Situation
On Friday, November 21, 2025, Tyson Foods announced it would permanently close its beef processing facility in Lexington, Nebraska, effective January 20, 2026. The company also announced it would convert its Amarillo, Texas facility to a single full-capacity shift. The Lexington plant employs roughly 3,200 people and can slaughter almost 5,000 cattle per day approximately 4.8% of total daily U.S. beef slaughter (Dennis and Smith 2025). This marks the first time one of the “Big Four” meatpacking companies has permanently closed a major plant during the current cattle supply crunch.
The purpose of this article is to estimate the economic impact the Tyson beef processing plant closure could have on the state of Nebraska.
Methods
We use the IMpact analysis for PLANing (IMPLAN) framework model to estimate the impacts of loss of processing capacity on the Nebraska economy. IMPLAN is an input-output model that examines how direct investments multiply through a large economy (Deller and Williams 2009) and is an industry-standard tool for economic impact analysis (John Dunham & Associates, Inc. 2024). The total economic impact from losing the ability to harvest cattle is the sum of the direct and multiplier impact. The direct impact refers to economic activity in production, processing, or both. The multiplier impact refers to additional economic activity which occurs in the local economy. The multiplier impact occurs as cattle operations and/or processing plants purchase supplies and services within the local economy or as their workers spend paychecks on normal household items such as mortgage or rent, insurance, health care, food, fuel, other retail, recreation, entertainment, and other services. Multiplier impacts as a result support businesses throughout the economy. The total economic impact is the sum of the direct and multiplier impact.
Output is the broadest measure of economic impact and refers to the value of business sales. Employee compensation and employment are measures of impact on the labor market. Employee compensation refers to wages, salaries, benefits, and proprietor income. Employee compensation is a component of output and should not be added to the output. Employment includes both full- and part-time jobs. Direct jobs would be expected to be full-time but multiplier employment would occur throughout the economy and could be either full-time or part-time.
Data
The IMPLAN model requires estimates of total expenditures on cattle purchased from Nebraska producers, the share of total plant costs accounted for by cattle, and the total jobs, wages, and compensation lost. We draw on multiple data sources to construct these inputs.
Lost jobs are taken from the WARN report filed by Tyson with the State of Nebraska (Nebraska Department of Labor 2025), which details the number of affected positions by job title. This information is combined with wage data from the U.S. Bureau of Labor Statistics (U.S. Bureau of Labor Statistics 2023) matched using occupation codes. Benefits are assumed to equal one-half of wages, so total compensation is calculated as the sum of wages and benefits. Under these assumptions, Tyson is expected to lay off 3,212 workers with an estimated average annual compensation of 94,169 dollars per employee.
The share of cattle harvested at the Tyson plant that originated from Nebraska feedlots is assumed to be 85 percent (personal conversions with cattle feeders). Cattle are assumed to account for 72 percent of total plant costs, with labor and capital comprising the remaining share (Azzam, Balanzó, and Lopez 2023). Total output is estimated using historical cattle, boxed beef, and byproduct prices, historical Nebraska harvest weights, standard dressing percentages, an assumed 90 percent utilization of processing capacity, and 255 harvest days per year (USDA AMS 2025; USDA NASS 2024).
State and local tax losses from forgone employment are also estimated. Personal income tax losses are based on an effective state income tax rate of 4.4 percent applied to lost labor income. In addition, approximately 35 percent of lost income is assumed to be spent on taxable items subject to the 5.5 percent state sales tax, and the same share is used to estimate lost Dawson County sales tax revenues at a 1.5 percent local sales tax rate (Nebraska Department of Revenue 2024).
Finally, cattle production in Nebraska is assumed to continue following the plant closure. To isolate the impact of the plant closure from the broader beef industry, the modeled contribution of the beef industry to output, value added, labor income, and employment is netted out. The corn sector is assumed to be unaffected, as alternative demand from ethanol plants and grain elevators is expected to arbitrage away any short- or long-run effects on corn planting decisions.
Results
The estimated annual statewide economic impact of the Tyson plant closure is 3.283 billion dollars, including both direct and multiplier effects on the Nebraska economy. Total labor income losses are projected to be 530.431 million dollars per year across 7,003 jobs, which comprise the 3,212 positions directly eliminated at the plant and additional jobs that support those workers in other sectors. Although these figures represent statewide annual impacts, the direct and multiplier losses are expected to be concentrated in Dawson County and neighboring communities from which plant employees commute.
The plant closure is also expected to substantially reduce tax revenues. Annual losses in state personal income tax revenue are estimated at 23.209 million dollars. State sales tax revenues are projected to decline by 10.163 million dollars per year, and local sales tax revenues accruing to Dawson County are expected to fall by 2.771 million dollars per year.
Implications
The preceding analysis indicates that the Tyson beef processing plant closure generates substantial annual statewide economic impacts. 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. 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.
References
Azzam, Azzeddine M., Jordi Jaumandreu Balanzó, and Rigoberto A. Lopez. Input and output market power with non-neutral productivity: Livestock and labor in meatpacking. Centre for Economic Policy Research, 2023.
Deller, Steven C., and David B. Williams. “The contribution of Agriculture to the Wisconsin economy.” (2009).
Dennis, Elliott and T. Jake Smith. “Understanding the Tyson Lexington Plant Closure: What It Means for Cattle Producers.” Accessed December 15, 2025.
https://cap.unl.edu/news/understanding-tyson-lexington-plant-closure-what-it-means-cattle-producers/ .
Nebraska Department of Labor. “Layoffs and Downsizing (WARN).” Accessed December 19, 2025. https://dol.nebraska.gov/ReemploymentServices/LayoffServices/LayoffsAndDownsizingWARN
Nebraska Department of Revenue. “Individual Income Tax Data.” Accessed December 19, 2025.
https://revenue.nebraska.gov/research/statistics/individual-income-tax-data.
U.S. Bureau of Labor Statistics. “51-3023 Slaughterers and Meat Packers Employment and Wages, May 2023.” Accessed December 12, 2025.
https://www.bls.gov/oes/2025/may/oes513023.htm.
Elliott Dennis, Associate Professor, Department of Agricultural Economics
Eric Thompson, Professor, Department of Economics
