August 11, 2011 

Tyson to halt chicken losses through price increase

Tyson Foods expects grain prices to remain high, and will focus on increasing chicken prices through better quality, according to a Dow Jones report.

Tyson's expected fourth-quarter loss in its chicken business will not be as severe as losses in 2008, said Chief Executive Donnie Smith.

High grain prices, which have pushed most of the industry into the red this year, are "here to stay," Smith said. The company is taking that for granted and focusing on boosting chicken prices through increased quality, he said.

Tyson, whose poultry business remained profitable in the third-quarter - in contrast to most of the rest of the industry - is hoping a fourth-quarter loss is short-lived. Smith said fourth-quarter losses should not be compared to those in 2008, when soaring grain costs also pushed chicken producers into the red, and some into bankruptcy.

Tyson lost US$286 million in the fourth-quarter of 2008, much of it due to hedging losses. The company has since taken a more conservative approach to buying grain.

Tyson and other poultry producers have started to cut back poultry production. Smith would not detail the extent of Tyson's cuts, except to say that they reflect the expected decline in demand this year.

Meanwhile, the company's pork and beef businesses remain strong. As exports in both markets increase, Tyson is gaining a greater share of the exports, executives said.