Feed price force US meat giants to cut production

25-09-2007 | |

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.

Correspondents



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