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Tyson Foods: Grain and Feed Ingredient Costs Rise

Tyson Foods reported that its grain and feed ingredient costs increased in the quarter ended April 3.

In short, Tyson Foods is one of the world’s largest food companies and a recognized leader in protein.

Its portfolio of products and brands include: Tyson, Jimmy Dean, Hillshire Farm, Ball Park, Wright, Aidells, ibp and State Fair.

The company operates the reportable beef, pork, chicken and prepared foods segments.

Meanwhile, International/Others mainly includes its operations abroad, in Australia, China, Malaysia, Mexico, the Netherlands, South Korea and Thailand.

According to the United States Department of Agriculture (USDA), domestic protein production (beef, pork, chicken, and turkey) decreased 2% in the first quarter of 2021 compared to the same period in 2020.

All Tyson Foods segments experienced inflation in operating costs, especially in labor, freight and certain materials, and the company expects this trend to continue through the third quarter of 2021.

In addition, the costs of grains and feed ingredients have increased “substantially”, affecting all segments of the company.

The company seeks to recoup these increased costs through pricing.

Ingredient

In particular, the beef segment experienced strong demand and a broad supply of market-ready cattle, but had lower production performance associated with the impacts of a challenging work environment and severe winter weather during the second quarter of the year. fiscal year 2021 (first of calendar year).

The pork meat segment experienced strong demand, but had a lower production yield partially associated with the severe winter weather.

Meanwhile, the Chicken segment experienced higher costs, volatile market conditions, and lower production performance, which included impacts associated with Covid-19, severe winter weather, and a decrease in hatching rate during the second quarter of fiscal 2021.

Tyson Foods expects the lower hatching rates to continue in the short term and may result in additional costs, including higher fattening expenses and external meat purchases.

Lastly, the Prepared Food segment continued to experience growth in the retail channel, but faced higher costs and lower production performance, in part due to the impact of a challenging labor and supply environment and severe winter weather during the second quarter of the year. fiscal year 2021.

 

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