insights -- Feburary 2018 - 1

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



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