Profile: Sanderson Farms Inc (SAFM.O)
29 Jan 2015
Sanderson Farms, Inc., incorporated on October 31, 1978, is a poultry processing company engaged in the production, processing, marketing and distribution of fresh and frozen chicken and other prepared chicken items. In addition, the Company is engaged in the processing, marketing and distribution of prepared chicken through its wholly owned subsidiary, Sanderson Farms, Inc. (Foods Division). It produces a range of processed chicken products and prepared chicken items. It sells ice pack, chill pack, bulk pack and frozen chicken, in whole, cut-up and boneless form, under the Sanderson Farms brand name to retailers, distributors, and casual dining operators in the south-eastern, south-western, north-eastern and western United States and to customers who resell frozen chicken into export markets. During the fiscal year ended October 31, 2013 (fiscal 2013), it processed 452 million chickens, or over 3.0 billion dressed pounds.
The Company is a vertically-integrated producer of fresh and frozen chicken products, controlling the production of hatching eggs, hatching, feed manufacturing, growing, processing and packaging of its product lines. The Company’s poultry operations are integrated through its control of all functions relative to the production of its chicken products, including hatching egg production, hatching, feed manufacturing, raising chickens to marketable age (grow out), processing, and marketing. The Company’s operations, as of October 31, 2013, included eight hatcheries, seven feed mills and nine processing plants, which includes the facilities at its new Kinston, North Carolina complex. Its prepared chicken product line includes approximately 94 institutional and consumer packaged partially cooked or marinated chicken items that it sells nationally and regionally, to distributors and food service establishments. It has contracts with operators of 187 breeder farms. Processed chicken is an ice packed, whole chicken. The Company adds value to its ice packed, whole chickens by removing the giblets, weighing, packaging and labeling the product to specific customer requirements and cutting and deboning the product based on customer specifications. It also deep chills the processed chicken and packages whole chickens in bags or combinations of fresh chicken parts, including boneless product, in various sized, individual trays under the Company’s brand name, which then is weighed and pre-priced, based on each customer’s needs. This chill pack process increases the shelf life, reducing customer weighing and packaging labor, and providing the customer with a variety of products. The Company freezes the chicken product and permits shipment of product overseas where transportation time may be as long as 60 days.
The Company as of October 31, 2013, had the capacity to process 4.375 million head per week in its big bird deboning plants. While the Company sells some of its chill pack product under store brand names, its chill pack production is sold under the Company’s Sanderson Farms brand name. The Company has long term contracts (one to three years) with its chill pack customers. As of October 31, 2013, the Company had the capacity to process 5.0 million head per week at its chill pack plants. It maintains its own breeder flocks for the production of hatching eggs. As of October 31, 2013, it maintained contracts with 48 pullet farm operators for the grow-out of pullets (growing the pullet to the point at which it is capable of egg production, which takes approximately six months). Thereafter, the mature breeder flocks are transported by vehicles to breeder farms that are maintained, as of October 31, 2013, by 139 independent contractors under the Company’s supervision. As of October 31, 2013, the Registrant operated seven feed mills, four of which are located in Mississippi, one in Texas, one in Georgia and one in North Carolina. The Registrant’s annual feed requirements for fiscal 2013 were approximately 3,547,000 tons. It has the capacity to produce approximately 4,773,600 tons of finished feed annually.
Sanderson Farms Inc
225 N 13th Ave
PO Box 988
LAUREL MS 39441-0988