Tyson: Still too much beef-processing capacity

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BY ART HOVEY / Lincoln Journal Star

Anybody seeking a message of certainty from John Tyson about the stability of Nebraska’s meatpacking industry would have come up a bit short in Lincoln Tuesday.

The chairman of the board of the nation’s largest beef processor predicted another round of “rationalizing” in beef-processing capacity.

Outside the ranks of meatpackers, rationalizing usually means creating false justification for action.

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John Tyson (AP file)

John Tyson (AP file)

In the language of meatpackers, it means acting with full justification to downsize processing capacity to the reality of fewer cattle.

Addressing students and faculty at the University of Nebraska-Lincoln, Tyson said “something’s got to give” in the beef business.

Either producers will have to boost feedlot numbers soon or processors will have cut back on the scale of slaughtering and related operations, “because we can’t afford to run at 70 to 75 percent of capacity.”

Tyson Foods dealt with similar issues last year by closing plants at West Point and Norfolk and consolidating its northeast Nebraska efforts to Dakota City.

John Tyson made no references Tuesday to further Tyson consolidations during the question and answer period that followed his remarks on meatpacking and the global economy.

Just to be clear, company spokesman Gary Mickelson said later Tyson Foods had no plans for closing more beef plants in the state or anywhere else.

But speaking more generally, John Tyson, the third generation in a business founded by his grandfather, said only those plants that can continue to operate profitably will stay open under these conditions.

“Those that can’t will close.”

John Harrington and Steve Kay, two close observers of meatpacking news, had no trouble grasping that point.

“I think he’s dead on,” said Harrington, livestock analyst for the Data Transmission Network in Omaha. “We’ve got too much chain speed chasing too few cattle right now.”

As a result, he added, “at least the last 30 days have been a train wreck for the packers. And it’s because there aren’t enough cattle really to allow them to run as aggressively as they want to.”

Scanning a highly competitive industry alignment that also includes Cargill, JBS Swift and other companies, the Hastings-based Harrington compared the situation to a crowded swimming pool and a mind set of “somebody needs to get out of the pool. You go first.”

Kay, based with Cattle Buyers Weekly in Petaluma, Calif., offered a similar perspective.

He cited his recent listing of the nation’s top 30 beef processors.

“They had capacity to slaughter 134,755 cattle per day,” Kay said, “and that’s 5,100, or nearly 4 percent more than a year ago. So what we have is we have continued over-capacity in beef processing relative to the cattle supply.”

Jeff Stolle of the Nebraska Cattlemen conceded fairly tight supplies of cattle to feed and to turn into meat right now. However, “I think as soon as the first of the year there could be a fairly significant change in the supply picture.”

Back at UNL, John Tyson sounded more upbeat about the possibilities for the company to gain more of a marketing foothold for its beef, pork and chicken goals in such far-off places as Argentina and China.

One of the recent bright spots has been in marketing chicken feet to overseas customers in various combinations.

That includes “feet with the toenails on and feet with the toenails off.”

Reach Art Hovey at 523-4949 or at ahovey@alltel.net.