Tyson Foods has suggested that the US protein market has witnessed four straight years of declining availability as export markets have become increasingly important to US protein groups.
Input costs and export markets have come to determine producer profitability for US protein companies, representing a shift in the drivers of production and profitability, Tyson chief operating officer Jim Lochner has suggested.
Speaking at the JP Morgan Protein Conference, Lochner said that this compares to the “old paradigm” that profitability was driven by domestic demand. “The new paradigm is that they’re largely driven by grain costs and exports,” Lochner said today (30 March).
Tyson linked what it termed the “shift” in input costs to the US government mandate increasing the nation’s reliance on biofuels, introduced in the mid-2000s. Currently, about 40% of the US corn crop is used in ethanol production, contributing to historically high corn prices.
High input costs, along with increasing global demand for protein, have reduced the amount of meat and poultry available in the US, resulting in higher protein prices for consumers, Lochner 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.