Tyson to partner with rancher group, restart second shift at Texas beef plant

By Neil J Kanatt and Tom Polansek

Nov 9 (Reuters) - Tyson Foods TSN.N said on Monday it would partner with rancher group Allied Beef and restart a second shift at its Amarillo, Texas, beef plant, as it tries to revive a business squeezed by the tightest US cattle supplies in 75 years.

The trough in cattle supplies has driven up livestock costs that outpaced gains from soaring steak and hamburger prices for meatpackers. Tyson laid off thousands of workers and closed facilities earlier this year.

Tyson said the partnership with Allied Beef, a group of ranchers and feeders located in Texas, Oklahoma, New Mexico, and other states, would help create a "more economically sustainable model across the supply chain."

The new partnership likely reflects a resumption of US imports of Mexican cattle, which used to account for 3% to 5% of US cattle slaughtered, Stephens analyst Pooran Sharma said.

"A direct relationship with ranchers could provide (Tyson) with greater visibility into cattle availability, improved scheduling, and better plant utilization," Sharma added.

The US Department of Agriculture has resumed cattle ​imports from Mexico after halting shipments last year in an attempt to keep out ​the flesh-eating parasite New World ​screwworm.

Allied Beef said the partnership would give ranchers "the stability and confidence to invest in their herds." US ranchers, who slashed their herds due to a persistent drought in the western US, have been slow to expand as dry weather and wildfires continued to limit the availability of pasture land this year.

The additional shift at Amarillo — one of Tyson's key processing facilities, alongside Dakota City, Nebraska, and Holcomb, Kansas — is expected to be fully operational by summer 2027, Tyson said, and follows its reduction to one full-capacity shift in August, which affected about 1,700 workers.

Tyson cut its annual profit forecast for a second time within a month in September. It is expected to report fourth-quarter results next Monday.