Blog: Washington swoops to help US poultry producers
Dean Best | 17 August 2011
In recent days, we've detailed how the US poultry sector is suffering from high input prices and weak consumer demand.
Add soaring feed costs to low demand for poultry products (which has caused an over-supply of chicken and prices to drop) and you have severe pressure on processors' margins.
Even the largest players have felt the pain. Last week, Tyson Foods reported a slump in quarterly profits on the back of sliding earnings from poultry. In the three months to 2 July, Tyson's poultry profits were US$28m. In the same period last year, they were $186m.
Last month, rival processor Pilgrim's Pride said it would close a plant in Dallas, a move that could lead to around 1,000 jobs being lost.
Pilgrim's Pride, which is controlled by Brazilian meat giant JBS, said it needed to improve how it uses its production capacity amid "record-high" feed costs and an over-supply of chicken.
What's more, the announcement came as Pilgrim's Pride reported a $128.1m loss for the second quarter of its financial year.
However, reports in the US say that the US Department of Agriculture is set to make a special purchase of poultry products worth $40m.
According to the Chicago Tribune, the USDA made a similar move last year when it purchased $30m of products. In 2008, it snapped up $42m worth of chicken.
The products are used for the USDA's food assistance programmes but, it is hoped, others far away from America's soup kitchens will feel the benefit.
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