USDA Proposes Rule On Contractor-Integrator Interaction

For more than six decades, the mutually beneficial relationship between broiler integrators and contract growers has led to expansion of the industry. Increased efficiency and hence, sustainability has provided consumers with inexpensive highly nutritious protein.  A recent study conducted by Dr. Thomas Elam confirmed that broiler contract growers enjoyed a higher income than independent row crop and livestock farmers and the survey commissioned by the NCC demonstrated long tenure of growers with their integrators. This is contrary to the assertions made by Secretary of Agriculture, Tom Vilsack, during his previous tenure as Secretary of Agriculture and who has since refined and directed his action against the U.S broiler industry regarded as the most efficient among world animal protein industries.


In testimony before the Senate Agriculture Committee, Secretary Vilsack characterized the proposed rule as, “promoting transparency” with the intention of promoting competition, reducing consolidation and fighting inflation. Cervantes’ Don Quixote would concur with the objectives.


The rule would require integrators to provide prospective and existing growers with a disclosure document.  This would quantify the minimum number of placements annually and stock intensities with potential impact on grower income.  Growers would have to be provided information on past litigation and historical payments.  It is recognized that integrators bear the risk of market fluctuation, price of feed and as owners of flocks the possible impact of weather extremes, catastrophic and erosive diseases.  Contractors are absolved of these risks but are expected to use their best endeavors to achieve acceptable standards of growth, feed conversion and livability under the guidance of service persons serving us a link with the integrator.


The proposed rule would require integrators to provide growers with the identity of the broiler strain, gender, breeder age and health status of chicks placed and how their incomes could be changed by these factors.  Will a contractor be in a position to refuse a high-yield strain, given prospective mortality compared to a slower-growing strain?  Will a contractor be able to specify that a flock be harvested at a specific age or live weight to suit their personal needs, payment or prejudices?       


The proposed rule is at the least onerous for integrators and lacking in any benefits for contractors. In many situations the proposed rule would be unworkable. Many of the practical and relevant aspects of the proposed rule are incorporated in existing contracts establishing the relationship between integrators and their growers.  If they are exploited, there would not be a waiting list to grow for integrators or to expand farms. 


One of the requirements in the proposed rule would involve growers receiving detailed information on their ranking within the settlement cohort, including details on housing, chicks, feed and other inputs.


A disconcerting admission by Secretary Vilsack, in response to a question from Senator Cindy Hyde-Smith (R-MS), is that the contemplated Rule would in fact, be the first of three.  USDA intend implementing a rule providing for enforcement of unfair and deceptive practices, undue preferences and unjust prejudices.  A third rule would allow contractors to bring complaints and legal actions under the Packers and Stockyards Act without demonstrating harm with respect to competition, allowing an upsurge in frivolous litigation. 


The USDA has already notified the Office of Management and Budget of a pre-rule entitled, “Poultry growing tournament system: fairness and related concerns.”  that would effectively dismantle the tournament system.


The National Chicken Council issued a firmly worded statement against introducing new regulations and restrictions that would increase costs and inevitably be passed down to consumers in an inflationary environment.


The headlong program to create rules presumably to benefit contractors who have not expressed dissatisfaction with the current system, stems from joint Department of Justice and USDA regional meetings midway in the second Obama term. These staged events were intended to generate a groundswell for restrictive rules curbing what the then Administration considered to be an undesirable consolidation of power. The resulting “Farmer Fair Practices Rule” approved by Sec. Vilsack by on his last day of office was set aside by incoming Secretary of Agriculture Dr. Sonny Perdue.  It is evident that Comrade Vilsack has picked up where he left off and intends to force through his intention to change the relationship between integrators and growers without clearly understanding the implications for the parties involved and of greater importance to the effect on consumers.  As with the attempt by Sec Vilsack in 2017 to introduce the changes now proposed in 2022, we will look to voters and to Congress to curb his enthusiasm and restore rationality.  Attempting to fix nonexistent problems invariably leads to unintended consequences. Both growers and integrators will be adversely impacted by an ill-conceived attempt at social engineering and political grandstanding.


Poultry Industry News

Tyson Foods Inc. Reports on Q3 FY 2022

In a press release dated August 8th Tyson Foods Inc. (TSN) announced results for Q3 of FY 2022 ending July 2nd 2022.


The following table summarizes the results for the period compared with the values for the corresponding quarter of the previous fiscal year (Values expressed as US$ x 1,000 except EPS)


Third Quarter Ending

July 2nd 2022

July 3rd 2021

Difference (%)





Gross profit:




Operating income:




Pre-tax Income

Net Income







Diluted earnings per share:




Gross Margin (%)




Operating Margin (%)




Profit Margin (%)




Long-term Debt and other liabilities:




12 Months Trailing:

Return on Assets (%)


Return on Equity (%)


Operating Margin (%)


Profit Margin (%)


Total Assets




Intraday Market Capitalization August 8th


52-Week Range in Share Price of TSN: $69.83 to $100.72. 50-day Moving average, $91.39


Market Close: Friday May 6th $90.85. Open Monday May 9th post-release $94.37.

TSN beat on revenue against an estimate of $13,300 million but adjusted EPS of $1.94 was below expected $1.98.

Forward P/E 11.5 Beta 0.8


The Chicken Segment attained sales of $4,959 million ($4,954 million in Q3 FY 2021) representing 36.7 percent of Company revenue. Operating income was $277 million or 26.8 percent of the Company total (adjusted to $269 million). In Q3 of 2021 operating loss was $(279) million adjusted to $27 million.


For comparison among Tyson Foods’ business segments the adjusted operating incomes were respectively:- Pork, $25 million; Beef, $506 million; Prepared Foods $186 million.


In commenting on results Donnie King, president and CEO stated “We delivered solid results during the third quarter, focusing on operational excellence and aggressive cost management." He added, "The turnaround of our chicken business continues, and we continue to be the market share leader in many of our retail business lines, which include our Tyson, Jimmy Dean, Hillshire Farm and Ball Park iconic brands. We maintained double-digit sales and earnings growth year to date as well as progressing toward our goal of delivering more than $1 billion in recurring productivity savings by the end of fiscal 2024.


"King concluded "I'm optimistic about our ability to win with our team members, win with our customers and consumers and win with excellence in execution."


