Up to 85 positions at Foyle Meats are at risk of redundancy, its parent company Foyle Food Group has said.
Based in Campsie Foyle Meats has a processing capacity of 1,500 cattle and 12,000 lambs per week.
At its peak, the Foyle Group was Northern Ireland's biggest exporters of lambs.
It processed up to 400,000 carcases a year and won supply contracts in France and with Tesco throughout the UK.
The Foyle Food Group, also owns Omagh Meats, Donegal meat, Foyle Proteins and Hilton Meats.
The group as a whole employs more than 750 people, with 260 of those working at Foyle Meats.
While farmers and supermarkets have been making money from a buoyant lamb trade, processors claim their margins have been squeezed.
A statement from the company said that between 2007 and 2009, the total number of lambs processed in Northern Ireland fell by 29%.
There has been a further reduction of 25% since the start of 2010.
The company said it would work closely with the Unite union to minimise job losses and explore other job opportunities within the group.