Tyson Foods, the US meat processing giant, has recorded a $181m (€160m) adjusted operating loss in its beef operation for the first half of its financial year ending 31 March 2025.

It was in the most recent three months or second quarter that $149m (€132m) of this loss was incurred which is significantly worse than the $34m (€30m) that was recorded for the same period in 2024.

The company don’t foresee a significant recovery in the performance in the second half of the financial year as they are projecting a loss for the full year of between $200m and $400m (€177m and €354m) for their beef operation.

Tyson business

While beef processing is the biggest category with $5.2bn (€4.6bn) sales in the second quarter, Tyson Foods is a multi-species business with total sales of $13bn (€11.5bn) in the period.

Chicken is the second largest category with $4.1bn (€3.6bn) sales which returned an adjusted operating income of $312m (€276m) for the period.

The Prepared Foods division had sales of $2.4bn (€2.1bn) giving an adjusted operating income of $244m (€216m) while pork processing had sales of $1.2bn (€1bn) and contributing $55m (€48.6m) of adjusted operating income.

Problem with beef in US

The problem for Tyson Foods and other beef processors in the US is lack of cattle numbers to supply the processing capacity available.

The US cattle herd fell to 86.7m head by the 1 January 2025 according to USDA data, the lowest level in over 70 years.

Periodic droughts in many cattle producing regions are the main cause of the decline and there are now over 8m fewe cattle in the US than there were in 2019 when the cattle herd was 94.8m head.

Tyson Foods has processing capacity for 155,000 head of cattle per week across 12 locations in the US which adds up to 8m head over a year.

That is the same number as the national cattle population has declined by since 2019 and the result is that beef processors have been competing aggressively to buy cattle at levels which they haven’t been able to offset with beef price increases.

While Irish farm gate beef prices have increased over recent months to unprecedented levels, US factory cattle prices have consistently traded around the equivalent of €6/kg or more since the start of last year when the Irish R3 steer price was just €4.84/kg.

Perfect storm

The US beef industry is currently being squeezed by having record volumes of competitively priced beef imports and the Chinese market effectively closed for exports.

Tyson Food’s management sought to minimise the potential threat of tariffs to their business for the second half of the year.

They pointed out that just 10% of their revenue was derived from exports across the business but did reflect uncertainty by not increasing profit forecasts for the second half of their trading year.

While Tyson Foods may have more limited exposure to dependence on exports, the reality is that the US overall seeks to export between 1.2m and 1.3m tonnes of beef annually.

China and Hong Kong took 215,000 tonnes of this in 2024 but they are out for the immediate future at least.

Also other major Asian markets have been flat in recent months and the widespread use of hormones in US beef production mean that the EU and UK are also effectively closed to most US beef exports.

As for competition in the domestic market place, both Brazil and Australia have rapidly increased export sales of beef to the US over the past year and continue to do so, even with the 10% tariff introduced in April.

The US factory price for cattle in the middle of April was the equivalent of €6.36/kg.

At that level it was more than twice the cost in Brazil at the equivalent of €3.05/kg while the cost in Australia is the equivalent of €3.40/kg.

Comment

US beef processors have faced a prolonged period of high cattle prices at a time when two of their largest suppliers of imported beef have a cattle price that is close to half the US cattle price.

Drawing parallels with Irish factory performance isn’t possible as the major processing groups are all private businesses that don’t publish accounts.

However, while Irish factories have faced rapidly increasing cattle prices in recent months, they also have the advantage of selling at least half their exports into the UK where farm gate prices have been consistently running at more than a euro per kilo higher than in Ireland.

The bottom line is that strong factory prices for cattle are only sustainable in the longer term where factories are able to recover higher value for the beef they sell into the market place.

Clearly that hasn’t been the case with Tyson Foods up to this point.

*08/05/2025 – Updated opening paragraph to clarify that the loss referred to Tyson's beef operation.