MEAT+POULTRY - January 2025 - 17

T
ON
o say the past two years have been challenging for American meat
companies is an understatement. But this year might be even more
challenging if President-elect Donald Trump goes ahead with his
threat to impose 25% tariffs on all goods from Canada and Mexico, an
additional 10% in tariffs on all Chinese imports and a 100% tariff on imports
from the BRICS (Brazil, Russia, India, China, South Africa, Iran, Egypt,
Ethiopia, and the United Arab Emirates) nations.
If enacted even at smaller percentages, the tariffs could sharply
increase costs for American businesses and consumers. They would
make US agricultural products, including meat, harder to market abroad,
while simultaneously raising costs for farmers, food manufacturers and
consumers, according to agriculture industry groups. Should Canada,
Mexico and China impose retaliatory tariffs on US meat and poultry exports,
they could severely damage what is a vital global trade for the industry.
TYSON'S CHALLENGES
Just two years ago, Tyson Foods Inc., the largest processor of fed beef in the
industry, posted operating income for its beef segment of $2.502 billion and
a record operating profit of $3.240 billion the year before. But the segment
suffered a historic loss in fiscal 2024 and it faces a similar loss in 2025.
Tyson Beef reported an operating loss of $381 million for the year
ended Sept. 30, 2024. This went against a loss of $91 million in 2023. This
loss was despite the fact that sales of $20.479 billion were up 1.6% on
2023's $19.325 billion and that its average selling prices were up 4.4%. Beef
had an operating loss in the fourth quarter of $71 million, versus a $323
million 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 1.9%, versus a negative 0.5% in 2023.
Annual operating income decreased, primarily reflecting compressed
spreads as expected, Tyson chief financial officer, Curt Calloway, told
financial analysts on Nov. 12. Uncertainties remain, including the timing
and pacing of meaningful herd rebuilding 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 $400 million to $200
million. 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 $244 million in fiscal 2006.
The reasons for Tyson's negative outlook were clear. It cited the US
Department of Agriculture's projections that domestic beef production
will decrease 2% 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 34.32 million head. The annual cow harvest will decline by
approximately 1.028 million head on 2023's total, said Andrew Gottschalk,
principal at HedgersEdge.com. Analysts forecast that 2025 will see similar
declines in total cattle slaughter, which will put even more pressure on
beef processing margins.
Tyson Foods has closed several poultry processing plants in recent
years and added a beef plant to its closure list in late November. Tyson
said it expects to lay off 809 employees at its facility in Emporia, Kan.,
which is a beef and pork non-harvest facility. It announced in a letter
to employees that it would cease all operations on Feb. 14, 2025. Tyson
officials reportedly told city officials that all Emporia operations would
move to its Holcomb, Kan., beef facility.
www.meatpoultry.com | 01.25 | MEAT+POULTRY
17
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MEAT+POULTRY - January 2025

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