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0802USArankb_Pilgrims
on June 23, 2009

Cutbacks, expansions figure in offbeat year

Pilgrim’s Pride and Tyson Foods led with production cuts to help restore industry profitability, while mid-sized firms made gains.

Pilgrim's Pride Corporation and Tyson Foods Inc., tightened the cinches and cut ready-to-cook (RTC) broiler production by a combined 15 million pounds weekly in 2007 but retained their respective No. 1 and No. 2 rankings in WATT PoultryUSA's survey. Their cuts helped restore industry profitability, which had been hurt early in 2007 by escalating feed costs.

WATT PoultryUSA 2008 rankings data show No. 2 ranked Tyson Foods reducing average RTC production by 7.69 million pounds a week or 5.1 percent. No. 1 ranked Pilgrim's Pride cut weekly production by 7.29 million or 4 percent. Still, their combined average weekly production amounts to 43.3 percent of the survey total compared to 45.4 percent a year ago.

Meantime, 14 firms in the survey increased weekly RTC production by more than 4 percent. From the top 15 companies, these included No. 4 ranked Sanderson Farms (+4.29 million pounds or 12.4 percent); No. 6 ranked Mountaire Farms (+2.89 million pounds or 10.5 percent); and No. 7 ranked House of Raeford Farms (+3.98 million pounds or 19.3 percent).

Only two firms in the top 15 lowered RTC production by percentages comparable to those of Tyson Foods and Pilgrim's Pride. No. 11 ranked Foster Farms cut RTC production by 4.8 percent, and No. 13 ranked Peco Foods reduced output by 5.4 percent.

Mid-sized firms made gains

Mid-sized firms registered strong production growth in the 2008 survey. Following 2006, when the top 10 companies expanded more rapidly than mid-sized producers, nine of the 12 companies ranking 15 through 26 reported increases of more than 4 percent in 2007 production. Only one of the remaining three reported a decrease in production. In fact, five of the mid-sized firms reported percentage growth in the double digits No. 17 ranked Simmons Foods with the high of 16.6 percent. Overall, 14 firms in the survey increased production by more than 4 percent; nine of the 14 were mid-sized producers.

Other comparisons further highlight the differences in RTC production in 2007 and 2006. In 2006, the combined increase by the 13 firms ranked below No. 10 totaled only 2.94 million pounds. In 2007, the combined increases by the same group had risen to 8.03 million pounds.

No dramatic changes in rank

Dramatic moves in rankings are absent from the 2008 survey. Only one firm fell by more than one place. The other changes (seven of them) involved firms edging out others by one place. On the strength of the opening of its new broiler complex in Waco, Texas, Sanderson Farms, for example, pulled ahead of Wayne Farms into the No. 4 position. And O.K. Foods inherited the No. 10 ranking after Foster Farms cut production. Similarly, George's, Inc., slid past Peco Foods to the No. 12 position. Allen Family Foods, which spent $37 million to rebuild the plant at Harbeson, Del., boosted production by 15.7 percent to climb one place in the rankings to No. 15. Mar-Jac Poultry slipped past Amick Farms to claim the No. 20 spot, though both firms registered strong production increases. Finally, Marshall Durbin Cos. and Claxton Poultry traded places in the rankings, as did Coleman Natural Foods and Farmers Pride.

Mountaire Farms, on the other hand, increased production by 10.5 percent to hold its No. 6 ranking, despite the 19.3 percent increase by House of Raeford Farms, which acquired and converted a turkey plant in Wallace, N.C., to broiler processing.

Additional highlights

  • Pilgrim's Pride announced its 2006 acquisition of Gold Kist had yielded $150 million in annualized savings three months ahead of schedule.
  • Tyson Foods sold two commodity chicken plants (Ashland and Gadsden, Ala.) and related facilities for $40 million. The company opened the Discovery Center, which includes 19 research kitchens and a USDA-inspected pilot plant.
  • House of Raeford Farms, in addition to opening the Wallace plant, invested $1.9 million for a shavings mill in 2007 and plans to invest $5.6 million for grain storage in 2008.
  • Koch Foods acquired slaughter/processing plants from Tyson Foods in Ashland and Gadsden, Ala.
  • George's, Inc., completed construction of a $17 million feed mill in Cassville, Mo.
  • Allen Family Foods invested $7 million in an addition to the plant in Hurlock, Md. Capital improvements planned for 2008 are budgeted at $30 million.
  • Townsends, Inc., completed projects to restructure product flow at the plant in Batesville, Ark., and consolidated the par-frying operation in the further processing plant in Mocksville, N.C.
  • Simmons Foods grew average weekly RTC production by 16.6 percent, largely on the basis of increased broiler weights (up by over 0.4 pound per head).
  • Case Foods plans to construct a new feed mill in Ohio in 2008 at a projected cost of $14 million.
  • Cagle's, Inc., reported capital improvements to the Collinsville and Pine Mountain Valley plants, with more investment planned for 2008.
  • Marshall Durbin made $3.9 million in capital improvements in 2007 with more investment planned for 2008.
  • Gold'n Plump Poultry began operation of a $12 million hatchery in Independence, Wis.
  • Harrison Poultry increased ready-to-cook production to 4.80 million pounds weekly, up 11.4 percent.
  • Coleman Natural Foods expanded the capacity of the BC Natural Chicken processing plant in Fredericksburg, Pa. The company plans to add a new distribution center in 2008.
  • Draper Valley Farms was acquired in 2007 by Booth Creek Management Corp.
  • Gerber's Poultry completed over $1.3 million in capital improvements in 2007 with more planned for 2008.
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