Tyson to Shutter Lexington, Neb. Beef Plant, Cut Shift in Texas
Company cites massive losses, shrinking U.S. cattle herd; 4,900 workers affected across two facilities
Tyson Foods will end operations at its Lexington, Nebraska, beef plant and cut a shift at its Amarillo, Texas facility to one shift a day, down from two shifts a day, a sweeping restructuring as the nation’s second-largest beef processor absorbs deep financial losses tied to the smallest American cattle herd in decades.
The company said roughly 3,200 workers in Lexington and 1,700 in Amarillo will be affected as it moves to “right-size” its beef segment. Lexington — one of Tyson’s largest slaughter plants — can process nearly 5,000 head of cattle per day, making the closure one of the most significant capacity reductions in recent years. The plant is just off Interstate 80 in Lexington, which is about 170 miles west of Lincoln, Neb., and had a population of about 10,000 in 2023, according to Census data. The plant is expected to close in January. It sits between several major facilities owned by other beef processors including JBS and Cargill. A new plant, Sustainable Beef in North Platte, Neb., opened earlier this year about 60 miles west of Lexington.
Sen. Deb Fischer (R-Neb.) said the loss of Lexington’s largest employer would have a devastating impact on the city and region. “I am extremely disappointed by this news from Tyson,” she said.
Cattle shortage, record beef prices driving the shake-up. With the U.S. cattle herd at multi-decade lows, packers have been forced to pay sharply higher prices for a shrinking supply of animals, even as consumers already face record-high retail beef prices. “We are taking difficult but necessary steps,” Tyson said, noting that production will be increased at other plants to rebalance volumes.
President Donald Trump’s administration has moved to expand beef import access from Brazil, Argentina and other suppliers to help alleviate the domestic shortfall, though retail prices have yet to meaningfully ease.
Massive beef-segment losses. On an earnings call this month, the company, one of the big four meatpackers in the United States, said it expected operating losses between $400 million and $600 million on beef in the next fiscal year, after losing $720 million over the prior two years. Tyson said that its cattle costs for the 2025 fiscal year that ended in September rose by nearly $2 billion, compared with the prior year. Analysts say packers are being squeezed between historically high cattle costs and a consumer base already strained by food inflation.
“As anticipated, the beef segment remains our only soft spot,” Donnie King, the chief executive of Tyson, said on the call with analysts. “Cattle supplies are at record lows due to drought, potential herd rebuilding and the impact of New World screwworm in Mexico,” he added, referring to an invasive fly.
Tyson produces one-fifth of chicken, beef and pork in the United States, according to its website.
The Lexington closure underscores that pressure: without enough cattle to maintain efficient throughput, the plant’s fixed costs have become unsustainable.
Impact on cattle producers and the regional economy. The shutdown will immediately reshape cattle marketing in Nebraska and surrounding states. Lexington has long been a key buyer in the region, providing competitive bids and manageable hauling distances for cattle feeders.
Growers now face longer hauls, fewer bidding options, and greater concentration in remaining packing plants — a shift likely to weigh on regional basis values and feeder-market dynamics.
Local officials warn of significant economic fallout, from trucking and feed suppliers to service-sector businesses tied to the plant’s workforce.
Tyson said it will redistribute production to other company facilities to meet customer demand, but for the Lexington community and cattle producers across the region, the adjustment will be profound — and immediate.
| How Tyson’s Closures Collide with the DOJ/USDA Competition Probe The Department of Justice (DOJ) and USDA have been conducting an active antitrust and market-competition investigation into major beef packers, including Tyson, JBS, Cargill, and National Beef (link). The probe — launched in response to years of complaints from cattle producers — is focused on:Plant concentration and regional market powerWhether packer capacity decisions influence cattle pricesWhether coordination or parallel conduct in downsizing plants restricts competitionWhether cattle procurement, captive supply, and contracting practices suppress cash trade Against that backdrop, Tyson’s closure of Lexington (5,000 head/day) and shift cuts in Amarillo raise exactly the types of questions investigators are probing. 1. DOJ/USDA will evaluate whether the closures reduce competition in already thin markets Beef packing is highly concentrated, and Lexington is a major procurement hub. Removing that plant:Eliminates a major bidder in Nebraska and adjoining cattle regionsForces feeders to rely more heavily on Tyson’s competitors (or other Tyson plants)Potentially depresses cash cattle prices due to fewer buyers and longer hauling distances This is the sort of structural capacity reduction that DOJ historically views as increasing market power, even if driven by economics. 2. Tyson’s explanation—shrinking herd and massive losses—is economically valid, but regulators won’t simply take it at face value. Tyson says it:Lost $720 million in beef over the last two yearsExpects to lose another $600 million in FY 2026Cannot keep a 5,000-head plant efficient without adequate cattle supplies These explanations are plausible and consistent with the cyclical cattle shortage, but DOJ will ask:Did Tyson consider alternatives that would preserve regional competition?Did packers communicate — formally or informally — about reducing capacity?Are closures coming at strategic times when cattle supplies are tight and packer leverage is highest? Even if not illegal, regulators look for whether capacity reductions have the effect of tightening the cash cattle market. 3. USDA’s Packers & Stockyards Division will analyze the impact on cash trade levels. The Biden-era GIPSA revival and the ongoing Trump-era push for transparency both emphasize:Whether packer actions “unfairly manipulate prices”Whether market access for independent feeders is underminedWhether plant changes alter negotiated-trade volumes in mandatory reporting Lexington was one of the plants that supported robust negotiated/cash trade in the region. Its removal likely shifts more cattle into formula and forward contracts — another red flag for regulators. 4. The investigation is not suddenly contradicted — if anything, Tyson’s move intensifies it. U.S. gov’t contacts say the closures do not conflict with DOJ/USDA’s ongoing investigation. Instead, officials say:The investigation is designed for moments exactly like thisTyson’s economic arguments will be weighed against market-structure impactsCapacity cuts make the market even more concentrated—meaning regulators become more concerned, not less DOJ historically scrutinizes capacity reductions in concentrated industries even when companies cite economic necessity. 5. Trump administration import expansions complicate the picture. Officials say Trump’s moves to expand beef imports from Brazil and Argentina serve two purposes:Relieve domestic supply shortagesPut downward pressure on consumer prices (though not yet successful) But increased imports don’t replace the competitive function of a domestic slaughter plant. DOJ will still ask:Does closing U.S. capacity while increasing imports raise anticompetitive risks domestically?Does it further weaken bargaining power for U.S. cattle feeders? Bottom Line: Tyson’s explanation — shrinking cattle supply and huge losses — is credible. But the market impact — removing a 5,000-head/day buyer in a concentrated region — is exactly what DOJ/USDA are investigating. So the closure doesn’t contradict the investigation; it deepens it, ensuring that Tyson’s motivations, communications, and market impacts will face heavy scrutiny in the months ahead. One ag industry contact responds: “I don’t disagree with your conclusions, but this has been studied more than anything else on the planet… for 100 years. This will also open a door for the completion of Producer Owned Beef just outside of Amarillo.” Another email response: “What signal does the Tyson closure give to DOJ? If the meat packing industry is so profitable, why would you close established facilities? This frustrates me as so many producers and the beef groups blame the packer. We need the packer… there is a reason the industry has consolidated. Mexican border opening ahead raises the question as to what the actual flow of animals will be. Brazil tariff reduction, what a mess. Definition of unintended consequences in both directions. Maybe Trump does know the livestock producer. If you want to expand the U.S. cow herd, drop feeders $100hwt.” ‘Might as well breed her now; she ain’t worth nothing anymore’ is what I am hearing already.” |
