Tyson sees less. but more expensive, chicken
CHICAGO (Reuters) - Meat company Tyson Foods Inc said Thursday there will be less, but more expensive, chicken on supermarket shelves this summer as higher feed prices are passed onto consumers.
During a webcast presentation at the BMO Capital Markets agriculture and protein conference, Tyson Chief Executive Richard Bond said the chicken industry has reduced production in reaction to higher feed prices.
"The lag of higher priced corn is just now coming through the products that we are taking to market," said Bond.
Tyson is the largest U.S. meat company and produces beef, pork and chicken.
Feed prices have skyrocketed this year due in part to more corn, a popular feed, being used to make the biofuel ethanol. The diversion of corn to fuel production from food production has angered meat companies like Tyson, which have seen production costs soar.
Tyson raises the chickens it processes into meat and it has said feed costs for those chickens will be about $600 million more this fiscal year than the previous year.
Corn prices have exceeded $6 per bushel this year, the highest ever.
Based on recent government crop data, Bond said this year "almost a billion bushels of corn will be shifted from food production to ethanol production."
Bond also criticized the proposed five-year U.S. Farm Bill, which was passed on Wednesday by the U.S. House of Representatives and is now before the Senate, because it would extend by two years a tariff on imported ethanol.
"I think overall the Farm Bill is good, but that particular segment is not something we are very appreciative of," he said.
U.S. ethanol producers are aided by a tariff on imported ethanol and by a tax credit for blending ethanol with gasoline.
It takes about 1.2 pounds (0.55 kg) of corn to produce one pound of chicken on a live weight basis. As a result, at $4 per bushel it takes 8.57 cents worth of corn for each pound of chicken and at $6 per bushel it takes 12.86 cents worth of corn, according to industry statistics.
(Reporting by Bob Burgdorfer; Editing by John Picinich)