With regard to the Chicken Segment the company release included:- “Sales volume decreased in the third quarter of fiscal 2022 primarily due to a reduction in volumes related to a fire at a production facility in the fourth quarter of fiscal 2021 and a reduction in outside meat purchases. Average sales price increased in the third quarter of fiscal 2022 due to the effects of pricing initiatives in an inflationary cost environment. Operating income increased in the third quarter of fiscal 2022 primarily due to higher average sales prices, partially offset by the impacts of inflationary market conditions including increased supply chain and labor costs. In the third quarter of fiscal 2022, we experienced $145 million of higher feed ingredient costs and $23 million of net derivative losses as compared to $56 million of net derivative gains in the third quarter of fiscal 2021”.


Guidance for FY 2022 included Revenue between $52 and $54 billion; Operating margin of 5 to 7 percent unchanged from the Q2 report, Savings in cost of production of $400 million in FY 2022 relative to 2021and capital expenditure of $1.9 billion. The Company warned that supply chain issues would impact international operations.


Pilgrims Pride Reports on Q2 2022

In a press release dated July 27th Pilgrim’s Pride Corp. (PPC) announced results for the 2nd Quarter of FY 2022 ending June 26th. The report incorporates operations in the U.S. Mexico, the EU and the U.K.


The following table summarizes the results for the period compared with the values for the corresponding quarter of the previous fiscal year (Values expressed as US$ x 1,000 except EPS)


2nd Quarter Ending

June 26th 2022

June 27th 2021

Difference (%)





Gross profit:




Operating income:             




Pre-tax Income

Net Income / (loss)







Diluted earnings per share:




Gross Margin (%)




Operating Margin (%)




Profit Margin (%)




Long-term Debt and lease obligations:




12 Months Trailing:




           Return on Assets    (%)




           Return on Equity    (%)




           Operating Margin   (%)




           Profit Margin          (%)




Total Assets ’22 22.7% / ’21 25.8% intangibles




Market Capitalization  July 29th




Notes for the 2nd Quarter:


SGA ’22 $164 million comprising 3.5% of sales compared to ’21 $503 million at 13.8% of sales

Foreign Currency loss $2.7 million ’22; $4.2 million ‘21

Tax payment $113 million ’21; $9.8 million benefit, ’22.



52-Week Range in Share Price:  $20.23 to $32.56     50-day Moving average  $31.17

Market Close July 26th pre-release  $32.92;  Market Close July 27th $32.31

Forward P/E  13.8             5-year Beta 0.9



In reviewing the relative revenue and contribution to operating profit, the following proportions of Company totals were derived from data presented:-


Geographic Segment     Proportion of Revenue    Contribution to Operating Profit

             U.S.                               62.6%                                      88.4%

             U.K. and  EU                26.9%                                        1.5%

             Mexico                          10.5%                                      10.1%


In commenting on Q3 results Fabio Sandri, CEO of Pilgrim's Pride Corp. stated, “Throughout the second quarter, we emphasized discipline and ownership throughout all aspects of our strategy and organization. As a result, second quarter sales grew over 27 percent and Adjusted EBITDA was up almost 68 percent from last year. I am continually impressed with our team’s determination to drive operational excellence to mitigate inflationary headwinds and work with Key Customers to profitably grow our business”.


“Our results continue to reflect the benefits of our diversified US portfolio. Investments in automation and in our hourly team members and their communities led to significant progress in net staffing levels, enabling our operations to realize the benefits of strong market fundamentals. Moreover, our overall demand in retail and foodservice remained robust given our emphasis on Key Customers and our diversified product portfolio. In addition, our retail branded business maintained its momentum, as Just Bare® and Pilgrim’s® continued their strong growth trajectory.

In commenting on U.K and EU. operations Sandri stated, “Our  business continued to recover through enhanced partnerships with Key Customers, improved cost recovery, and accelerated implementation of supply chain solutions. The team will continue to identify ways to leverage our diverse portfolio of offerings and further optimize our production capabilities to alleviate continual cost escalation and consistently innovate to drive profitable growth in a difficult economic environment.


With regard to Mexico Sandri opined “Our Mexican operations were impacted by seasonal diseases that reduced our efficiency of live production. Nonetheless, the team leveraged our diverse geographic footprint to ensure sufficient supply, driving superior service for Key Customers. Moving forward, the team will continue to monitor conditions and adjust accordingly to grow the business.


Perspectives for the future included “Given our market momentum and focus on profitable growth, we are announcing a number of new investments in the US. These investments include an expansion of our Athens, Georgia facility, which will enhance our service levels and support growth for a Key Customer. It also includes funding for operational excellence improvements via automation throughout our U.S. footprint and construction of a protein conversion plant for pet food ingredients in Georgia. Also, we are committing to the development of a Prepared Foods facility in the Southeast U.S. to cultivate our branded growth, further diversifying our portfolio”.


Beyond Meat Reports on Q2 2022

In a press release dated August 4th Beyond Meat Inc. (BYND) announced results for the 2nd Quarter of FY 2022 ending July 2nd. The Company disappointed on the top line with sales of $147 million against a consensus of $149 million. The bottom line miss was a negative EPS of $1.53 against an expectation of a negative $1.18


The following table summarizes the results for the period compared with the values for the corresponding quarter of the previous fiscal year (Values expressed as US$ x 1,000 except EPS)


2nd Quarter Ending

July 2nd 2022

July 3rd 2021

Difference (%)





Gross profit:




Operating income:




Pre-tax Income

Net Income / (loss)







Diluted earnings per share:




Gross Margin (%)




Operating Margin (%)




Profit Margin (%)




Long-term Debt and lease obligations:




12 Months Trailing:

Return on Assets (%)


Return on Equity (%)


Operating Margin (%)


Profit Margin (%)


Total Assets July 2nd.




Market Capitalization August 5th



Notes for the 2nd Quarter derived from data presented:

SGA ’22 $63 million comprising 42.8% of sales compared to ’21 $48.3 million or 32.3% of sales

R&D ’22 $16.2 million comprising 11.0% of sales compared to ’21 at $13.8 million or 9.2% of sales

Inventory: In Q2’22 represented 20.9% of sales compared to 17.5% in Q2 2021

In Q2 ’22 30.1 million lbs. sold compared to 26.3 million lbs. in Q2 ‘21

In Q2 ’22 Unit revenue attained $4.88/lb. compared to $5.69/lb. in Q2 2021

In Q2 ’22 each of claimed 183,000 outlets received an average of 165 lbs. product compared to 118,000 outlets receiving 222lbs. in Q2 ‘21

In Q2 2022 U.S sales represented 70 percent of revenue of which 77 percent was retail, the remainder, food service.

In Q2 2022 International sales represented 30 percent of revenue of which 53 percent was retail, the remainder, food service.

