May 2024

Economic impact of Perry pork processing plant closure

Tyson Foods announcing it will close its Perry, Iowa, pork processing plant in June is the most recent casualty in the economic woes of pork packers.

Smithfield Foods ceased operations at its Vernon, California, plant in early 2023. HyLife shuttered and sold its Windom, Minnesota, plant midway through 2023. Olymel, Canada’s largest pork and poultry processor, also closed pork processing facilities in 2023.

Businesses do not shut down profitable operations. However, in tough times, companies with multi-plant operations will logically idle their least profitable, highest cost plants to limit losses.

Many factors are squeezing pork packer profits

Labor, packaging, transportation, insurance and property taxes are all higher. More capital is needed to replace equipment. Interest rates remain elevated.

New plants and retooling existing plants added about 10% to US hog slaughter capacity from 2016 to 2022. This competition further disadvantages aging, higher-cost plants.

Margins can vary greatly among plants, with differences driven by costs, sources of hogs, plant size, capacity utilization and age of plant. Newer plants may be more automated. Older plants may have more breakdowns and need more downtime for maintenance limiting ability to run at maximum capacity. These factors are unique for each plant. Multi-plant companies consider such factors, and company-wide capacity utilization and profits, in business decisions regarding plant closures.

Single-shift plants face cost disadvantage

The roots of the Tyson Perry hog processing plant date back to the 1960s. The facility was opened as Iowa Pork Co. in 1962. Soon after it was sold to Iowa Beef Processors, Inc. (IBP) and then to Oscar Mayer in 1965. Oscar Mayer then sold it back to IBP in 1988. Tyson Foods acquired IBP in 2001.

The facility has a reported capacity of 8,250 head per day. That’s about 5.5% of Iowa’s hog slaughter capacity and roughly 1.7% of US hog slaughter capacity.

The Livestock Slaughter 2023 Summary, published by USDA’s National Agricultural Statistics Service, contains estimates of the number of federally inspected hog plants by capacity. The Perry plant is one of 11 plants in the 2,000,000 to 2,999,999 head per year size group (Table 1). In 2023, those 11 plants did 22.5% of the total federally inspected hog slaughter. In comparison, the 14 plants in the largest group size, slaughtering 4,000,000 or more hogs per year, did 60.2% of the federally inspected slaughter. Those plants average roughly 20,000 head per day.

Tyson’s Perry plant is a single-shift plant. Double shifting a plant enables processors to boost capacity, which trim both fixed and variable costs per head. A thumb rule says that adding a second shift would typically add 20% to building and equipment costs (for extra cooler capacity, etc.), but volume would rise about 95%. This suggests that double-shift fixed costs are approximately 55%-60% of single-shift costs per head processed.

However, ability to double-shift is predicated on factors beyond plant infrastructure to do so. Margins need to be good. Hogs need to be plentiful. Labor needs to be available.

Table 1. Federally inspected hog plants and head slaughtered by size group.

Impacts on pork producers

Tyson has four hog slaughter plants in Iowa and one each in Nebraska, Indiana and Tennessee with the one in the Volunteer State primarily harvesting sows and boars. Tyson’s Iowa plants in Storm Lake, Waterloo and Columbus Junction likely have capacity to absorb many of the hogs that would have been harvested in Perry. Those plants have capacities of 17,250, 19,500 and 10,150 head per day, respectively. Also, Tyson has pork contracts and sales to retail, food service and export channels to continue which it will fulfill with pork from other plants.

Barring any additional unforeseen changes in processing capacity, the industry will have sufficient capacity this spring and summer to process hogs. Though transportation costs may rise for some producers. Cash negotiated hog prices and basis near Perry may also dip. Such weakness will likely be temporary. Impact on national prices will be minimal.

Processing capacity constraints usually don’t come into play until late in the year when slaughter supplies peak seasonally. Tyson closing the Perry plant will tighten the slaughter capacity to hog supply situation this fall.

Understanding how packing plants impact local economies

Pork packers generate three types of economic activity in communities where they locate plants.

  • Direct effects are based on the level of output (sales) and include packers paying employees and buying hogs, equipment, supplies, services and other inputs to process pork for sale.
  • Indirect effects are suppliers and vendors of pork processing plants buying intermediate inputs for resale to plants.
  • Induced effects are business owners and employees who work in pork processing plants and for their suppliers and vendors converting incomes into household spending.

Summing the direct, indirect and induced effects account for the total economic activity pork processing plants generate.

Understanding how economic activity will shift in Iowa

We defined three regions to analyze the economic impacts closing the Perry plant will have in Iowa. One region is Dallas County, home of Tyson’s plant. The second is other Iowa counties where pork is processed. The final region is all remaining Iowa counties.

Our primary goal is evaluating economic losses in Dallas County and possible gains in other pork processing counties. Given Dallas County’s central Iowa location, we presume most of the hogs Dallas County loses will be processed in other Iowa counties. Impacts, both positive and negative, extend beyond these counties because plant workers, hog producers and other input suppliers live and work throughout Iowa, hence we also examine Iowa’s statewide ability to absorb the economic shock of the closure.

Information from the IMPLAN input-output model is used to make predictions about the economic impacts. We estimate that $890 million in annual direct sales will shift from Dallas County to the other pork-producing counties. This direct output figure is based on the 1,276 workers employed by the plant. IMPLAN estimates Dallas County will lose $1.18 billion of total sales revenue, or output, after accounting for indirect and induced effects. A total of 2,765 jobs is estimated to be lost in Dallas County.

Value added losses across all industries in Dallas County will be $274 million, of which $114 million is value added loss from the Perry plant itself. Value added includes all labor income plus payments to investors (dividends, interests and rents) and indirect tax payments to governments. Value added is analogous to gross domestic product and is a preferred measure of economic worth.

The other pork producing counties gain sales revenue across all industries of $1.14 billion and $246 million in value added. For the pork industry itself, this is about $118 million in value added and an additional 1,269 pork plant workers. If the pork processing plants can indeed attract these workers and process additional hogs, the other pork producing counties will see an additional 964 jobs created in other industries. The non-pork processing counties see net losses of $74 million in sales revenue, $18 million in value added and 210 jobs.

Perry plant closure is net loss for Iowa

Taken, all together, the statewide economic impact is a net loss of 741 workers, $118 million in sales revenue and about $46 million in value added across all industries.

In terms of state and local taxes, Dallas County loses $815,000 in county taxes and about $4.85 million in other local taxes (i.e., cities, schools, and special districts).

Tax revenues will rise in counties that gain hogs to process. However, adding gains elsewhere to losses in Dallas County results in a net loss to the state of Iowa and to counties, cities and other local districts of about $2.19 million in taxes from closing the Perry plant.


Lee Schulz, extension livestock specialist, 515-294-3356,
John Crespi, director, Center for Agricultural and Rural Development, 515-294-1699,


Lee Schulz

extension economist
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John Crespi

Center for Agricultural and Rural Development
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