By Evie Liu

America's cattle shortage is pushing meatpackers to shut plants, cut shifts, and rethink how much processing capacity the industry actually needs.

JBS, the world's largest meat processing company, said on Friday that it will close its beef-processing plant in Souderton, Pennsylvania, and a value-added facility in Memphis, Tennessee. The company said production from the facilities will be shifted to other plants within its network.

JBS did not disclose employee counts in its announcement. According to the Pennsylvania notice that employers must give before large layoffs or plant closures, 1,485 workers are affected at Souderton.

The closures come as meatpackers grapple with weaker profitability for their beef processing businesses. The U.S. herd has fallen to its lowest level in seven decades after years of drought and elevated feed costs. That's pushed cattle prices to record levels and dealt a direct hit to meatpackers' margins, since they can't pass all the costs to consumers.

To make it worse, there are not enough cattle for meatpackers to process. Processors need enough beef sales to cover labor, transportation, and operating costs. When slaughter volumes decline, fixed costs are spread across fewer cattle, further squeezing profitability.

Tyson Foods' beef business posted an adjusted operating loss of $426 million in fiscal 2025, and management projected another $250 million to $500 million loss in 2026. JBS posted a negative earnings margin of 4.6% for its North American beef operations in the first quarter.

JBS executives have warned that the U.S. beef industry has more processing capacity than current cattle supplies can support. This has forced the company to streamline its operations and reshape its network, leading to the closure of higher-cost and less strategic facilities and the shifting of volume to bigger, more efficient plants.

It also means focusing more on growing the higher-margin prepared foods and value-added business. Even as it trims capacity elsewhere, JBS has invested heavily in its U.S. network, backing major expansion projects in Texas, Georgia, and Iowa.

"We must ensure our operations are efficient, modern, and positioned to compete," JBS USA CEO Wesley Batista Filho said in a Friday statement. "By investing where we are growing and making difficult adjustments where needed, we are building a stronger and more resilient company."

Tyson Foods has also said it was "right sizing" its beef operations to have a "smaller and more efficient footprint" for higher capacity utilization. The company closed its beef processing plant in Lexington, Nebraska in January, and scaled back operations at its Amarillo, Texas facility. Production will be increased at its other beef facilities, according to the company.

"Continuing to absorb losses like we have been seeing for the past two years is simply unacceptable," said CEO Donnie King on the company's February earnings call.

The recently confirmed U.S. cases of New World screwworm has added another risk to already elevated beef prices. The parasite, which can kill livestock if untreated, has already prompted quarantines, import restrictions, and renewed concern over disrupted cattle movement.

All this could further drive up operating costs for ranchers and discourage them from rebuilding herds in meaningful numbers. That means meat processors will likely remain caught between high livestock costs, low cattle supplies, and underused plants.

Fresh beef prices reached a record $9.64 per pound in April, up 14% from a year earlier, according to USDA data. Prices for beef steaks averaged $12.80 per pound as of May, according to the Bureau of Labor Statistics, up 16% from a year ago.

JBS stock gained 2.8% in Friday trading. Shares have lost 12% since the beginning of the year. Tyson stock, roughly flat for the year, increased 3.2% on Friday.

Write to Evie Liu at evie.liu@barrons.com

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June 12, 2026 16:58 ET (20:58 GMT)

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