Cattle producers face some uncertainty as Tyson prepares to close Lexington plant

About two weeks after the sudden announcement from meat-processing giant Tyson that it would soon shutter its facility in Lexington, agricultural economists and beef producers have mixed outlooks on what’s in store for Nebraska cattle producers and the city of nearly 11,000 people.

The Friday before Thanksgiving, Tyson announced it was going to shut down its south-central Nebraska plant, impacting more than 3,000 workers, in January. The Tyson facility has been home to several different businesses over the years, but under Tyson, the plant has helped grow Lexington’s population since the 1990s. It’s also been a popular slaughterhouse for nearby cattle owners and feedlots.

Laura Field, Nebraska Cattlemen’s executive vice president, spoke Thursday about the closure’s impacts in a webinar hosted by the University of Nebraska-Lincoln.

“This closure will take about 15% of Nebraska’s steer and heifer slaughter offline,” Field said. “Those are numbers that are real, so we know that, that’s going to be an impact. It’s a significant cattle feeding region of the state, and we know there’s expansion of feedlot capacity happening at the same time as the closure. We know there are things that are still to come. These decisions and conversations cause ripple effects in the market now and in the future. Some of those we’re not going to know for a while.”

Field said the Nebraska Cattlemen group is continuing to remind Nebraska’s congressional leaders, their contacts at the USDA and even in the president’s administration about how this closure could linger in Nebraska for years to come.

“The biggest message is we don’t want to see that plant sit empty,” Field said. “If it can continue to operate in another capacity, further processing or something, or it can be under new ownership and operate… I think it’s important that, that facility be utilized.”

The Lexington facility was one of Tyson’s largest, having the capacity to process around 5,000 cattle a day, or about 5% of total U.S. slaughter capacity. Cattle markets dipped when they opened the week following Tyson’s closure announcement.

Elliot Dennis, a University of Nebraska-Lincoln professor and livestock and meat economist, said the Lexington closure and Tyson’s decision to narrow down its shifts at its plant in Amarillo, Texas, will reduce beef processing capacity nationwide by 7-9%. Several plants haven’t been hitting their total processing capacity with fewer cattle in the U.S. Rep. Mike Flood told Nebraska Public Media News in November that he recently toured a processing plant in Schuyler, where owners talked about struggling to meet its total capacity.

Drought in some areas of the country are to blame, but other pressures like the New World Screwworm, which continues to creep through Mexico and toward the U.S., are setting in. In May, the United States Department of Agriculture closed the southern border to live animal imports, including cattle. Dennis said southern Plains states depend on Mexican cattle, possibly around 1 million head, to help fill their processing capacities. The screwworm was a huge issue for cattle herds until it was eradicated in the 1960s. The threat of its return has kept cattle operators on high alert.

The U.S. cattle herd continues to dip to historic lows, benefitting most cattle producers with record sale prices and increasing prices for customers. Nebraska was one of the states that saw a lot of cattle sent to slaughterhouses during the 2022 drought. And while the entire herd is still recovering from that devastating hit, more cattle are packing on weight, leading to a small improvement in supply.

According to several recent reports from the USDA, including one released shortly before the Tyson announcement, Nebraska seems to be resilient despite the national cattle herd trends. The state saw a record number of cattle, 2.3 million, on feed in November. It increased the number of cattle on feed by an impressive 3% compared to numbers in October. Texas and Colorado saw declines, while Kansas and Iowa saw steady improvements.

Craig Uden, Nebraska Cattlemen president-elect, is a part owner of Darr Feedlot near Cozad, which runs about 100,000 cattle, along with other cattle-related operations. Living near Lexington himself, he sent a good portion of his cattle to the Tyson plant. Speaking in an interview with Nebraska Public Media News on Thursday, the cattle operator said that while the abrupt closure is a disappointing blow to the ag sector, it makes sense for plants like Tyson to close if they don’t continue to operate at a profitable capacity.

With fewer cattle taking up space at meat processing facilities, Uden said it wasn’t too challenging to shift his cattle to other plants. However, with the cattle now going to slaughterhouses farther away, his business will see increases anywhere from $10 to $25 per animal to get them processed.

Some of the closest facilities are still miles away, which can quickly add up. Several meatpacking facilities such as JBS and Cargill, two of the notorious “Big Four” conglomerates that take up much of the meat processing U.S. share, are more than an hour’s drive away. Having one of Tyson’s largest packing facilities in the middle of cattle country greatly benefitted local producers, Uden said.

“I think it’s challenging for some of my local people that might have grown or fed their cattle at home and then just went right into this plant,” Uden said. “They don’t have a lot of experience with other plants, and so I see that being somewhat of a challenge locally.”

But Uden said any cattle operator in Nebraska has to learn to weather the storms that come with the cattle industry. Markets have since nearly rebounded to where they were before the Tyson closure announcement, according to Uden and Dennis.

“You know, a month ago it was Argentine beef,” Uden said. “Three weeks ago it was Brazilian beef. Tyson plant. There’s challenges every day. There was a lot of negativity in the market as far as foreign beef coming in, and this and that. There’s been a lot of talk about the cost of beef, but long term, the market will adjust to that.”

Nearby packing plants have seized on the opportunity to hire Tyson’s outgoing workforce. Plants like Sustainable Beef in North Platte and Gibbon Packing near Grand Island have held job fairs in Lexington, trying to seek out employees looking for new work once January rolls around and the Tyson plant is shuttered for good.

Some Lexington leaders hope a different company can just move into the facility, but there are underlying fears that the Nebraska city could lose a significant portion of its population as families look for work in other places. Other ripple effects continue to unfold since the Nov. 21 announcement, including a 139-worker layoff announced several days later by a company that contracted to do sanitation work for the Lexington facility.

Being through several large facility closures over the last 40 years, Uden said the Lexington community will remain strong and is “not one to take things lying down.”

“They’ll try to bring in new industry, but in the meantime, everybody’s a little short of labor, so I think there’ll be job opportunities for some of those people.”

But he’s not oblivious to the fact that changes are coming for now-bustling south-central Nebraska city.

“There’ll be some of those opportunities in a fairly small radius, and then you’ll see people that might leave the processing area and go look for a new type of job," Uden said. "I know we’ll lose people. You want to keep the high-quality personnel that were at this plant, and they’re good family people that want to stay here, and this is where their life is. We’ll rally around them and see if we can’t make things a little smoother.”