Low cattle numbers raise fears of another beef packing plant shutdown

The U.S. cattle herd has fallen to its lowest level in more than 75 years, and some industry experts warn that another major beef packing plant could shut down as a result.

Years of persistent drought have degraded pasture conditions across much of the country, leaving many ranchers with no choice but to sell more of their cattle and reduce their herds. The resulting decline in cattle supplies has squeezed beef packers that rely on high slaughter volumes to remain profitable.

In January, Tyson Foods closed its beef packing plant in Lexington, Nebraska, citing challenging market conditions. The closure eliminated more than 3,000 jobs and dealt a significant economic blow to the rural town of about 10,000 people.

With just four companies — Tyson Foods, JBS, Cargill and National Beef — controlling most U.S. beef processing, the Lexington closure highlighted the vulnerability of a highly consolidated industry.

A handful of large plants process a large share of the nation’s cattle, meaning the loss of a single facility can have far-reaching economic consequences.

A study by the University of Nebraska found that, in a competitive market model where packers are not colluding, plant capacity utilization is the main factor determining packer profitability. Large packing plants are built for volume, and when cattle supplies fall, profitability suffers.

“When this decrease in profitability is large enough and expected to continue, firms may decide to permanently close a plant to reduce their fixed costs (which include plant infrastructure, machinery, and technology) and utilize their remaining capacity more efficiently,” writes Jake Smith, an assistant professor at the University of Nebraska and one of the authors of the study.

Tyson, JBS and National Beef have all reported losses in their beef divisions in recent years.

USDA data show that approximately 47% of U.S. beef was processed in just 11 plants in 2025. While USDA does not disclose plant ownership in its reports, industry analysts generally identify those facilities as belonging to the Big Four packers.

Following the closure of the Lexington plant, the number of largest plants — those that can process over 1 million head of cattle per year — will drop to 10 in next year’s report, according to Oklahoma State University livestock economist Darrell Peel. But if drought conditions persist, that number could be lower.

Future plant closures could devastate rural communities by eliminating thousands of jobs, but could help packers improve profitability by concentrating production in fewer facilities. Recent labor strikes have shown how major packers can shift production among packing plants.

During a three-week strike at JBS’s packing plant in Greeley, Colorado, analysts said the company redirected cattle to its other plants, helping offset losses in those facilities. Similarly, workers at Cargill’s plant in Fort Morgan, Colorado, who went on strike on May 20, demanding higher wages, reported that cattle deliveries had largely stopped weeks earlier and were redirected elsewhere.

The ability of major packers to move cattle among plants raises questions about whether all existing facilities will remain necessary if cattle supplies continue to tighten.