News last update:6 Aug 2012

Feed price force US meat giants to cut production

Rising feed prices force Cargill and Tyson, two of the largest meat producers in the US, to reduce production in order to maintain margins, according to media reports.

Tyson Foods, the world's largest meat processor, will close operations in beef plants in Texas, Kansas, Nebraska, Iowa and Illinois for two weeks.

Cargill reduces beef production by reducing working hours at all processing factories, according to Reuters.

The beef market in the US is struggling with higher input costs, export bans, livestock movement restrictions, and retailer pressure to hold down price increases.

Tyson spokesperson Libby Lawson blamed the shutdown on poor margins, she told Reuters.

Tyson's beef profits have been falling for some time now, and full-year earnings in this sector have been lower than expected for two years in a row.

Tyson has, however, managed to keep operations profitable this year by reorganizing several of its plants.

Cargill has also seen a loss of profits in the beef sector in recent times, and in 2004 the company axed 750 jobs at five of the compay's Excel beef plants.

Expensive feed
US meat processors have blamed many of industry woes on the rising prices of grains, which in turn lead to animal feed being much more expensive.

Earlier this year, the American Meat Institute (AMI) blamed these rising costs on the country's rising ethanol production, which it said was damaging meat processors for the sake of biofuel production.

"Federal research investment in meat and poultry nutrition could provide livestock and poultry producers with tools and supplements to help adjust their feeding regimen to incorporate distillers grains and other byproducts more easily," AMI President Patrick Boyle said.

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