A monthly column written for Beef Central by US meat and livestock industry commentator Steve Kay, publisher of US Cattle Buyers’ Weekly

TO say that the past two years has been challenging for American meat companies is an understatement.

Just two years ago, Tyson Foods, the largest processor of fed beef in the industry, posted operating income for its beef segment of US$2.5 billion. The year before, it posted a record operating profit of US$3.24 billion.

But the segment suffered an historic loss in fiscal 2024 and it faces a similar loss in 2025.

Tyson Beef reported an operating loss of US$381 million for the year ended September 30. This went against a loss of US$91m in fiscal 2023.

This was despite the fact that sales of US$20.47b were up 1.6pc on 2023’s US$19.32b and that its average selling prices was up 4.4pc.

Tyson Beef had an operating loss in the fourth quarter of US$71m, versus a US$323m loss in the fourth quarter of 2023, so at least Tyson saw a significant year-on-year improvement in the quarter. Operating margin for 2024 was a negative 1.9pc, versus a negative 0.5pc in 2023.

Uncertainty over US herd rebuild

Annual operating income decreased, primarily reflecting compressed spreads as expected, Tyson CFO Curt Calloway told analysts on November 12. Uncertainties remain, including the timing and pacing of meaningful US herd rebuild intentions, he said.

These market dynamics were reflected in Tyson’s range of outcomes for operating income for fiscal 2025, where it expects a loss of US$200-$400mm. This reflects a similar level of profitability year-over-year at the midpoint, said Calloway.

The 2024 loss far exceeded Tyson Beef’s previous largest ever loss of US$244m in fiscal 2006.

The reasons for Tyson’s negative outlook are clear. It cited USDA projections that domestic beef production will decrease about 2pc in 2025 versus 2024. Analysts forecast that total US cattle slaughter in 2024 is on track to be 1.3 million head lower than the 2023 total of 34.3m head.

The annual US cow harvest will decline by about 1.028m head on 2023’s total, says analyst Andrew Gottschalk, from HedgersEdge.com. This would imply that the reduction in the annual cow harvest would comprise 83pc of the reduction in this year’s total harvest. The balance belongs to steers and heifers, he says.

Plant closures

Tyson Foods has closed several US poultry processing plants in recent years, and has now added a beef plant to its closure list. Tyson says it expects to lay off 800 employees at its beef plant in Emporia, Kansas, which is a beef and pork non-harvest facility

It announced in a letter to employees that it would cease all operations on February 14. Tyson officials reportedly told city officials that all Emporia operations would move to its Holcomb, Kansas, beef facility.

Tyson Foods took over the operation of the Emporia plant in 2001 after buying Iowa Beef Packers (IBP). IBP had operated the plant as a slaughter and processing facility for many years. But it ended those operations  in 2008. The plant had a daily slaughter capacity of 4000 head.

After careful consideration, Tyson made the difficult decision to close the Emporia to increase the efficiency of its operations, said Tyson Foods. It added that it employs more than 5000 people across other Kansas facilities.

New US beef plants may struggle

As for the overall US beef processing industry, I do not anticipate that any beef plants of any size will close in the coming year. But the reduced cattle numbers suggest that brand-new US plants will struggle to buy cattle from established players.

At least eight new plants are in the works, with an avowed slaughter capacity of more than 9000 head per day. I have my doubts that much of this proposed new capacity will come to fruition.

Meanwhile, food and agri-business giant Cargill is set to lay off about 5pc of its global workforce, or 8000 employees. The move comes in the wake of what it calls weak financial performance during fiscal 2024 and a restructuring of the business.

“To strengthen Cargill’s impact, we must realign our talent and resources to align with our strategy,” the company said. “Unfortunately, that means reducing our global workforce by approximately 5pc. This difficult decision was not made lightly. We will lean on our core value of putting people first as we support our colleagues during this transition.”

For fiscal year 2024, ended May 31, Cargill recorded US$160b in sales, down almost 10pc from US$177billion in fiscal 2023.

The company does not publish its annual earnings. But Brian Sikes, chairman, president and CEO, noted in Cargill’s annual report published on August 13 that ongoing challenges facing the global food system from disruptions caused by conflict, changing demographics, and volatile economic and environmental conditions impacted the company.

Also in August, Reuters reported that Cargill planned to reduce its business units from five to three, with the remaining three focused on food, farming and trade and “special” businesses.