In November, Tyson Foods announced plans to permanently close its Lexington processing plant on Jan. 20. The announcement shocked the beef industry and specifically the town of Lexington, Neb.
A University of Nebraska-Lincoln (UNL) analysis estimates the annual statewide economic impact of the closure will be $3.28 billion.
The beef plant, which opened in 1990, was one of the largest in the nation. According to UNL the plant employs approximately 3,200 team members and has the capacity to slaughter 5,000 cattle per day, which equates to about 4.8% of total daily U.S. beef slaughter.
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What Does Tyson’s Announcement Mean to Beef Producers?
Sources told Farm Journal late last week, Tyson has not scheduled any shifts at the Lexington facility the week of Jan. 16.
Expected Economic Impact
The closure of the beef plant will be one of the biggest shocks in history for the small town Lexington, which is home to about 11,000 people. However, the ripple effect will be felt throughout the Nebraska economy.
According to the UNL analysis, total labor income losses from the closure are projected to be $530.43 million per year across 7,003 jobs. Of those, 3,212 are positions directly eliminated at the plant, with the remainder representing additional jobs that support the workers in other sectors
UNL expects a substantial reduction of tax revenues in the aftermath of the closure. Annual losses in state personal income tax revenue are estimated at $23.2 million. State sales tax revenues are projected to decline by $10.16 million per year, and local sales tax revenues accruing to Dawson County are expected to fall by $2.77 million per year.
Conducting the analysis was Eric Thompson, UNL economics professor, and Elliott Dennis, UNL associate professor livestock marketing and risk management.
“These impacts would be larger if a greater share of cattle processed at the plant were purchased from Nebraska feedlots or if cattle accounted for a larger proportion of total plant costs,” they explain. “Conversely, the estimated impact would be smaller if the total value of beef sold were lower. Tax rates are based on historical tax data and may vary from year to year depending on employee deductions and other factors.”
