Recent livestock processing plant closures in the High Plains region have generated headlines, but agricultural economists note they occur because of tight margins.
Springdale, Arkansas-based Tyson Foods recently announced the closing of plants in Emporia, Kansas, and Butterball LLC is ceasing operations in Jonesboro, Arkansas. The Emporia plant employed about 800 workers, and Butterball employed nearly 180 people.
Chad Hart, a professor and Extension specialist at Iowa State University, said the announcements are a sign of the times in the agricultural economy.
“Incomes are down, costs are still high (in general), and margins are tight to non-existent,” he said.
Farmers and ranchers and many agribusinesses are tightening their belts, Hart said. Layoffs in agricultural manufacturing and meat processing are occurring as industries adjust to today’s economic situation.
James Mitchell, an assistant professor and Extension livestock economist at the University of Arkansas, said the November World Agricultural Supply and Demand Estimates report noted a slight increase in beef production for this year compared to 2023, and broiler production is expected to be up, too.
“There will be a noticeable decline in 2025 beef production on tighter cattle numbers, and there have been entities positioning themselves for this decline,” Mitchell said. “Turkey production is down significantly, and this reflects continued disruptions from highly pathogenic avian flu, and in my opinion, a significant consumer demand problem.”
Familiar costs
Hart said beef processors in particular are dealing with higher costs for machinery and labor.
“The labor issue is two-fold: one, labor is in relatively short supply so it’s difficult to fill out multiple shifts at plants; two, due to the short labor supply, wages are increasing, adding to the costs of production.”
The processing plants are facing tighter margins for most species, he said.
The industry could see additional realignment depending on the depth and length of the economic downturn in agriculture, Hart said.
“Capacity utilization is a key part of both meat processing (and livestock processing) operations,” said Glynn Tonsor, professor in the department of agricultural economics at Kansas State University. When the aggregate industry has more physical capacity than available incoming animals or meat, that quickly slices into a profit opportunity.
Tonsor did not expect the announcements in recent weeks to have an aggregate impact on meat prices consumers may see at the grocery store.
Hart said consumers are already seeing elevated prices at the grocery store.
“Historically, meat packing and processing facilities have operated on very tight margins,” Tonsor said.
While there were some deviations from that early in the COVID-19 pandemic in 2020, this historical pattern reflects the capacity and ongoing increases in expenses for labor and other input costs, Tonsor said.
Staying in cycle
Total beef packing capacity is closely tied to the cattle cycle, Mitchell said.
“Historically, we observe realignments in the packing sector as cattle supplies tighten, often in the form of plant closures or shifts in operational focus,” he said. “Conversely, when cattle numbers increase, we see expansions or investments aimed at improving efficiencies to handle the growing supply.”
These adjustments are not unique to packing plants, and other sectors adapt similarly, he said. For example, feedlots have responded to tighter cattle numbers this year by feeding cattle longer, resulting in significantly heavier carcass weights. This strategy has mitigated the impact of reduced cattle supplies on overall beef production, showcasing the industry’s ability to adapt to the ebb and flow of market conditions, Mitchell said.
“We see changes to livestock numbers in response to profitability, so it seems reasonable to expect realignment in the packing sector in response to market conditions,” Mitchell said.
Dave Bergmeier can be reached at 620-227-1822 or [email protected].
Realignments are not new
By Dave Bergmeier
Realignments are part of the processing industry, agricultural economists say.
In the recent case of Tyson Meats and Butterball LLC closing plants, nearly 1,000 employees were impacted.
A non-harvest processing facility is a plant that does not engage in the slaughter of animals, said James Mitchell, assistant professor and Extension livestock economist at the University of Arkansas. Those facilities primary function in the further processing of slaughtered livestock and pre-prepared products. These facilities specialize in creating market-ready and value-added products, he said.
Generally, larger and newer plants tend to be more efficient in both harvest and non-harvest processing operations, Mitchell said.“These facilities often leverage technology and streamlined processes that may reduce labor requirements and increase throughput. For example, newer plants may use automation in tasks like packaging, cutting and sorting.”
Tyson plans to move about 200 employees to a large processing plant in Holcomb, Kansas. Mitchell expects those employees to transition into similar roles or be trained to take on new duties.
Butterball LLC in Jonesboro, Arkansas, is a private company. Mitchell said individual firms often have unique circumstances.
“In recent history, we’ve seen companies handle closures in various ways, including relocating employees to other facilities, helping with applying for other jobs within the company and collaborating with local communities to support displaced workers in finding new employment opportunities,” Mitchell said.
For producers, it’s possible that production from the closing facility could be absorbed by other locations, or production might be phased out over varying time horizons depending on the company’s broader operational strategy, Mitchell said. Each case tends to reflect the specific needs and constraints of the firm and the market dynamics at play.
Dave Bergmeier can be reached at 620-227-1822 or [email protected].
