Hormel: Other companies should reduce turkey production

Turkey companies that haven’t cut back on production are not doing favors to anyone, said Jim Snee, president, chairman and CEO of Hormel Foods.

Roy Graber Headshot
(Austin Alonzo)
(Austin Alonzo)

Turkey companies that haven’t cut back on production are not doing favors to anyone, said Jim Snee, president, chairman and CEO of Hormel Foods.

Hormel Foods, the parent company of Jennie-O Turkey Store, released the financial results of the fourth quarter of fiscal year 2017, and the full year as well. The company reported that the Jennie-O Turkey Store segment profit was $70.4 million. While it was still a profitable quarter, the profit was down 24 percent.

However, Snee said during a November 21 conference call that while Jennie-O Turkey Store is still profitable, “a lot of the turkey industry is operating near break-even.”

To help improve the profits and deal with the current oversupply of turkeys in the United States and subsequent low prices, Jennie-O Turkey Store, which is the second largest turkey company in the United States, has cut down on production. However, not everyone in the turkey industry has.

“We feel like we have done what we need to do in that we’ve cut production and believe the rest of the industry needs to as well. Quite frankly, we are a bit disappointed that we haven’t seen that as of yet,” Snee said.

Snee said he believes the reason some companies have not reduced turkey production is that they are fearing that another avian influenza outbreak, like the one that occurred during 2015, could come.

Market recovery expected in 2018

While the turkey market conditions are still challenged, Hormel Foods Chief Financial Officer Jim Sheehan, who also spoke during the conference call, expects to see some recovery next year.

The company has been actively watching USDA poult placement and inventory reports, and while it doesn’t appear things will change much in the very near future, Sheehan believes “we’re going to see market improvements toward the back half of 2018.”

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