Despite fears about the furloughing of U.S. Agriculture
Department (USDA) inspectors that could shut down meat plants for
around two weeks, meat giant
Tyson Foods Inc.
) has declared that it doesn't see an immediate threat to its
Media reports say that the company does not expect the
furloughs of inspectors to begin until April. However, Tyson
intends to develop contingency plans after the sequester process
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 Mar 2013. This was because the
differences between President Obama and congressional Republicans
were still to be resolved.
Up to 8,400 inspectors appointed by the USDA will be
furloughed for the equivalent of 15 days to effect the savings
required under the automatic cuts.
According to Agriculture Secretary Tom Vilsack, the impact of
the furlough of inspection personnel may amount to 15 days of
lost production costing over $10 billion. However, Vilsack has
assured meat processing giants that they will not have to shut
down the plants very soon. That is on account of the inspectors
being allowed 30 to as many as 120 days, or four months' notice
Tyson's chicken competitor
Sanderson Farms Inc.
) apprehends a huge loss during the 15-day furlough of inspection
personnel and consequent shutdown of plants.
The company also said that live chickens would suffer from
higher mortality as a result of the furlough. This is because
chickens gained weight as a result of the company postponing
chicken processing, which would in turn lead to their earlier
death. This would in turn affect supply to grocery chains like
Tyson last week said that it expects sales to grow by 3% to 4%
annually 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
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 is geared to boost the segment by
brand including natural chicken reared without use of antibiotics
or added hormones. Currently, Tyson Foods carries a Zacks Rank #1
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