Blog: Dean BestPilgrim's signals more cuts in US meat

Dean Best | 12 March 2008

So, more rationalization in the US meat industry. This year, we have already had Tyson Foods announce plans to cut its beef operations and Smithfield Foods sell off its own beef business to focus on pork.

Brazil-based meat giant JBS, the buyer of the Smithfield business, has played a key role in the consolidation of the sector, with the acquisition of another US firm, National Beef Packing Co.

Today (12 March), we saw poultry giant Pilgrim’s Pride unveil plans to wield the axe and close a chicken processing complex and six of its 13 distribution centres in the US.

Like Tyson, Pilgrim’s Pride is looking to revive margins hit by the soaring costs of corn.

However, recently-appointed president and CEO Clint Rivers saved most of his ire for Washington, blaming the US government's "ill-advised policy" to subsidise ethanol production for the soaring cost of corn.

News of Pilgrim Pride’s cuts sent shares in other US poultry groups soaring. Wall Street sees rationalisation as vital in improving industry margins.

However, as Rivers warned, further cuts in the poultry industry are inevitable as processors are forced to readjust to food inflation and weakening demand.

All of which means more job cuts in one of the key food sectors in the US.


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