process. It said shifting production among its remaining facilities will allow it to maintain a similar level of cattle slaughter across a more efficient network.
The latest restructuring follows the January shutdown of Tyson's massive beef plant in Lexington, Nebraska, which had about 3,200 workers and could process roughly 5,000 cattle per day, according to an industry estimate. Tyson also reduced its Amarillo plant to one full-capacity shift, affecting about 1,700 workers.
On Thursday, Tyson said it plans to ramp up a second shift in Amarillo "as cattle become available." It said it will work with affected employees in Illinois, Utah and Washington to apply for jobs at other facilities.
"We are living through one of the most severe cattle shortages in our nation’s history, and now we’re seeing the consequences ripple through the entire beef supply chain," said Texas Agriculture Commissioner Sid Miller, in a statement responding to the Tyson move.
TYSON WARNS OF WIDER LOSS
The plant closures could affect cattle prices regionally, because there will be fewer people bidding for animals, said independent livestock trader Dan Norcini.
"But on a national level, I don't think it'll make much of a difference on livestock prices, in part because the locations that are being closed are not where there's a ton of concentration of cattle," he said.
Tyson on August 3 warned that losses in its beef business would widen as tight cattle supplies keep livestock costs elevated. It forecast an adjusted operating loss of $500 million to $650 million in fiscal 2026 for its beef business, compared with a previous forecast for a $350 million to $500 million loss.
Cattle supplies shrank to a 75-year low after a prolonged drought burned up grazing lands in the western U.S. and Washington suspended imports from Mexico in an attempt to keep out the flesh-eating livestock pest New World screwworm.
However, screwworms were detected in June on Texas farms and in New Mexico after moving north through Central America.
Facing pressure to lower consumer costs, the Trump administration said it plans to start lifting the import ban this month. The average retail price of one pound of lean and extra lean ground beef hit a record $8.65 in June, according to federal data.
"We have paid the economic price of a closed border, disrupted a cattle supply chain built over generations and screwworm still made it into the United States," said Texas's Miller.
It may take up to a year for Tyson to benefit from removing the ban because imported feeder cattle must spend time grazing on grass or being fattened in feedlots to get ready for slaughter, Tyson Chief Operating Officer Wes Morris said on a conference call last week.
(Reporting By P.J. Huffstutter in Chicago, Editing by Franklin Paul and David Gaffen)
