Tyson Foods Categorically Rejects Conclusions Drawn by White House
September 08 2021 - 6:32PM
Tyson Foods (NYSE: TSN) categorically rejects the conclusions drawn
earlier today by the Secretary of Agriculture and the Director of
the National Economic Council in a White House press briefing.
The U.S. Department of Agriculture recently published a report
detailing the drivers of consumer inflation in the food sector,
none of which are related to industry consolidation or scale. The
report can be found by clicking here.
Increase in Beef Prices due to Unprecedented Market ConditionsAs
we have explained in great detail to the U.S. Senate Committee on
the Judiciary, in testimony provided in August 2021, which can be
accessed by clicking here, the increase in the price of beef, in
particular, is due to unprecedented market conditions.
Multiple, unprecedented market shocks, including a global
pandemic and severe weather conditions, led to an unexpected and
drastic drop in meat processors’ abilities to operate at full
capacity. This led to an oversupply of live cattle and an
undersupply of beef, while demand for beef products was at an
all-time high. So, as a result, the price for cattle fell, while
the price for beef rose. Today, prices paid to cattle producers are
rising.
Labor shortages – the inability of the industry to adequately
staff its plants – has exacerbated the situation. Labor shortages
are also affecting the nation’s pork and poultry supply.
Tyson Foods today pays its frontline workers an average of $22
per hour, including full medical benefits; we recently announced
additional paid sick leave and vacation benefits starting in 2022.
The company is also piloting childcare programs and providing
access to vaccinations for all of its U.S. workers.
Inaccurate Claims of Consolidation ImpactIt is inaccurate to
suggest that consolidation in the meat processing industry is
leading to higher prices for consumers. In fact, evidence of
healthy competition can also be found by looking at historical
outcomes. For example, we have seen a rise in availability and
quality of beef, while the price has become more affordable over
the past quarter-century: data shows that while the concentration
of the industry has remained relatively constant for close to 30
years, quality has significantly improved.
Furthermore, as the U.S. Department of Agriculture table below
clearly illustrates, the historical ratios of margins of cow and
calf producers and feeders versus processors, including Tyson, show
that cow and calf and feeder margins outpace processor margins in
almost every year except the most recent.
Table: USDA Data - historical ratios of margins of cow
and calf producers and feeders versus processors, including
Tyson https://www.globenewswire.com/NewsRoom/AttachmentNg/880f1aab-f618-4f13-b5db-7e7fd28430b6
Scale Allows for Efficiency, Leading to Lower Prices for
American FamiliesTyson’s scale allows it to operate efficiently,
which keeps costs down for consumers. At Tyson, we rely on
independent farmers and want them to succeed, because without a
steady pipeline of livestock, we can’t run our business. In rural
communities across America, every year, we invest more than $15
billion with 11,000 independent farms supplying us with cattle,
hogs and chickens.
Tyson Foods is committed to working with the Administration, the
U.S. Congress and others to find ways to better feed this growing
country – and keep consumer prices affordable. We welcome a deeper
discussion on all of the issues raised today.
About Tyson Foods, Inc. Tyson Foods,
Inc. (NYSE: TSN) is one of the world’s largest food companies and a
recognized leader in protein. Founded in 1935 by John W. Tyson and
grown under three generations of family leadership, the company has
a broad portfolio of products and brands like Tyson®, Jimmy
Dean®, Hillshire Farm®, Ball Park®, Wright®, Aidells®,
ibp®, and State Fair®. Tyson Foods innovates continually
to make protein more sustainable, tailor food for everywhere it’s
available and raise the world’s expectations for how much good food
can do. Headquartered in Springdale, Arkansas, the company has
139,000 team members. Through its Core Values, Tyson Foods strives
to operate with integrity, create value for its shareholders,
customers, communities and team members and serve as a steward of
the animals, land and environment entrusted to it.
Visit TYSONFOODS.COM to learn more.
Media Contact: Gary Mickelson,
gary.mickelson@tyson.com, 479-236-9022
Category: IR
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