Tyson Foods is closing its beef-processing plant in Lexington, Nebraska, as part of a strategy to “right size” the struggling segment within the food manufacturing industry.
Following a year marked by declining beef volumes, the meat giant reported an adjusted operating loss for its beef segment in fiscal 2026. Consequently, Tyson will also convert its Amarillo, Texas facility to operate on a single, “full-capacity” shift.
Tyson Foods emphasized that these changes aim to position its beef operations for “long-term” success. The company plans to ramp up output at other beef facilities to meet customer demand. Additionally, Tyson is committed to assisting affected workers in applying for positions at other sites while offering relocation benefits.
This decision follows a challenging fourth quarter in fiscal 2025, during which “tight” cattle supplies drove the beef segment deeper into the red.
In the fourth quarter, the beef segment reported an adjusted operating loss of $94 million, compared to a $71 million loss from the previous year. Although sales for beef increased to $5.49 billion from $5.26 billion, this was fueled by a 17% rise in average prices, coupled with an 8.4% drop in volumes.
For the entire fiscal year 2025, the adjusted operating loss for the beef segment expanded to $426 million from $291 million, despite an increase in sales to $21.6 billion from $20.5 billion.
While revenues increased due to higher prices, overall beef volumes declined by 1.9% for the year. “The beef segment remains our only soft spot,” stated president and CEO Donnie King in his results chat with analysts. He added that chicken sales are expected to alleviate pressure on Tyson’s two largest revenue streams.
Looking ahead, Tyson projects an adjusted operating loss in the beef segment ranging from $400 million to $600 million for fiscal 2026. Simultaneously, the US Department of Agriculture anticipates that domestic beef production will decrease by another 2% during that period.
“Cattle supplies are at record lows due to drought, potential herd rebuilding, and the impact of new world screwworm in Mexico,” King noted, highlighting various market headwinds faced during the quarter.
As for the upcoming year, King and newly appointed COO Devin Cole remarked on challenges stemming from tight supply, which may be further affected by heifer retention—holding female calves to join the breeding herd rather than sending them for slaughter.
“Looking forward, we expect cattle supplies to remain tight as we move into 2026. During this period, chicken is likely to benefit most from changing consumer preferences, both at retail and in foodservice,” King added. “More heifer retention implies less beef in the near term, which means the supply of market-ready cattle will fall before it increases in future years.”presentation.