March 3, 2006

Major US poultry processors have no plans to trim production

Major US poultry processors say they have no plans to reduce production despite significantly slowed export sales and lower domestic chicken prices in recent months.

Officials with Tyson Foods, the nation's largest chicken processor, along with Pilgrim's Pride and Sanderson Farms, have recently said the companies do not plan to cutback on production. Privately held Perdue Farms said it would not comment on export sales or production plans.

There was a general consensus among the other three companies that while export sales of mainly leg-quarters and other "dark meat" products have slowed dramatically in some cases in recent months, domestic demand for the breast meat has remained good enough to keep processors from trimming production. Also, the poultry companies have had excellent returns the past two years so they have good balance sheets, industry sources said.

In addition, representatives of the companies said the industry in general feels that export sales will improve later on in the year after people in the countries affected by the highly pathogenic avian influenza, or bird flu, understand that eating poultry that has been properly prepare and cooked is safe.

"We do not--at this point--anticipate reducing our output," said Dick Bond, Tyson Foods' president, on Feb 21 at the Consumer Analyst Group of New York 2006 Conference.

Kathy Costner, spokeswoman with Pilgrim's Pride, said the company produces (at the level) to meet its customers' demand, which has held up well. She said leg-quarter prices are down significantly due to slowed export sales but demand from the company's customers in the US remains good. "Consumers must realise that eating chicken is safe," Costner said.

The US broiler industry initiated a programme last autumn to test 100 percent of its commercial flocks for highly pathogenic bird flu, and this process is ongoing.