52-Week Range in Share Price: $20.50 to $134.99 50-day Moving average $28.42

Forward P/E 666

In commenting on Q2 2022 results , Ethan Brown Founder and CEO stated, “We recorded our second largest quarter ever in terms of net revenues even as consumers traded down among proteins in the context of inflationary pressures, and we made solid sequential progress on reducing operating and manufacturing conversion costs. Across the balance of the year, we are tightly focused on intensifying OpEx and manufacturing cost reductions, executing against a series of planned market activities for our global strategic partners, and strengthening our retail business through core support and the introduction of one of our best innovations to date. Through these and other measures, we are confident we will emerge from the current economic climate leaner and stronger, and well positioned for our next chapter of growth.”


The report included commentary on the second quarter that included:-

“The decrease in net revenue per pound was primarily attributable to changes in price, including the impact of sales to liquidation channels and list price reductions in the EU implemented in the first quarter of 2022, changes in foreign exchange rates, and increased trade discounts”.


The reality is that the Company record includes:-

  • An accumulated deficit of $574.6 million.
  • Trailing 12-month operating cash flow of -$416 million
  • Effective July 15th 41 percent of float was short
  • News reports of mismanagement and failure to execute and deliver on products offered to food service prospects
  • Share price off 43 percent year-to-date


Notwithstanding the Q2 report BYND opened August 15th post release at $31.33 and closed inexplicably up 18% at $38.26. Management may attribute this market affirmation to promises to cut expenses by laying off four percent of staff and other economies to reduce cash burn. A more sinister explanation is that some investors see the inevitability of an acquisition with a premium or alternatively a short squeeze in the near future. David Trainer speaking on CNBC correctly points to flagging sales and losses among the manufacturers of vegetable protein with extreme competition in the market. (see Report on Maple Leaf Foods Q2 in this edition). Analysts see Beyond Meat running out of cash with a share price below $5. This will create an opportunity for a Grey or even a Black knight (the White knights have passed it over) to acquire and dismember the Company. Tyson Foods correctly assessed the prospects for Beyond Meat when they disposed of their equity before the IPO.


Parties in Sanderson Farms Acquisition Accept DOJ Consent Decree

In documents filed with the U.S. District Court of Maryland, Cargill Meat Solutions, Sanderson Farms and Wayne Farms agreed to pay $84.8 million in restitution to workers.  The case follows intensive investigations by the Department of Justice into allegations that the three companies cited allegedly suppressed wages for plant workers and colluded to restrict payments to contract growers over a minimum of ten years.  Cargill Meat Solutions will pay $15.0 million, Sanderson Farms $38.3 million and Wayne Farms $31.5 million.  The companies accepted the consent agreement without admitting any wrongdoing.  Meng, Sahl and Company, a compensation consultancy, was enjoined from providing services that could be used to restrict wages.  The DOJ settlement is separate from a class-action lawsuit naming Wayne Farms and Sanderson Farms as defendants.


In addition to restitution for plant workers, the integrators will abandon aspects of the tournament system and will not be allowed to penalize contractors for documented suboptimal grow-out performance.  The companies will function in accordance with a compliance monitor for a ten-year period to ensure adherence to rules imposed by the Department of Labor and under the USDA Packers and Stockyards Act.


The agreement will expedite approval of the $4.5 billion transaction by which Cargill, Inc. and Continental Grain Company will acquire Sanderson Farms to create a new entity, Wayne-Sanderson Farms that will comprise third largest U.S. broiler producer approaching the weekly volume of 2nd-ranked Pilgrim’s Pride Corporation.


Port Of New York and New Jersey Takes Preemptive Action On Containers

Recognizing the increased level of traffic through Atlantic Coast ports as a result of congestion on the West Coast, the Port of New York and New Jersey has taken preemptive action to maintain regular inward and outward flow of containers during the fourth quarter.  Effective September 1st, the port will impose a container imbalance fee.  The outward movement of containers by ocean carriers should equal to or exceed 110 percent of their incoming volume during a given period.  Deviation from this standard will result in a $100 per container penalty for imbalance.  The Port will also impose a container fee on long-dwelling incoming and export containers.  This is intended to expedite movement and maintain space for outward collection.


The Port of New York and New Jersey has experienced a 34 percent increase in container volume compared to pre-pandemic operation with 12 percent higher container movement year-to-date.  During April through June, seven percent of volume handled represented cargo from vessels rerouted from the West Coast.


Maple Leaf Foods Reports on Q2 of FY 2022

In a press release dated August 4th Maple Leaf Foods Inc. (MFI-TO) announced results for the second quarter of FY 2022 ended June 30th.

The following table summarizes the results for the period compared with the values for the corresponding quarter of the previous fiscal year (Values expressed as US$ x 1,000 except EPS (conversion of CAN$1=US$0.78)


2nd Quarter Ending June 30th.



Difference (%)





Gross profit:




Operating income:




Pre-tax Income

Net Income1







Diluted earnings per share:




Gross Margin (%)




Operating Margin (%)




Profit Margin (%)




Long-term Debt and lease obligations2:




12 Months Trailing:

Return on Assets (%)


Return on Equity (%)


Operating Margin (%)


Profit Margin (%)


Total Assets*

 Intangibles and goodwill as % of assets






Market Capitalization


  1. Restructuring charge of $14.9 million in Q2
  2. June 30th 2022/2021


Q2 2022 Meat Protein Segment:

Sales, $905 million, up 3.8% from Q2 2021.

Adjusted operating earnings $45.0 million down 33.8% from Q2 2021.


Q2 2022 Plant Protein Segment:

Sales, $31.8 million, down 15.2% from Q2 2021.

Adjusted operating loss $(26.5) million 16.7% deterioration from Q2 2021.

52-Week Range in Share Price: $17.17 to $25.43 50-day Moving average $20.58

Forward P/E 23.9 Beta 0.4

Market Close pre-release August 3rd $21.01

Market Open post-release August 4th $17.46

Insider shareholding 39.2%. Institutional shareholding 26.0%


In commenting on Q2 results Michael H. McCain, president and CEO of Maple Leaf Foods stated, “This chaotic and unpredictable operating environment is unprecedented in my 40-year career in the food industry," He continued “Driven by a post-pandemic economy and the tragic conflict in Eastern Europe, we have been unable to hire adequate people resources to operate our supply chains, experienced unnatural agricultural and trading markets, and realized hyper-inflation that has been challenging to keep up with pricing. While our Q2 results fell short of expectations with an Adjusted EBITDA margin of 9 percent in the Meat Protein Group, we see signs of these conditions abating. Our commitment to achieve 14-16 percent. Adjusted EBITDA was grounded in the assumption of normal, five-year average market conditions and we are confident we will deliver that once the environment stabilizes, although predicting this timeline at the moment is challenging. Our focus on executing our Blueprint to be the most sustainable protein company on earth is absolute.”


