The meat industry heaved a sigh of relief as according to
media reports, the U.S. Congress decided to set aside the
furlough of meat inspectors by the United States Department of
The government allotted $55 million in order to prevent the
proposed furlough as a part of the federal budget cuts. The
spending cut and tax increases to cover the deficit by the U.S.
government was scheduled to begin in Jan 2013, but was eventually
pushed back to March. This was because the differences between
President Obama and congressional Republicans had yet to be
Up to 8,400 inspectors appointed by the USDA were supposed to be
furloughed for the equivalent of 15 days to effect the savings
required under the automatic cuts. This would result in complete
shutdown of meat plants for two weeks as by law, meat processors
cannot sell beef, pork, lamb and poultry meat without the USDA
inspection seal. According to Agriculture Secretary Tom Vilsack,
the impact of the furlough of inspection personnel could have
amounted to 15 days of lost production costing over $10 billion.
The proposal was accepted as it did not involve any new spending.
The $55 million would instead come from $30 million previously
allotted to maintain USDA buildings and $25 million for a new
USDA program to upgrade school kitchen equipment.
Meat processing giant
Tyson Foods Inc.
Sanderson Farms Inc.
) welcomed the decision. Tyson Foods hailed the bill and
commented that the setting aside of the proposed furlough would
be beneficial for the meat industry, groceries, restaurants and
schools. The prevention of furlough would also provide
uninterrupted supply to chains like
In its fourth quarter fiscal 2013 earnings conference call held
in Feb 2013, Tyson said that it expects sales to grow by 3% to 4%
in fiscal 2014. Value-added sales are expected to rise in the
range of 6% to 8% in 2014. Moreover, international production is
expected to grow at an annual rate of 12% to 16%.
The company expressed that its second-quarter loss was
attributable to contracting margins in the beef and pork segment.
The chicken segment is however improving due to favorable demand
shift from red meat.
In April 2013, the company expects to further boost the segment
by introducing the NatureRaised Farms brand, including natural
chicken reared without use of antibiotics or added hormones.
Currently, Tyson Foods carries a Zacks Rank #2 (Buy).
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