US POULTRY giant Tyson Foods’ chief executive has said African Swine Fever has the potential to have an impact on the global protein industry “on a level we have never experienced”.
Tyson CEO Noel White made the comment in the firm’s Q2 filing, suggesting a worldwide decrease in pork supply could offer a “significant upside to our pork business, while also lifting the chicken and beef businesses as substitutes and increasing raw material costs in our prepared foods business”.
Estimates suggest that African Swine Fever could see 30% of the Chinese pig population culled, translating to a 15% drop in global pig numbers. The virus has spread voraciously across China and other Asian countries in recent months.
Mr White said, however, that forecasts for Tyson Foods had not been adjusted because of African Swine Fever, as the impact of the outbreak was not yet clear.
He suggested pig prices had not kept pace with costs, and that any “positive” impact from the disease would occur from late 2019 or early 2020.
Speaking more generally, Mr White said he was “pleased” with the business’s progress in its year to date.
Sales were up at $10.4bn, compared with $9.7bn the previous year, as was operating income at $635m.
And revenues in the business’s poultry division were up 26% to $3.4bn, “primarily due to incremental volume from business acquisitions”.
The filing notes increased operating costs, higher feed prices and “current market conditions” as having an impact on profitability.
The poultry division, which is Tyson’s second largest, reported sales of $141m in Q2, compared with $231m in 2018, effectively cutting operating margins in half.
Tyson bought poultry giant Keystone Foods in November last year and announced the intended purchase of BRF SA’s Thai and European operations, namely four processing facilities in Thailand and one in both the Netherlands and the UK. That latter transaction is yet to conclude and was not included in the Q2 outlook.