Meat+Poultry - June 2023 - 8

COMMENTARY
Better days ahead
While April showers bring May
flowers, January, February and March
sprouted some financial weeds for
some of the processing industry's most
prominent companies.
Early 2023 fiscal reports from
companies like Tyson Foods, JBS SA,
Hormel Foods and Seaboard reflected
the headwinds facing most of the
industry's processors.
Inflation, declining demand for
exports and domestically for premium
products, higher ingredient costs, and
operational inefficiencies were some of
the common themes in many companies'
conference calls to discuss quarterly
results. When announcing a loss of $97
million in the fiscal second quarter last
month, Donnie King, Tyson's president
and chief executive officer, said a slow
start to the year was expected.
As of late, the company has been
cutting costs significantly, including
closing its corporate offices in South
Dakota and Chicago to consolidate
those workers in Arkansas. It was well
documented earlier this year when the
company announced plans to close two
processing plants and downsized its
corporate workforce by 10% and laying
off 15% of its senior leadership.
" We knew Q2 was going to be
challenging and it was, " King told
analysts on a May 8 conference call. " I've
never seen this highly unusual situation
for beef, pork and chicken, " he added,
noting that all three business segments
are experiencing challenges at the same
time, which is not the norm. Days later,
Gilberto Tomazoni, global CEO of JBS
said that his company has experienced
similar hardships on a global basis.
" In the last 12 years during which
we already had a global platform, this
is the first quarter that we have faced
adversities in almost all countries
where we operate, " he said.
Read more about the prominent
processors' cooling off period in this
issue's Mid-year update (see " First-half
woes, " page 74).
In the short term, the industry
looks forward to input costs easing,
more favorable livestock costs and
demand for US products among export
markets increasing. And as for demand
for products domestically, meat and
poultry companies anxiously anticipate
the seasonal boost that corresponds
with the end of May.
Each year, Memorial Day signals
the unofficial kickoff to outdoor
cooking season, an uptick in retail
meat sales and a flurry of seasonal,
summer-themed menu additions
at quick-service and full-service
restaurants resulting in more meat and
poultry demand.
Meanwhile, the industry's leading
companies are navigating through
the current headwinds and planning
for the months and years ahead
by implementing new equipment
technologies and data-focused
production strategies. Look no further
than Cargill rolling out its Facility of
the Future initiative systemwide (see
this month's cover story, Page 16).
Cargill's investment in automating and
digitizing its meat plants will top $100
million in 2023 and total $700 million
in the next three years, according to
the company.
Other companies have seen
the writing on the wall too and are
spending millions to equip their plants
for the future.
" We continue to invest in
automation and digital capabilities with
opportunities to improve our yield. We
now have 50 debone lines that are fully
automated, " Tyson's King said on the
conference call. " And we continue to
build our digital capabilities, operating
at scale with digitally enabled standard
operating procedures and utilizing
data, automation, and AI tech for
decision-making, " he said.
Tyson's investments in automation
over the next three years are estimated
to total more than $1.3 billion.
While processors are accustomed
to navigating cyclical economic and
market volatilities, it is encouraging
to see the industry's stalwarts planting
seeds of technology for the future.
JOEL CREWS, EDITOR | jc rews@sos land.com
" In the last 12 years during which we
already had a global platform, this is the
first quarter that we have faced adversities
in almost all countries where we operate. "
- GILBERTO TOMAZONI
8 MEAT+POULTRY | 06.23 | www.meatpoultry.com
http://www.meatpoultry.com
Meat+Poultry - June 2023

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