Tyson CEO sees ‘paradigm shift' in meat consumption

By Sara Wyant

© Copyright Agri-Pulse Communications, Inc.

WASHINGTON, February 29, 2012 -Americans may be eating less meat these days, but not because they're avoiding it for health reasons or because the economy is pinching. It's because farmers are producing less, Tyson Foods CEO Donnie Smith told USDA's Agricultural Outlook Forum Friday.

Until recently, consumer demand long has been the driving force behind steadily increasing per capita consumption of beef, pork, chicken and turkey. “We see a paradigm shift, driven now by producer profitability, not consumer demand,” he said. “The pressure of rising costs, especially for feed and fuel, is squeezing producers' profits,” and that, Smith added, “is having a big impact on available supplies of meat and poultry.” Critics of meat have been claiming victory, saying they are winning because people have reduced meat consumption, he said. “But they are not right,” Smith said. “People are eating less because less is available.”

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Meat prices are increasing faster than inflation, he said, evidence that consumers' preference for meat and poultry is being maintained. Otherwise, he said, “the price of meat would not be growing faster than inflation.”

Corn, the principal ingredient in chicken feed, now accounts for 55% of the wholesale cost of broilers, Smith noted. And while high corn prices have been welcomed by corn growers, they have been challenging for livestock and poultry producers who responded by reducing herds and flocks. He said that large amount of corn used to produce ethanol was one of the big factors behind higher corn prices. Energy costs are another factor squeezing producers' profitability, Smith said. The cost of diesel fuel has increased 57% in the last five years.

Tyson expects global meat and poultry consumption to increase 1.8% annually over the next four or five years “as these developing markets continue to mature more and more people move into the middle class and demand more protein,” he said. “One of the challenges in feeding this

large and growing population is what we call „food illiteracy' - that's the nicest term we can use” Smith described one group of “people who don't like what we do in animal agriculture and don't want us to do it at all,” and another group that is generations removed from the farm who lack appreciation of modern agriculture.

“We need education about food illiteracy,” he said. “We've got to tell our story. We have a great story to tell. We have to be careful we don't get lulled to sleep.” If the public is not educated about modern agriculture, he said, someone else will try to tell agriculture's story and “they may not get it right.”

Some in the industry worry that students of today, who don't understand the value of conventional agriculture, are making the laws and regulations in 25 years time. “Some kids don't know ham is a pork product,” he said. “They have no idea what goes into it.”


Original story printed in February 29, 2012 Agri-Pulse Newsletter.

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