September 26, 2007

 

Cargill, Tyson to cut production on high feed costs

 

 

US meat giants Cargill and Tyson will be forced to reduce production and operations over high feed prices in order to maintain margins, according to media reports.

 

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

 

On the other hand, Cargill reduces beef production by cutting working hours at all processing factories, according to Reuters.

 

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

 

Tyson spokesperson Libby Lawson said the shutdown was due to poor margins, she told Reuters.

 

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

 

Tyson however has managed to earn profits this year by reorganising 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 company's Excel beef plants.

 

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.

 

According to AMI president Patrick Boyle, 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.