Tyson Foods is closing its Joslin, Illinois, beef packing plant as tight cattle supplies continue to reshape the packing industry. Oklahoma State Livestock Marketing Specialist Derrell Peel says Tyson is concentrating its operations on its largest plants, but the adjustments may not be over.
“So, Tyson indicated that they’re going to focus on their three big plants. The biggest one is in Dakota City, which is the old IBP headquarters; Holcomb, Kansas, in southwest Kansas; and then the Amarillo, Texas plant, which has been running at one shift since last year sometime. And so they’re going to focus on that. They also indicated in today’s news that in addition to closing Joslin, that Pasco, Washington plant that they have was for sale. And so they’re clearly looking to potentially do something with that plant as well at some point in the future. So those three big plants are certainly kind of their core plants. They’re the biggest plants by and large. Well, they are definitely of these five. And so they will focus on those.”
Could more be on the chopping block? Peel says the industry still has more capacity than the current cattle supply can support.
“At this point in time, obviously, with each adjustment down in capacity, we’re moving closer to kind of reestablishing a balance between capacity and the very limited cattle supplies we have right now. I don’t think probably, particularly with Tyson’s indication that they may restart the second shift in Amarillo, that the total capacity wouldn’t change that much. And therefore, you know, we probably still have excess capacity for the foreseeable future. That’ll continue to be a challenge for packers. And that may be the basis for some additional adjustments going forward.”
Those packing plant changes don’t just affect the companies and their employees – about 2,500 workers are losing their jobs in Joslin. Producers who have relied on Joslin will have to find another destination for their cattle. That could mean a higher transportation bill.
“Those cattle are going to have to go to a different location. So there will be, you know, for a lot of producers that have utilized this plant, there will be some additional transportation costs associated with those cattle, depending on exactly where they’re located. More than likely, the majority of these cattle, I would imagine, will transfer to the Dakota City, Nebraska plant. It’s the closest plant, but it may depend on other factors relative to Tyson’s operations and how they’re going to move things around a little bit.”
And while Joslin is closing, Tyson Foods says it could eventually restore a second shift in Amarillo. Peel says that could offset much of the lost slaughter capacity from the Illinois plant.
“Approximately 3,000 head a day is the value that I have. You know, those are, you know, kind of what we think we know. We don’t always have precise numbers on that. So roughly 3,000 head a day, I think, which would make it on the smaller end of the large packing plants. And, you know, they indicated that if they reopened the second shift in Amarillo, it would largely keep their total slaughter pretty similar. And that’s probably true. You know, one shift at Amarillo wouldn’t quite be probably 3,000 head, but it might be close to it. And so, there could be no net or not a very large net decrease in their overall slaughter based on that.”