At a time when the African swine fever (ASF) outbreak in China is reducing the global supply of animal protein, and some of that lost pork supply could lead to increased consumption of chicken, Sanderson Farms executives say it would not make sense to build a new poultry plant to meet that demand for protein.
During the Sanderson Farms quarterly earnings call on May 30, one analyst asked if an ASF-related pork shortage would be an incentive for the company to build a new plant. Joe F. Sanderson Jr., the company’s chief executive officer, and Mike Cockrell, the chief financial officer, both said it would not.
“Whatever is happening in China, … we would not go build a plant because of that,” said Sanderson.
Some estimates state that China has lost about one-third of its pig herd – which is equivalent to the entire Untied States herd. Economists have made predictions that chicken will surpass pork as the world’s most consumed meat and China’s pig industry may never rebound. However, Cockrell said there are still too many uncertainties involved to justify building a new plant just because of ASF.
“You wouldn’t build a new plant because of a temporary issue with the export markets,” he said. “By the time we find a site and get it built, ASF may be in the rear-view window. I know there are some estimates that this could go on for a long while, but we don’t know that. That wouldn’t factor into our strategy.”
Plans for a new plant still in the works
While neither Sanderson Farms executive said the company would not build a new plant because of the ASF situation, it does still plan to find a new site. Sanderson said the main incentive to build a new facility is to improve shareholder value.
Sanderson Farms' newest plant is in Tyler, Texas, which opened on February 4.
Sanderson said in December 2018 that it would not build any new plants in 2019 and would instead focus on ramping up its Tyler facility and training employees at some of its other newer plants. However, Sanderson added the company is looking for a site to build in the not-too-distant future.
