Coronavirus slows chicken production in top-producing U.S. state -Sanderson Farms

Credit: REUTERS/Mike Blake

By Tom Polansek

CHICAGO, April 2 (Reuters) - U.S. poultry company Sanderson Farms Inc SAFM.O on Thursday said it is reducing chicken production in Georgia, the top U.S. chicken-producing state, after ordering more than 400 slaughterhouse workers who seem healthy to stay home as a precaution against infection by the novel coronavirus.

The move could eat into margins at the company and is an early sign of strain in the U.S. food supply chain at a time of surging consumer demand at grocery stores.

Sanderson Farms is cutting chicken processing to 1 million birds a week from 1.3 million over the next four weeks in Moultrie, Georgia, after telling 415 workers to stay home with pay, Chief Executive Joe Sanderson said on a conference call.

The workers live in Dougherty County, a "hotbed" of coronavirus cases, although there are no indications they are not healthy, he said.

"My guess is we're going to keep paying those people to stay away from the plant in Moultrie," the CEO said, noting the company is hiring other workers for the facility.

U.S. meat and poultry processors have been shaken by the coronavirus pandemic as workers have fallen ill and consumers shifted demand to grocery stores from restaurants, bars and cafeterias that are shut.

The United States is the world's largest producer and second largest exporter of poultry meat. The country produced 9 billion chickens for meat in 2018, and 15% came from Georgia, according to the National Chicken Council, an industry group.

Dougherty County, Georgia, has more than 500 known cases of the illness caused by the coronavirus and the most deaths of any county in the state, according to health officials. There have been 29 coronavirus-related deaths in the county, according to a Reuters tally.

Sanderson, which can process more than 13.6 million chickens per week at all its slaughterhouses, said a total of 204 employees were quarantined with pay because they have shown symptoms of the virus. Fifteen employees have tested positive nationwide. Earlier cases have not shut plants.

To meet increased grocery-store demand, Sanderson is shifting production toward chicken sold in "tray packs" in supermarkets, rather than bigger birds supplied to restaurants and food-service outlets.

The company cut its estimate for "big bird" production in its fiscal third quarter by 3.1% from a February estimate and raised its "tray pack" estimate by 3.1%.

Sanderson last week began reducing the number of eggs put into incubators for the purpose of hatching into chickens destined for restaurants and food-service companies. Demand for big bird business is down 60% to 65%, according to the company.

(Reporting by Tom Polansek Editing by Bill Berkrot)

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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