Addressing the Plant Protein segment McCain said "We are in full motion executing our transition to a different business model,” He added “At the end of Q2, we took steps to materially reduce the size of the organization. We expect to achieve our SG&A targets by the end of this year, and a right sizing of the manufacturing footprint in the first half of 2023, giving us the back half of 2023 as time to make final adjustments. Revenue management adjustments will also occur over the course of the next 12 months. This is a business model in transition back to one of profitable growth."


The Company provided the following comments on strategy and guidance:-

  • Meat Protein:Expect mid-to-high single digit sales growth with Adjusted EBITDA Margin expansion near the lower end of the 14% - 16% target by the end of 2022, once markets normalize, driven by mix-shift benefits in prepared meats resulting from growth in sustainable meats and brand renovation, as well as operational efficiencies”.
  • Plant Protein: “The Company is pivoting its strategy and investment thesis for the Plant Protein Group and has set a new goal to deliver neutral or better Adjusted EBITDA in the latter half of 2023. Work is ongoing to implement this pivot. Given the current size of the Plant Protein Group of approximately US$150 million of annual revenue in 2021, the expected resultant business model from this strategy would deliver a 30% gross margin, with less than US$50 million in SG&A, to achieve the stated Adjusted EBITDA target.


In late 2021, the Company announced that it was re-evaluating its outlook for the Plant Protein Group and launching a comprehensive review of the overall plant protein category. This decision was driven by a pronounced slowdown in growth rates in the category, particularly in the second half of the year, which fueled the Company’s imperative to identify and thoroughly assess the causes, near and long-term trends, and overall implications. While the Company’s analysis is ongoing, the results to date confirm that the very high category growth rates previously predicted by many industry experts are unlikely to be achieved given current customer feedback, experience, buy rates and household penetration. Based on this new information, the Company believes that the category will continue to grow at more modest, but still attractive rates. Current estimates suggest that the category will grow at an average annual rate of 10% to 15%, making it a $6 billion to $10 billion market by 2030.


The Company announced in May 2022 that it is moving forward with a planned leadership transition plan for the Board and Management. Michael McCain will serve as the Executive Chair of the Board and will continue as CEO for the next year as part of the management transition plan. Curtis Frank, currently the President and COO, will assume the role of CEO during Q2 of 2023.


USPOULTRY Live Production Program

Biosecurity will be front and center at the 2022 Live Production, Welfare and Biosecurity Seminar to take place September 21st and 22nd at the DoubleTree Hilton Downtown in Nashville, TN.  The event organized by USPOULTRY is co-sponsored by the National Chicken Council, the National Turkey Federation and United Egg Producers.


Program topics include a Farm Bill update, biosecurity best practices, animal welfare, a cage free industry update, lighting intensity, animal activists’ update and food safety.

The full agenda and details on registration can be accessed at <www.uspoultry.org>.


Seaboard Q2 Reports Butterball Profit

On August 2nd Seaboard Corporation (SEB) filed SEC Form 10-Q reporting results for Q2 of FY 2022 ending July 2nd.  The company is a conglomerate with segments dedicated to pork production, grain milling, commodity trading, marine transport and power generation. Seaboard owned 50 percent of the equity of Butterball LLC at the end of the first quarter with warrants to purchase an additional five percent of the shares, expiring in 2025.  On April 19th Seaboard exercised rights to purchase the additional equity thereby acquiring a controlling interest with 55 percent of the equity of Butterball LLC.


For Q2 FY 2022 SEB earned $108 million on revenue of $2,973 million with an EPS of $92.53. Comparable values for Q2 of FY 2021 ending July 3rd were net income of $176 million on revenue of $2,430 million with an EPS of $151.56


On July 2nd Seaboard posted total assets of $7,810 million with long-term debt and lease obligations of $1,399 million.  Seaboard has a market capitalization of $4,620 million with 79 percent of equity held internally. The 12-month trailing operating margin was 5.1 percent with a profit margin of 5.0 percent. Return on assets and equity were 4.3 and 11.6 percent respectively. During the past 52 weeks share price has ranged from $3,535 to $4,400 with a 50-day moving average of $3.930.


Effective April 2nd Seaboard owned half of Butterball LLC ranked as the second largest turkey producer in the U.S. The performance of this now-incorporated subsidiary, producing 850 million tons of RTC product in 2021, is reflected in the Seaboard Corp. SEC Q-10 submission. For Q2 FY 2022 Butterball posted sales of $417 million compared to $371 million in Q2 FY 2021. Net income attained $21 million generating a profit margin of 5.0 percent compared to a loss of $(7) million for the corresponding 2nd Quarter of 2021. As of July 2nd 2022 Butterball LLC posted assets of $1,100 million.


The SEC 10-K report includes the following statement:- “The Turkey Segment, accounted for using the equity method, represents Seaboard’s investment in Butterball, LLC. The increase in income from affiliates for the three and six month periods of 2022 compared to the same period in 2021 was primarily the result of higher selling prices, partially offset by lower volumes of turkey products sold and higher feed, plant production and transportation costs. Also, the income from affiliates for the first quarter of 2022 includes Seaboard’s portion of a gain on the sale of a business. Management is unable to predict market prices for turkey products or the cost of feed for future periods; however, management anticipates this segment will be profitable for the remainder of 2022”.


McDonald’s Terminates McPlant Offering

After determining suboptimal consumer demand for the McPlant burger using a patty supplied by Beyond Meat, the QSR chain has withdrawn the product from the stores where it was under test.  It is understood that the product has gained acceptance in Europe. McDonald’s CEO Chris Kempczinski noted “after a successful pilot in the U.K. beginning in January, we made it available across all the restaurants in the U.K. and Ireland.”  He added, “When customers are ready for McPlant we will be ready for them.”


The announcement that McDonald’s sales in the U.S. have terminated resulted in an immediate six percent decline in the share price of Beyond Meat (BYND).  BYND is down 52 percent YTD declining to a market capitalization of slightly over $2,000 million.  Despite trials and the experience of McDonald’s, neither YUM! brands nor Pizza Hut have committed to national menu offerings.

