June 27, 2012

Global meat industry faces higher operational costs

Increased operational costs, higher shipping expenses and healthy competition are putting pressure on producers even as world demand for meat is presently strong, according to reports.

The report showed that Smithfield Foods Inc saw an 8% increase in costs despite seeing relatively strong demand levels. It is not clear, the report stated, whether Smithfield Foods will try to pass the costs on to customers or if it will "look internally to improve efficiency or adopt a combination of both".

The report also highlighted how other companies, such as BRF-Brazil Foods, are combating the higher costs by ramping up sales and shipments. BRF-Brazil Foods, according to the report, is carrying out an ambitious plan to double last year's net sales in just four years.

However, as well as the increasing costs faced by the whole industry, the company will also have to overcome a 14% increase in Brazil's minimum wage, the report pointed out.