NEW YORK, March 30, 2011 (GLOBE NEWSWIRE) -- Jim Lochner, chief operating officer of Tyson Foods, Inc. (NYSE:TSN), said a new paradigm exists in the supply/demand fundamentals in U.S. protein production. "Producer profitability will determine the amount of protein available to be consumed in the future," he said. "That concept hasn't changed; however, the drivers of profitability and production have changed.
"The old paradigm was that profitability and production are driven by domestic demand. The new paradigm is that they're largely driven by grain costs and exports," Lochner said today at the J.P.Morgan Global Protein Conference. Dennis Leatherby, Tyson's executive vice president and chief financial officer, also represented the company at the conference.
This shift in input costs began in the mid 2000s, which coincides with the U.S. government's mandate that a portion of the nation's gasoline be mixed with ethanol at a level of 10%. Ethanol in the United Sates is made primarily from corn, which is also a primary ingredient in livestock feed.
Today, about 40% of the U.S. corn crop is used in ethanol production. This new demand has contributed to historically high corn prices. High input costs, along with increasing global demand for protein, have reduced the amount of meat and poultry available, resulting in higher protein prices for consumers, he added.
"Total production of major proteins appears to be about flat versus last year, but with extremely strong exports, it's likely there will be even less meat and poultry per capita," Lochner said while showing a chart illustrating four years in row of declining domestic protein availability.
Lochner added that Tyson Foods is well positioned with its focus on four primary objectives:
- Being the customers' "go-to supplier" by helping them succeed through service, innovation and insight driven food solutions
- Being the "best in class" protein producer by optimizing commodity businesses and driving out inefficiencies
- Building a multinational enterprise with operations in Mexico, China, Brazil and India
- Upgrading raw material through initiatives such as renewable energy from animal fat and other technologically advanced platforms.
About Tyson Foods
Tyson Foods, Inc. (NYSE:TSN), founded in 1935 with headquarters in Springdale, Arkansas, is one of the world's largest processors and marketers of chicken, beef and pork, the second-largest food production company in the Fortune 500 and a member of the S&P 500. The company produces a wide variety of protein-based and prepared food products and is the recognized market leader in the retail and foodservice markets it serves. Tyson provides products and services to customers throughout the United States and more than 100 countries. The company has approximately 115,000 Team Members employed at more than 400 facilities and offices in the United States and around the world. Through its Core Values, Code of Conduct and Team Member Bill of Rights, Tyson strives to operate with integrity and trust and is committed to creating value for its shareholders, customers and Team Members. The company also strives to be faith-friendly, provide a safe work environment and serve as stewards of the animals, land and environment entrusted to it.
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Certain information contained in the press release may constitute forward-looking statements, such as statements relating to protein expected to be produced in 2011. These forward-looking statements are subject to a number of factors and uncertainties which could cause our actual results and experiences to differ materially from the anticipated results and expectations, expressed in such forward-looking statements. We wish to caution readers not to place undue reliance on any forward-looking statements, which speak only as of the date made. Among the factors that may cause actual results and experiences to differ from anticipated results and expectations expressed in such forward-looking statements are the following: (i) the effect of, or changes in, general economic conditions; (ii) fluctuations in the cost and availability of inputs and raw materials, such as live cattle, live swine, feed grains (including corn and soybean meal) and energy; (iii) market conditions for finished products, including competition from other global and domestic food processors, supply and pricing of competing products and alternative proteins and demand for alternative proteins; (iv) successful rationalization of existing facilities and operating efficiencies of the facilities; (v) risks associated with our commodity purchasing activities; (vi) access to foreign markets together with foreign economic conditions, including currency fluctuations, import/export restrictions and foreign politics; (vii) outbreak of a livestock disease (such as avian influenza (AI) or bovine spongiform encephalopathy (BSE)), which could have an adverse effect on livestock we own, the availability of livestock we purchase, consumer perception of certain protein products or our ability to access certain domestic and foreign markets; (viii) changes in availability and relative costs of labor and contract growers and our ability to maintain good relationships with employees, labor unions, contract growers and independent producers providing us livestock; (ix) issues related to food safety, including costs resulting from product recalls, regulatory compliance and any related claims or litigation; (x) changes in consumer preference and diets and our ability to identify and react to consumer trends; (xi) significant marketing plan changes by large customers or loss of one or more large customers; (xii) adverse results from litigation; (xiii) risks associated with leverage, including cost increases due to rising interest rates or changes in debt ratings or outlook; (xiv) compliance with and changes to regulations and laws (both domestic and foreign), including changes in accounting standards, tax laws, environmental laws, agricultural laws and occupational, health and safety laws; (xv) our ability to make effective acquisitions or joint ventures and successfully integrate newly acquired businesses into existing operations; (xvi) effectiveness of advertising and marketing programs; and (xvii) those factors listed under Item 1A. "Risk Factors" included in our October 2, 2010, Annual Report filed on Form 10-K.
CONTACT: Ruth Ann Wisener, 479-290-4235