BYND has traded over a range of $20.50 to $134.99 over the past 52 weeks with a 50-day moving average of $27.83.  The company has generated negative returns on assets of -10.5 percent and -167 percent on equity.  Over the trailing 12-month period the company has posted a negative operating margin of -50 percent and a profit margin of -55 percent. With a forward P/E exceeding 600, the share is over-priced given an apparent inability to gain traction in the U.S. among QSRs and with slow to declining retail sales. This is due in part to competition and higher price relative to real ground beef.

Analysts have expressed concern over the free cash flow ogenerated by BYND. The financials released yesterday confirm the precarious situation for the Company. Details will be evaluated and a report will be posted on CHICK-NEWS


Tyson to Expand Prepared Foods Plant in Caseyville, IL.

The Caseyville, IL., plant producing Hillshire Farm® and Jimmy Dean® products will undergo expansion at a capital cost of $180 million.  According to an August 4th news release, expansion will be conducted through 2023.  The current project follows a previous decision to add production lines to increase annual output to16 million lbs.  The announced expansion will extend over 170,000 square feet and provide employment for an additional 250 workers.



USDA Evaluating COVID Response

Following a directive by Congress, the Office of the Inspector General (OIG) of the UDSA undertook an evaluation of the response of the Food Safety and Inspection Service of the Agency to COVID. The OIG report has now been released.  The focus of the investigation was the response of the Agency following the Presidential Executive Order in April 2020 mandating that meat-packing and chicken plants should remain in operation.  It was determined that FSIS spent $22 million on funding under the CARES Act to pay for personal protective equipment for inspectors and staff.  It is noted that during the early period of the COVID outbreak, inspectors, along with the plant workers were infected with COVID and fatalities occurred among the FSIS workforce.  The report also determined that FSIS provided guidance to plants and tracked cases among workers.


The evaluation resulted in recommendations for tracking and reporting health outcomes in any future pandemic. The FSIS agreed to comply with suggestions including responsive action initiated by the Office of the USDA Chief Financial Officer.


Producers and Restaurants Sue for a Moratorium on Massachusetts Law on Sow Housing

The National Pork Producers Council and a consortium of restaurants have filed a motion for a preliminary injunction enjoining the Commonwealth of Massachusetts from enforcing housing requirements as specified in a law paralleling California Proposition #12.  The suit named Massachusetts Attorney General Maura Healey and John Lebeaux, Commissioner of the Massachusetts Department of Agriculture Resources as respondents.  The claimants maintain that the few relatively small pork producers in Massachusetts and in New England states are not compliant with the requirements for group housing of sows. The filing with the U.S. District Court request a stay in the implementation of the law until the Supreme Court has ruled on the California Proposition 12 appeal.  The filing implied that the Supreme Court will all probability reverse the decision of the Ninth Circuit regarding the constitutionality of Proposition #12 based on interference with interstate commerce.



Cargill Philanthropy

Cargill Inc. recently announced donations totaling $4.9 million to the Feeding American Network of food banks.  Funding of $1.9 million will comprise protein products for local food banks specifically for vulnerable communities.  The bulk of the allocation will be to improve refrigeration infrastructure and equipment to repackage donated bulk proteins.


Over the past 35 years, Cargill has donated $28 million to Feeding America and member food banks.  Worldwide in 2020, Cargill contributed more than $30 million to reduce global hunger through support of CARE, Heifer International, the World Food Program and Save the Children.


Cargill supports Means Database, an online platform to gather excess food inventory from supermarkets and restaurants for those in need.


Tyson Foods and Perdue Farms Donate for Flood Victims and the Needy

Tyson Foods will partner with Walmart to distribute 500,000 pounds of protein to feed needy families in and around Hazard, KY.  John R. Tyson, Executive Vice-president and Chief Sustainability Officer for Tyson Foods, stated “We are deeply saddened by the damage and loss of life caused by the catastrophic flooding and we want to do our part to help.”  He added, “We are working with our local community partners to amplify their support and do our best to provide food and supplies to those who need it.” Tyson will deploy the Meals That Matter ® disaster-relief trailer in the Hazard, KY., Walmart parking lot.  Teams from Tyson Food facilities in Tennessee, Missouri, Arkansas, and Indiana will provide aid to victims of the disaster.


Perdue Farms has donated $30,000 in direct contributions and an additional 5 tons of chicken to the Second Harvest Food Bank of Middle Tennessee in Nashville. This will support a Back-Pack program and a mobile pantry in rural Putnam County. Perdue associates in the Monterey, TN., complex organized the donation and delivered the products.


Tyson Foods Settles Non-Compete Claim

Tyson Foods has settled litigation with Brian Baker, who left the company as Vice-president of Poultry Optimization to join Foster Farms.


Tyson was concerned over disclosure of confidential information relating to live bird production. Accordingly the company attempted to enforce a restraining order that was dismissed by a Washington County, AR. Circuit Court.


The case was settled with the issues resolved to the mutual satisfaction of the parties. Judge John Threet dismissed the case with prejudice with each party will be responsible for their own costs.


Previously, broiler integrators have sued senior managers who have resigned to obtain employment with competitors.  It is obviously common practice to require employees with specific technical or business knowledge to sign non-compete agreements, although their enforceability may be limited.


Consumer Perceptions Concerning“Plant-Based”

In a report produced by the Food Industry Association entitled The Power of Plant-Based Foods and Beverages, it is clear that consumers demonstrate diverse reactions to the term “plant-based”.  Those who are environmentally conscious associate the term with “nature” and “healthy”.  Other respondents considered the term analogous to “fake”, “tasteless” and are aware of a price differential between plant-based meat and the real product.


The Report was prepared with the assistance of Nielsen IQ and MotiveBase. Reaction to the term “plant-based” were gathered from consumers, retailers, and food professionals over a 52-week period ending June 11th.


The significant takeaway from the report is the lack of understanding of the term suggesting clarification and the need for standards.  Consumer education is required concerning the nutritional value of plant-based meat alternatives.  Most consumers are unaware of the inclusion of approved additives that detract from the “clean label” ethos but more importantly the high level of salt and the inferiority in amino acid content, despite claims for equivalence in crude protein content as supplied by animal-derived products.



