Springdale-based Tyson Foods Inc. confirmed Thursday it has curtailed production at all nine of its U.S. beef processing plants.
Lack of demand and poor market conditions were cited as reasons for the action.
The world’s largest meat company suspended cattle slaughter Thursday at its plants in Finney County, Kansas; Denison, Iowa; and Dakota City, Nebraska.
“In terms of daily slaughter, today (Thursday) we will be running 35 percent of our normal slaughter. For the week we are running at reduced hours at all nine of our domestic plants,” said Tyson spokesman Gary Mickelson.
Beef, while a large part of the company’s sales, has also proven to be a drag on earnings.
In the first three quarters of 2006, beef sales totaled $8.8 billion and represented 44 percent of Tyson Foods’ total revenue. For the quarter ended July 1, the beef segment lost $10 million compared to profits of $36 million in the third quarter of 2005. The company reported a total loss of $52 million in the quarter ended July 1.
The company also on Thursday confirmed the sales contracts of the first five loads of beef headed for Japan just one week after the 30-month ban was lifted.
“We have more orders pending price confirmation with our Japanese customers,” said Tyson spokeswoman Libby Lawson.
As the U.S. beef industry returns to the Japanese market, the U.S. Meat Export Federation (USMEF) has launched an initiative to help boost the demand for beef internationally.
The USMEF is a non-profit trade organization based in Denver, with offices in Seoul, Tokyo, Osaka, Hong Kong, Shanghai, Singapore, Taipei, Moscow, St. Petersburg, Mexico City and London.
“It is our primary responsibility to promote beef products and the safety of our system to the Japanese consumers in an effort to restore the confidence and trade volume to the pre-ban status,” said Lynn Heinze, USMEF spokesman.
Immediately following Japan’s reopening of its market to U.S. beef, the federation began trade team talks with Japanese buyers visiting American beef packers.
Heinze estimates 20 to 30 small teams of Japanese restaurant owners and other food supply companies will visit U.S. packing plants in the next few weeks. The first team has already visited, according to Heinze.
We feel it is important to work diligently at reclaiming the hearts and minds of the Japanese consumers,” Heinze said.
Tyson Foods said it will work with the export federation should any of the teams want to visit a Tyson facility. To date there have been no requests made, according to Lawson.
In 2003, the Japanese bought $1.4 billion of U.S. beef before the first case of mad cow disease surfaced on American soil. The Japanese market environment has changed following the 2003 ban. Not only has South America, Australia and New Zealand moved into the Japanese market since 2003, but Heinze said the Japanese are eating less beef than before the mad cow scare.
Prior to December 2003, beef accounted for about 5 percent of the protein consumed in Japan, according to Heinze. Now beef represents only about 3.5 percent of the protein in the Japanese diet.
“There is no doubt it will take some time to reclaim the market share the U.S. had before 2003. The next few months are critical in recapturing their confidence. Value and quality of the U.S. product should eventually trump the competition,” Heinze said.
Lack of demand and poor market conditions were cited as reasons for the action.
The world’s largest meat company suspended cattle slaughter Thursday at its plants in Finney County, Kansas; Denison, Iowa; and Dakota City, Nebraska.
“In terms of daily slaughter, today (Thursday) we will be running 35 percent of our normal slaughter. For the week we are running at reduced hours at all nine of our domestic plants,” said Tyson spokesman Gary Mickelson.
Beef, while a large part of the company’s sales, has also proven to be a drag on earnings.
In the first three quarters of 2006, beef sales totaled $8.8 billion and represented 44 percent of Tyson Foods’ total revenue. For the quarter ended July 1, the beef segment lost $10 million compared to profits of $36 million in the third quarter of 2005. The company reported a total loss of $52 million in the quarter ended July 1.
The company also on Thursday confirmed the sales contracts of the first five loads of beef headed for Japan just one week after the 30-month ban was lifted.
“We have more orders pending price confirmation with our Japanese customers,” said Tyson spokeswoman Libby Lawson.
As the U.S. beef industry returns to the Japanese market, the U.S. Meat Export Federation (USMEF) has launched an initiative to help boost the demand for beef internationally.
The USMEF is a non-profit trade organization based in Denver, with offices in Seoul, Tokyo, Osaka, Hong Kong, Shanghai, Singapore, Taipei, Moscow, St. Petersburg, Mexico City and London.
“It is our primary responsibility to promote beef products and the safety of our system to the Japanese consumers in an effort to restore the confidence and trade volume to the pre-ban status,” said Lynn Heinze, USMEF spokesman.
Immediately following Japan’s reopening of its market to U.S. beef, the federation began trade team talks with Japanese buyers visiting American beef packers.
Heinze estimates 20 to 30 small teams of Japanese restaurant owners and other food supply companies will visit U.S. packing plants in the next few weeks. The first team has already visited, according to Heinze.
We feel it is important to work diligently at reclaiming the hearts and minds of the Japanese consumers,” Heinze said.
Tyson Foods said it will work with the export federation should any of the teams want to visit a Tyson facility. To date there have been no requests made, according to Lawson.
In 2003, the Japanese bought $1.4 billion of U.S. beef before the first case of mad cow disease surfaced on American soil. The Japanese market environment has changed following the 2003 ban. Not only has South America, Australia and New Zealand moved into the Japanese market since 2003, but Heinze said the Japanese are eating less beef than before the mad cow scare.
Prior to December 2003, beef accounted for about 5 percent of the protein consumed in Japan, according to Heinze. Now beef represents only about 3.5 percent of the protein in the Japanese diet.
“There is no doubt it will take some time to reclaim the market share the U.S. had before 2003. The next few months are critical in recapturing their confidence. Value and quality of the U.S. product should eventually trump the competition,” Heinze said.