Recent reporting by the United States Department of Agriculture (USDA) calls for the country’s projected chicken supply to be up about 1% in 2024. However, the CEO of the nation’s largest poultry producer thinks that estimate might be higher than what he expects.
Donnie King, CEO of Tyson Foods, addressed the situation on May 6 during a quarterly earnings call.
King pointed out that the publicly available USDA data projects the supply to increase, but added, “if you look at the data underneath it, there are some things that you need to get from this.”
He referenced hatchability and livability rates, which have been less than optimal industry-wide for several years.
“This is a livability and hatchability story for the industry. I you look, pullet and hen mortalities continue to be elevated. Broiler mortality continues to be elevated. Hatchability continues to be 3-5% below historical rates, so the net of all that is this: There’ll be fewer live hens to deliver to processing plants than forecast. So, as I look at this, I believe the supply will be lower than the 1% projected,” said King.
King did mention Tyson Foods, owns a genetics company (Cobb-Vantress), and he said there is no "short-term fix" for these hatchability and livability issues.
"At least from our perspective, genetic selection over the last several years have been skewed toward broiler characteristics like yield and feed conversion.," he said.
There have also been some impacts from no-antibiotics ever production across the supply chain, King said, as well as a few persistent diseases that could also contribute to a potential failure for the industry to increase the chicken supply by 1%.
When discussing the hatchability and livability rates for Tyson itself, King deferred to Wes Morris, president of Tyson’s poultry segment. Morris said he was “very proud of our live performance,” especially noting year-over-year improvement in livability.
Quarterly financial results
King and other company executives discussed the financial results of the second quarter of the 2024 fiscal year. The quarter ended March 30.
Net income for the quarter was $145 million, improving from the net loss of $97 million for the same quarter of 2023.
Net sales were down slightly, going from $13.13 billion for the second quarter of FY 2023 to $12.07 billion during the most recent quarter. Second-quarter sales for the chicken segment were down year=over-year 6.1% at $44.07 billion.
Danville plant update
During the past year, Tyson Foods closed six poultry plants, but also opened a new one in Danville, Virginia in late November.
Morris said that the 325,000-square-foot plant is currently only running one shift per day, but that will likely change in the near future.
“I expect due to demand it will be double shifted by the beginning of ’25,” Morris said.