Wayne-Sanderson NC. Hatchery To Be Upgraded

Following the acquisition of Sanderson Farms the combined company, Wayne-Sanderson Farms, is undertaking a program of rationalization and consolidation to achieve efficiencies and synergy from the transaction.  On August 4th, the company announced that the Dobson, NC. hatchery will undergo a $1.3 million expansion and reorganization to accommodate gender-sorting of chicks.  Pullet chicks will be delivered to an Alabama small-bird operation with the local complex placing males.  The current output of the Dobson hatchery is 650,000 chicks per week.  The project includes the erection of new offices, a breakroom and staff facilities with expansion of chick handling into existing space not used for incubation.


Zoetis Posts Q2 Financial Results

In an August 4th release, Zoetis Inc. (ZTS) posted financial results for the 2nd quarter of FY 2022. The Company can be regarded as an indicator of the status of enterprises manufacturing pharmaceuticals, biologics and nutritional additives for companion animals and livestock industries in the Americas, Asia and Europe. Along with competitors Elanco, Phibro, Merck, and Boehringer-Ingelheim, all are subject to the risks of currency fluctuation, disruption of supply-chains and increased costs for products, labor and transport in a competitive environment with livestock producers and consumers impacted by inflation.


For the 2nd Quarter of FY 2022 ending June 30th 2022, net income attained $529 million on revenue of $2,052 million representing a net margin of 25.8 percent.  Comparable figures for the 2nd quarter of fiscal 2021 ending June 30th were net income of $512 million on total revenue of $1,948 million. Diluted EPS attained $1.12 for the most recent quarter of fiscal 2022 compared to $1.07 for the 2nd Quarter of 2021.


In reviewing the components of revenue for the 2nd quarter of FY 2022 the Companion Animal Segment represented 66.6 percent of Company revenue with Livestock accounting for 32.5 percent. Within this segment, cattle comprised 49 percent; poultry, 18 percent; swine, 22 percent with aquaculture and other species contributing to the difference. Sales to the International segment of livestock amounted to 68 percent with the remainder derived from the U.S.


Zoetis expanded its poultry vaccine portfolio in the U.S. with the approval of Poulvac® Procerta® HVT-IBD-ND, a trivalent vector vaccine that protects against Marek’s disease, infectious bursal disease and Newcastle disease. This is the third recombinant vector vaccine from Zoetis, following the introduction of Poulvac® Procerta® HVT-ND in 2020 and Poulvac® Procerta® HVT-IBD in 2021.


In reviewing Q2 results Kristin Peck, CEO stated, “Zoetis delivered another strong quarter, with 8 percent operational revenue growth and 9 percent operational growth in adjusted net income, driven once again by the strength of our companion animal portfolio.” She added “Our diversity and strength across parasiticides, dermatology products, vaccines and monoclonal antibodies for pain continue to demonstrate people’s desire for innovative and effective care for their pets."


Ms. Peck concluded “Our business remains strong thanks to the durability of our global portfolio and a steady pipeline of new products. Even as we face uncertain macroeconomic conditions, continued supply constraints, generic competition and the war in Ukraine, we remain confident in the resilience of our business and colleagues. As we look at the rest of the year, we are updating and narrowing our guidance to reflect our positive outlook for the remainder of the year, as well as recent changes to foreign exchange rates."


Guidance for FY 2022 includes revenue in a range of  $8,225 to $8.325 million; net income of $2,350 to $2,390 million and a reported diluted EPS ranging from $4.05 to $4.75.


On June 30th 2021 Zoetis posted assets of $13,770 million of which $4,257 million comprised intangibles and goodwill against long-term debt of $5,221 million. The Company had an intraday market capitalization of $84,790 million on August 5th 2022. ZTS traded with a forward P/E of 35.7 and has ranged over the past 52-weeks from $154.18 to $249.27 with a 50-day moving average of $171.49. Q2 operating margin was 37.1 percent.  Return on assets was 3.8 percent. At close of trading on August 3rd pre-release ZTS was priced at $180.06 opening on August 4th post-release at $177.75.


Accumulation of Containers Still Problematic at West Coast Ports

The threat of imposing a $100 per day demurrage fee on containers that remained in ports awaiting transport announced on October 24th 2021 reduced congestion during the first quarter of 2022 despite protest from shipping companies. According to recent data, on June 28th the Port of Long Beach counted 20,500 containers and the Port of Los Angeles had 70,290 containers. Although the combined quantity is lower than when the threat of a demurrage fee was mooted, there is clearly deterioration in the rate of removal from ports and especially by rail.


Gene Seroka, Executive Director of the Port of Los Angeles reported on June 14th that a number of containers awaiting rail transport have aged in excess of nine days.  He noted that if rail transport was restored to pre-COVID levels there would be no problem with aging containers and that cargoes would move "more fluidly through the port complex".


The question now is whether either threats or actual imposition of the demurrage fees as threatened would effect improvements to reduce congestion and expedite unloading and deliveries.


Impossible Foods Gains Entry to School Feeding

Following a 2021 approval by the USDA Food and Nutrition Service, vegetable protein products produced by Impossible Foods will be incorporated into school meals.  California is to be the leading state in adopting alternatives to real meat.  Chicken nuggets and patties will be supplied by Impossible Foods who claim that 500 institutions have tried or are using their products. Given the differential in wholesale cost between vegetable-derived products compared  to hamburger and chicken it would be difficult for school administrators to justify selection of  alternatives to real meat.


Reduction In Future Beef Supply An Opportunity For Broilers

Projections for future beef production suggest lower availability in 2023 as a result of a reduction in the beef-cow herd. This trend was evident in USDA statistics released on July 1st with inventory the lowest since 2015. Depopulation will be accelerated in the short and intermediate periods by drought in the Southwest and high-input costs.  Beef cow slaughter was up 15 percent year-over-year during the first half of 2022.  In 2021 the disposal of breeder cows increased by nine percent from the previous year.


Concurrently slaughter of feedlot and grass-fed cattle has increased with heifer slaughter up 3.8 percent for the first half of 2022.  Given the length of the beef cycle, the U.S. will be facing a deficit of product through 2024 and possibly beyond creating market opportunities for both pork and broiler producers.  Even if the U.S. economy does not decline into a recession, consumers will be frugal in their expenditure and will avoid high-priced beef, favoring both broilers and turkeys for their protein requirements.


House of Raeford Farms Supports Childrens’ Camps

FLOCK the nonprofit organization established by House of Raeford Farms, has supplemented the $28,000 raised by company employees and associates with a $10,000 donation to support Camp Corral.  The organization provides services for children of military veterans and wounded and fallen heroes


In responding to the donation, Phillip Kowalczyk, CEO of Camp Corral, stated, “We have transformed the lives of military children through the nurturing experiences at the camp.”


