LITTLE ROCK — Tyson officials on Wednesday played up the Springdale business’ financial health and access to more lucrative, foreign markets to investment bankers attending the Goldman Sachs Agricultural Biotech Forum in New York City.
As the United States’ poultry industry continues correcting an oversupply situation, experts say American red meat producers have been aggressively exporting products since higher prices can be commanded overseas.
Exports have allowed U.S. businesses to “maximize the return on every part of the carcass,” said Joe Schuele, a spokesman for the Denver-based U.S. Meat Export Federation. But, it’s been the country’s weak economic situation that has forced producers to “look for the market that offers the greatest return.”
American producers seek out the most profitable markets to help offset production costs, such as corn, cattle and hog prices, all of which have risen to record-setting highs.
Schuele said the exporting activity coincided with a period of time last summer when the U.S. dollar was “pretty soft” relative to the currency of major trading partners.
“That situation has shifted a little bit as the dollar has strengthened against the Mexican peso and euro,” he said.
Against that economic background, Tyson officials said Wednesday that operating efficiencies in its chicken segment were strong and the company has confidence in ongoing global demand.
Tyson’s chicken segment wrung out operating efficiencies through changes on the farm, during transportation and in processing plants, Donnie Smith, president and chief executive officer of the world’s largest meat production business, told investors Wednesday.
He estimated $800 million had been “taken out of the cost structure” since 2008.
Smith also pointed to poultry growth by 2014 in China, where the company has joint ventures with at least three different businesses that are helping build company-owned poultry barns.
China became the top market for U.S. agricultural goods in 2011, according to the U.S. Meat Export Federation.
“We’re bringing the integrated model” to China, Smith said.
Tyson expects to reap cost advantages in China because its production process is not fragmented among different businesses, which is the model still in use by Chinese agricultural producers, Smith said.
Last week, James Lochner, Tyson’s chief operating officer, said the business is betting on global demand for pork and beef as staying the same from last year.
Lochner, during his appearance at the Bank of America Merrill Lynch Global Agriculture Conference in Miami, told attendees that while he couldn’t break out statistics on a country-by-country basis, Tyson is expecting foreign red meat consumption to increase and foreign demand to remain steady.
Tyson’s international sales during its 2011 fiscal year represented $5.49 billion, or 17 percent, of the year’s $32.3 billion in total sales.
The company has poultry operations in Mexico, Brazil, China and India.
Tyson exports products to 130 countries, it said.
U.S. agricultural producers, like Tyson, have some assurance for continued demand as trade agreements that lower import red meat tariffs take effect this month.
Additionally, a five-year cooperative agreement concerning pork exports to China was recently signed.
Business, Pages 21 on 03/08/2012