EAGLE MOUNTAIN, UTAH — Tyson Foods is closing two beef processing facilities and selling a third, resulting in hundreds of layoffs. The closures include the beef facility in Joslin, Illinois, and the case-ready beef facility in Eagle Mountain, Utah. Tyson Foods is also seeking a buyer for its beef facility in Pasco, Washington.

These operational changes follow financial challenges reported in the company's third-quarter earnings. Tyson Foods reported a $138 million operating loss in its beef division during that period. The company also reported a 15.9% decrease in beef volume in its third-quarter earnings.

The restructuring occurs as the broader industry faces a shortage of raw materials. The US cattle supply has hit a 75-year low. A multi-year drought, rising costs, and consolidation among cattle ranchers have driven the cattle shortage.

In response to the limited availability of cattle, meatpacking plants have reduced shifts or cut Saturday workdays. This reduction in activity aligns with the decision to close specific facilities and reduce overall capacity.

Glynn Tonsor, agricultural economist at Kansas State University, provided context on the historical relationship between processing capability and animal inventory. "For the majority of the last 40 years, nationally, the US has had more capacity to harvest cattle than we’ve had cattle," Tonsor said.

Tonsor explained the economic impact of this imbalance on industry profitability. "Anytime you have too much capacity, or ‘too much’ supply relative to what is needed in the market, that puts downward pressure on the margins in that sector," he said.

While processing capacity adjusts, consumer markets show different trends. Beef demand has increased compared with other meat products. Increased demand for beef has been a leading force in driving up prices.

Data from the Bureau of Labor Statistics Consumer Price Index illustrates these market shifts. The price of beef increased 9% over the last year, while pork and chicken prices dropped. Additionally, beef quality has improved in the past several years.

Tyson Foods was established in 1935. The current reductions in footprint may have lasting effects on the infrastructure available to producers. Plant closures could lead to a trend towards less processing capacity in the future.

Why It Matters

The reduction in processing infrastructure intersects with a historically tight supply of cattle. With the US cattle supply at a 75-year low, the removal of facilities alters the options available to ranchers. Josh Maples, agricultural economist at Mississippi State University, noted the potential long-term implications of these structural changes.

"That’s one thing that I’m concerned about, is how it affects producer decision making," Maples said. The combination of high beef prices, improved quality, and reduced processing capacity creates a complex environment for both producers and consumers.

What's New

Additional reporting identifies the specific locations affected by the corporate announcement. Tyson Foods is closing its beef facility in Joslin, Illinois, and its case-ready beef facility in Eagle Mountain, Utah.

The company is also actively looking for a new owner for one of its assets. Tyson Foods is seeking a buyer for its beef facility in Pasco, Washington.