Tyson Foods has decided to close a beef processing plant in Lexington, Nebraska, which employs nearly one-third of the local population. This move could deal a devastating blow to the small town and reduce profits for ranchers nationwide.
While shutting down a single slaughterhouse may seem insignificant, the Lexington facility employs about 3,200 workers in a town of 11,000 people and processes approximately 5,000 cattle daily. Additionally, Tyson plans to eliminate one of two shifts at its Amarillo, Texas plant, cutting 1,700 jobs. Combined, these measures will reduce U.S. beef processing capacity by 7% to 9%.
Consumers may not see immediate changes in grocery store beef prices over the next six months, as cattle already scheduled for slaughter will still be processed, possibly at other facilities. However, in the long term, unless U.S. ranchers decide to increase herd sizes—which currently seems unlikely—beef prices could climb further from their current historic highs, driven by factors like drought and tariffs.
Last week, U.S. President Donald Trump lowered tariffs on Brazilian beef imports to ease consumer pressure. While this may provide some relief, ranchers and feedlots still face the dual challenges of high costs and low selling prices.
Here’s a detailed breakdown of the plant closure and tariff adjustments:
**A "Heavy Blow" to the Community** Clay Patton, Vice President of the Lexington Area Chamber of Commerce, described Tyson’s announcement as a "heavy blow" to the Platte River Valley community, a critical link in the agricultural supply chain.
The plant, opened in 1990 and later acquired by Tyson, attracted thousands of immigrant workers, nearly doubling Lexington’s population and revitalizing the once-declining town.
Patton noted that the January 2024 closure will ripple through the community, threatening small businesses and new housing investments. Tyson has offered relocation opportunities for employees willing to move hundreds of miles to fill vacancies at other plants.
"I hope we can weather this crisis and emerge stronger," Patton said.
Elmer Armijo, who moved to Lexington last summer to lead the First United Methodist Church, recalled the town’s stable economy—secure jobs, robust schools, and healthcare—now thrown into uncertainty.
"People are deeply worried," Armijo said. "Lexington’s economy relies entirely on Tyson."
Local churches, including Armijo’s, have begun offering counseling, food aid, and gas subsidies.
**Beef Prices Dip** The U.S. will lose a major beef buyer while increasing imports from Brazil (already 24% of U.S. beef imports this year). This dual impact casts doubt on ranchers’ profitability, discouraging herd expansion.
"The industry lacks confidence, and producers aren’t investing in growth," said Bill Bullard of R-CALF USA.
Brazil’s increased imports may affect the market more than Trump’s earlier push for Argentine beef, though steak lovers may see little change—most imports are lean trimmings for ground beef.
Kansas State economist Glynn Tonsor noted uncertainty over whether imports will maintain their 20% share of U.S. beef supply, given fluctuating tariffs.
Yet demand remains strong: U.S. per capita beef consumption is projected at 59 pounds (27 kg) this year.
**Tyson’s Struggles in Beef** The U.S. meat industry faces chronic overcapacity, with slaughterhouses operating below full potential. Recent government efforts to boost small competitors have worsened the glut.
Tyson’s beef segment lost $720 million over two years, with 2023 losses expected to exceed $600 million.
Tonsor said plant closures were inevitable. Consolidation will improve efficiency at remaining facilities.
Creighton University economist Ernie Goss suggested the Lexington plant may have fallen behind in productivity-enhancing technology.
"Retrofitting old plants is extremely difficult," Goss said. "Lexington’s output per worker is no longer competitive."
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