In 2022, camps will be held at 17 locations across the nation. Children will receive support from trained counselors who understand the challenges faced by military families.



Chick-fil-A Recipient of the Chicken Marketer of the Year

Chick-fil-A was awarded the Chicken Marketer of the Year at the 2022 Chicken Marketing Summit.


The Award was in recognition of the 2021 advertising campaign highlighting dedication to customers. The paid TV advertisements stimulated social media posts that were responsible for advancing the image of the brand and contributing to restaurant visits.


Finalist for the 2022 Chicken Marketer of the Year included Farmer Focus, Lee’s Famous Recipe Chicken and Wayne Farms.



Tyson to Petition SCOTUS Over COVID Claims

Tyson Foods Inc will petition the Supreme Court of the U.S.  (SCOTUS) for a ruling as to whether the company was absolved of liability for cases of COVID in plants. Tyson operated under the terms of the Presidential Executive Order of April 28th 2020 invoking the Defense Procurement Act. This obliged packers and poultry processors to continue operation despite ongoing cases of COVID among workers. 


Four employees of Tyson Foods died from COVID in Iowa hog plants.  Subsequent lawsuits alleging negligence were filed in state courts and subsequently in Federal courts.  Lower courts ruled that Tyson Foods acted under the Federal Order, although the Eighth Circuit Court of Appeals referred cases back to state courts claiming lack of Federal jurisdiction.


There is no certainty that SCOTUS will grant certiorari and respond to the petition that will have implications for operators of beef and hog plants.  It is a matter of record that there were relatively few cases of COVID among workers at poultry processing plants compared to red meat facilities.


Chipotle Announces Q2 FY 2022 Financial Results

In a July 26th release, Chipotle Mexican Grill (CMG) posted financial results for the second quarter of fiscal 2022. This upscale food company competes at the intersection of QSRs and casual dining, offering a limited menu of Mexican-themed dishes assembled cafeteria style. The Company experiences the same pressures of increased cost of ingredients, labor and packaging as competitors in an environment still restrained by COVID and impacted by inflation.


Same-store sales increased by 10.1 percent for the most recent quarter compared to Q2 2021. In-restaurant sales were up 35.9 percent Digital orders comprised 39.0 percent of food and beverage sales.


For the 2nd Quarter of FY 2022 ending June 30th 2022, net income was $259.9 million on total revenue of $2,213 million.  Comparable figures for the 2nd quarter of fiscal 2022 ending June 30th 2021 were net income of $187.9 million on total revenue of $1,869 million. Diluted EPS increased 40.4 percent from $6.60 for the 2nd quarter of fiscal 2021 to $9.25 for the most recent quarter.


The Company provided guidance for Q3 comprising a mid to high single-digit increase in sales growth. Restaurant openings will attain a range of 235 to 250 units during FY 2022.


Chipotle operates approximately 2,000 stores in the U.S., Canada, U.K., France and Germany with all locations company-owned.


In commenting on the quarter, Brian Niccol Chairman and CEO stated We are pleased with our second quarter performance during a period of inflation and consumer uncertainty," He added,  "Pricing power and value proposition remain strong as our culinary and food with integrity commitment continues to be a key point of differentiation."


On June 30th, CMG posted assets of $6,545 million, against lease obligations of $3,393million but with no long-term debt. The Company had an intraday market capitalization of $43,430 million on July 29th. CMG trades with a forward P/E of 47.6 and has ranged over a 52-week period from $1,196 to $1,958 with a 50-day moving average of $1,328.  Twelve-month trailing operating margin was 11.1 percent and profit margin 9.3 percent.  Return on assets over the past twelve months was 8.8 percent with 34.9 percent on equity. At close of trading on July 26th pre-release, CMG was priced at $1,315. On July 27th CMG opened at $1,495.


U.S. Drought Leading to Herd Liquidation-Implications for 2024

A report from Oklahoma State University documented a two-percent decline in cattle inventory on July 1, 2022, compared to the corresponding date in the preceding year.  Dr. Derrell Peel stated, "there are indications that drought impacts have accelerated sharply in the southern plains during July".  He added, "Cattle producers are destocking at a rapid rate as pasture conditions deteriorate". 


Dr. David Anderson of Texas A&M noted, "We haven’t had this kind of movement of cows to market in a decade since 2011 that was our really last big drought".  Regional cow slaughter plants have experienced high volume of sales in both Oklahoma and Texas.  This has implications for the availability of slaughter stock from pasture and feed lots in 2024 when additional packing capacity is projected to come on line together with the existing and expanded production from the four major packers.

Since the 2020 restrictions on output imposed by COVID that demonstrated vulnerability in the beef supply chain, a number of entrepreneurs and production groups have proposed establishing beef packing plants. Small regional establishments will receive funding from USDA and from state agencies.  Major plants processing up to 2,000 head per day and costing between $0.5 to $1.0 billion have been proposed.  Critics have noted that if these facilities are erected and commence production in 2024, they will have difficulty in sourcing live animals given the current depletion of the beef cow herd.  Industry insiders have also pointed to restrictions on availability of labor for large beef plants.  Promoters of new facilities may have underestimated the competitive aspects of the beef industry with domination by the four major packers with established markets and the possibility of predatory pricing to the detriment of industry newcomers.


Frivolous Lawsuit Claims Employee Status for Broiler Contractor

A disaffected contract grower for Perdue Farms has brought suit in a federal court claiming that the company classified him as an independent contractor whereas he claims the status of an employee apparently with no justification.


The lawsuit appears to be a response to his termination following claims of inaccurate weighing of the flock owned by Perdue that he raised under contract.

The lawsuit claims compensation and punitive damages and class restitution.  A further claim is that contract growers should be reclassified as employees eligible for benefits and compensation despite the fact that they are obviously independent farmers presumably based on their annual tax returns.


Congress Pressing DOJ to Resolve Allegations Of Market Manipulation By Beef Packers

A letter addressed to the Department of Justice (DOJ) requests information on the ongoing investigation of alleged market manipulation by the major beef packers.  Approximately two years ago, Tyson Foods, JBS USA, Cargill and National Beef Packing Company received demands for information as part of a comprehensive investigation.


The letter initiated by Rep. Cindy Axne (D-IA) noted, “The American public deserve to know of any wrongdoing at the meat packing industry.”  She added, “It is absolutely imperative that consumers and producers can have faith in the cattle industry.”


The beef packing industry has been under scrutiny since the 2019 fire in the Tyson Foods plant in Holcomb, KS. followed by the COVID outbreak that disrupted supply chains, and now high costs for beef in an inflationary environment.

