Meatpacking plants close as U.S. cattle herds shrink to a nearly 75-year low

The cattle herd in the U.S. right now is the smallest it has been since the early 1950s. That's tough on consumers, of course, because the tight supply has been driving double-digit inflation when it comes to the price of beef.

It's also proving to be a problem for meatpackers — the companies that turn cows into steaks and roasts and burgers. Smaller herds mean fewer hooves walking into slaughterhouses. This year, a handful of packing plants have closed — one in Nebraska and another in Wisconsin. And last week, Tyson announced that it'll be closing a plant in Illinois.

David Anderson, professor of livestock and food product marketing at Texas A&M University, remembers visiting a meatpacking plant in high school.

“I'm going to put it this way: Meatpacking plants are not for the faint of heart,” Anderson said.

It’s a slaughterhouse. “So the animals walk in, right?” he said. “But they ain't walking out.”

Anderson said that over the last few years, fewer cattle have been walking into packing plants every year.

“We had a packing capacity that was built for 130 million head of cattle, and today we're down at 88 million — or whatever the number is,” he said.

It’s 86.2 million, to be exact. Glynn Tonsor, professor of agricultural economics at Kansas State University, said that makes meatpackers’ operating costs jump.

“You can only do that for so long before some business adjustment is going to be made, whether that is shrinking the number of shifts, not running on Saturdays, maybe eventually closing a facility,” Tonsor said.

Which is what we’re seeing. Cattle heading to fewer large-scale packing plants.

“The day after one facility closes, every other facility in the system runs a little more efficiently,” Tonsor said.

Plenty of cattle walking in, and conveyor lines full of carcasses — which is good for meatpackers’ margins. But today’s efficiency could have implications in a few years.

“The lack of these facilities could get us into a spot where we run out of capacity pretty quick,” said Josh Maples, professor of agricultural economics at Mississippi State University. “The cattle sector is is incredibly cyclical. We go through periods of declining supplies and then increasing supplies.”

Inevitably, Maples said, the national cattle herd will get bigger again.

“Having enough packer capacity to process that is key to getting that amount of beef flowing through the system [and] ultimately to the consumer,” he said.

Because, Maples said, Americans’ demand for beef doesn’t seem to be going anywhere.