When Tyson Foods announced it would close a beef processing facility in Lexington, Nebraska, and scale back to one shift at a facility in Amarillo, Texas, the company said the move was necessary to “right size” its beef business.
In total, the closure and cutbacks will eliminate about 7% to 9% of total beef processing capacity nationwide.
But David Anderson, a livestock economist at Texas A&M university, doesn’t anticipate that it will have large impacts on the prices producers get for their cattle or how much consumers pay for beef at the grocery store.
“Typically, when a plant closes, what we expect is lower cattle prices and higher beef prices, because we’ve lost this capacity,” he said. “But at the same time, we’ve got so much excess capacity already that that may not happen. It’s not like the closing has created a constraint on packing.”
The closure and cutbacks come amid significant economic issues for meatpackers. In 2025, the U.S. recorded its smallest beef cattle herd in more than 70 years, and meatpackers are losing money as they operate well below capacity.
According to Sterling Marketing, which releases weekly reports on beef industry trends, beef cattle processors were operating at 81.5% of capacity in the week ending on Dec. 6. The Lexington plant was operating at less than that, with about 75% of its daily capacity, according to a report from Drovers Magazine.
Anderson said cattle is a “cyclical industry.” Very rarely, he said, are the different segments of the industry — cow-calf producers, feedlots, meatpackers and retailers — making money at the same time.
“When we get to very low numbers of cattle, we have very high prices,” he said. “The cow-calf producers and ranchers do well, that’s their turn to make a profit. And typically, feeders and packers lose money. And then, if we went back just a couple of years, we had very low cattle prices. Meatpackers did extremely well, but cow-calf ranchers were losing money.”
Cattle herds in the U.S. have been shrinking in recent years for a variety of reasons.
Widespread drought conditions in recent years have reduced the availability of grazing land and increased feed costs. The New World Screwworm, a parasite impacting livestock, led to the U.S. closing its southern border in May to live animal imports, including cattle. Some beef processing plants relied on cattle imported from Mexico to fill their facilities.
Efforts to grow the herd are ongoing, Anderson said, but there will be a long lag. Anderson said a heifer calf born last spring would have her first calf in the spring of 2027. The calf would get to its finished weight at a feedlot near the end of 2029.
“Biology puts this really long time lag on how fast you can respond to high prices,” he said.
A community prepares for population decline
The Lexington plant employs more than 3,200 people, all of whom will lose their jobs when the plant closes on Jan. 20. In Amarillo, the cuts will eliminate more than 1,700 jobs.
Amarillo is better suited than Lexington to absorb the job losses. The city is home to more than 200,000 people; Lexington’s population sits just above 10,500. Amarillo also has other major employers and industries in the area. Most of the economic development around Lexington has centered around the Tyson plant.
“It’s so difficult to replace an employer of that magnitude,” Anderson said. “I mean, that’s led to a huge amount of economic activity in a rural county, in growth, in population and in other businesses. So the rippling effect of this is pretty terrible.”
Feedlots located near the Lexington plant are likely to feel some strain from the closure. Craig Uden, who partially owns a feedlot about 8 miles outside of Lexington, said increased transportation costs are the “biggest challenge” for him and others in the area.
“It’s been a challenge to figure out how we’re going to deal with freight,” Uden said in a webinar hosted by the Nebraska Center for Agricultural Profitability. “It’s gonna cost us probably about $20 on average to move these cattle to any other major [packing plant].”
Tyson’s presence in Lexington has also created something of a multicultural hub in the middle of small-town America. Between 1990, when the plant began operating, and 2000, the city’s population nearly doubled, according to census data.
That rapid growth also meant demographic change. Data from the 2023 American Community Survey estimated that about 41% of Lexington’s population was born outside of the U.S., and about 60% identified as Hispanic. Most of the immigrant population hails from Latin America, while about 17% is from Africa.
Jennifer Norton, the city’s library director, said they “have the world in Lexington, Nebraska.” She worries that the Tyson closure could mean a significant population decline – and along with it, a loss of identity.
“There is going to be a very large exodus of the immigrant population, just because there won’t be jobs right here in town,” she said.
Lexington residents and state officials are hopeful, though not necessarily optimistic, that the massive plant can be repurposed or taken over by another beef processor. When Tyson closed a beef processing plant in Norfolk, Nebraska, in 2006, the company stripped the plant bare so it could not be used for the same purpose. It remains empty.
Tyson did not respond to a request for comment on its plans for the Lexington building.
This story was produced in partnership with Harvest Public Media, a collaboration of public media newsrooms in the Midwest and Great Plains. It reports on food systems, agriculture and rural issues.
