insights -- Feburary 2018 - 1
insights The U.S. Publication of Sosland Publishing Company 1. Overview Of The Industry The U.S. red meat and poultry industry is currently financially healthier than it has been for many years. The industry is well-balanced in terms of supply and demand, and processing capacity versus available numbers of livestock and poultry. The past year saw publicly traded companies, and likely most others, achieve record income and operating margins. This was especially so in the beef processing sector, which enjoyed stronger-thanexpected demand for beef at home and abroad. The outlook for 2018 and beyond remains positive. For example, Tyson Foods Inc., the largest U.S. protein company, expects to see its 2018 operating margins in beef, pork and chicken to be similar to last year and remain well above their normalized range. Processing capacity in each sector is such that companies have been able to operate their plants at high utilization rates. The beef sector has added little capacity in the past two years but has the flexibility to Meat and Poultry Industry Sponsored by INTL FCStone Inc. make additions without new plants. The pork sector has added additional capacity in the past six months to match expanded hog production. The poultry sector has also added capacity to match added production. Regarding alternative proteins, lab-grown meat products and plant-based options are taking this sector in a whole new direction. Its rapid development reflects forecasts that the world faces a critical protein shortage by 2050 unless steps are taken to increase current conventional proteins and develop new sources of protein. That's why U.S. meat and poultry companies are welcoming and even investing in such developments rather than seeing them as competition. Tyson president and CEO Tom Hayes has been quoted as saying that he sees plant-based protein as a big part of the food industry's future. Economic Contribution Data from the Department of Commerce says that meat packing, meat processing and poultry slaughter and processing in 1