At this time, the investigative activities of the DOJ appear to be centered on beef, although there may be extension to pork and even to chicken should unethical practices or manipulation be proven.


Wingstop Posts Q2 FY 2022 Financial Results

In a July 28th release, Wingstop Inc. (WING) posted financial results for the second quarter of fiscal 2022. This specialty QSR Company competes directly with privately held Buffalo Wild Wings and indirectly with national chains offering chicken. The Company experiences the same pressures of increased cost of ingredients, labor and transport as competitors in an environment still restrained by COVID and inflation. In addition, flavored wings are now readily available from supermarkets and in bulk from club stores for home meals and entertaining.


Domestic same-store sales decreased by 3.3 percent. System-wide sales were up by 7.5%. Digital orders comprised 60.5 percent of sales.


For the 2nd Quarter of FY 2022 ending June 25th 2022, net income was $13.3 million on total revenue of $83.8 million.  Comparable figures for the 2nd quarter of fiscal 2022 ending June 26th  2021 were net income of $11.3 million on total revenue of $74.0 million.  Diluted EPS increased from $0.38 for the 2nd quarter of fiscal 2021 to $0.44 for the most recent quarter.


The Company reiterated guidance for FY 2022 comprising a low single-digit increase in sales growth for FY 2022 with a diluted EPS range of $1.55 to $1.57. Systemwide restaurant openings will attain a range of 220 to 235 units


Wingstop operates 1,858 stores of which 39 U.S. locations are company-owned with 219 franchised operations in international markets.


In commenting on the quarter Michael Skipworth, president and CEO stated "Our second quarter results demonstrate the resiliency and underlying strength of the Wingstop brand as the unit economics have continued to strengthen throughout 2022, fueling another record number of net new openings this quarter." He added "We are in a unique position for the back half of 2022 where we are benefiting from meaningful deflation in bone-in wings, have a proven playbook, along with sales-driving levers that give us confidence in our ability to deliver on our outlook for 2022."


On June 25th, WING posted assets of $395.4 million, of which $99.2 million comprised goodwill and trademarks against long-term debt of $709.6 million. The Company had an intraday market capitalization of $3,120 million on July 29th. WING trades with a forward P/E of 69.9 and has ranged over a 52-week period from $67.67 to $187.35 with a 50-day moving average of $84.80.  Twelve-month trailing operating margin was 23.5 percent and profit margin 13.3 percent.  Return on assets over the past twelve months was 11.7 percent. At close of trading on July 27th pre-release, WING was priced at $100.31. At close of trading on July 28th WING priced at $119.74. On March 1st after announcing new financing, WING closed at $146.82.


Promotion of Batista Family Member at JBS S.A.

Wesley Batista Filho, son of Wesley Batista and grandson of Jose Batista Sabrinho, will assume the position of Global President of Operations for JBS S.A. on November 1st.  Wesley Batisto Filho is currently Global President of Operations covering Latin America and Oceania.  In his new position he will report to CEO Gilberto Tomazoni.  The CEOs of JBS USA, Australia, and Brazil will report to Battista Filho.


Andre Nogueira, President of Operations for North America, will retire at the beginning of November, but will remain with the company in an advisory capacity and will also serve on the board of Pilgrim’s Pride Corporation.

During the nine years as head of JBS operations in the U.S. the Company has doubled annual revenue through expansion in North America, the EU, and Australia.  The Batista family remains the controlling shareholder of JBS S.A.



NCC Promoting Measures to Overcome Hunger

The National Chicken Council has submitted suggestions to be considered at the September White House Conference on Hunger, Nutrition, and Health.


Mike Brown, President of the NCC, noted “Lean meats like chicken help close the protein gap among Americans who struggle with food and nutrient insecurity that particularly impacts women, children, and older adults who have greater need for nutrient-dense foods to support healthy diets.”


Suggestions submitted by the NCC include:

  • Renewing the Farmers to Families Foodbox Program
  • Expanding Section 32 purchases
  • Expanding cold storage capacity and upgrading the long-haul trucking fleet
  • Increase storage, packing and distribution infrastructure especially for food banks and charities



Stability Predicted For Foster Farms Following Acquisition

Following the acquisition of family-owned Foster Farms by conglomerate investor Atlas Holdings, the newly appointed CEO, Donnie Smith, confirmed that no radical changes are contemplated in structure or staffing.  In an interview conducted by the Modesto Bee, he stated, “Our intent is to grow the business.”  Foster Farms operates broiler complexes in Livingston, Fresno and Porterville, CA. and facilities in Oregon, Washington, Louisiana, Colorado and Alabama.  Turkeys are processed in Turlock, CA.


Foster Farms is believed to have annual sales approaching $3 billion and is the leading chicken and turkey producer on the West Coast, as well as a major employer in the counties where it operates.


Donnie Smith is a 35-year veteran of the poultry and meat industry, having served as CEO of Tyson Foods before early retirement in 2016.


Smith noted in the interview that, “ I have admired the Foster product mix and don’t see any reason to change it.”


Shane Commentary

Meat Industry Comments On Proposed Kingsbury Beef Plant in South Dakota

Kingsbury and Associates, in conjunction with Sirius Realty have announced their intention to establish a new beef plant in South Dakota.  The proposed facility would slaughter approximately eight thousand head per day, will employ 2,500 even with advanced mechanization and will cost over $1.1 billion.


Critics have noted that the company would be at a disadvantage in competing with the Big Four comprising Cargill, Tyson Foods, JBS USA and National Beef Packing that collectively supply 85 percent of the U.S. market.  Analysts note that the plant may have difficulty in finding sufficient labor, despite the intention to use automation and mechanization.  Agricultural economists believe that the new plant would be of benefit to cattle producers providing more competition for live animals.  Due to ongoing drought and low prices, the national herd has declined.  This may not be a problem, given that if the promoters break ground in 2023, production will only commence in early 2026, allowing time for contracts to be developed in order to establish a supply of live cattle.  According to Megan Kingsbury, the plant will be financially feasible, given that the promoters represent a fourth-generation of cattle production.


Investment of $1.1 billion illustrates the commitment required to make any meaningful impact on beef supply.  Recent USDA announcements of grants to establish small, local packing plants pale in comparison with the projected capacity of eight thousand head per day.  Economies of scale are necessary to be competitive and to show an acceptable return on investment.  It is inadvisable for the current Administration to attempt to run counter to establish free market principles and support enterprises that would otherwise be non-viable.


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