Recent facility closures could help companies increase efficiency
A livestock economist says market conditions and lack of efficiency contributed to a couple of major meat processors recently announcing the closure of several facilities across the U.S. University of Missouri’s Scott Brown says broiler returns are currently 60% of year-ago levels. “Lower chicken prices, especially at the wholesale level, and feed costs that continue to be high, have certainly made margins extremely difficult,” he says. “I think that has something to do with some of the announcements that we’ve seen.”
Tyson recently announced due to lower costs, it is closing four chicken processing facilities in the first two quarters of 2024. Those facilities are located in Arkansas, Indiana, and two in Missouri. Tyson reported operating losses of $315 million, or 7.5% for chicken.
He tells Brownfield that labor availability remains a challenge – and facilities are looking to increase efficiency. Brown says the sow farms were built in the 1990s and are antiquated compared to current industry standards. “Those farm closures help on that efficiency side of the equation,” he says. “This is no different than when we tell producers that in tight financial times, you work on minimizing costs. I think we’re seeing the same thing.”
Brown says he doesn’t expect pork production to decrease substantially because of the farm closures in Missouri. Smithfield confirmed last week it is closing 35 sow farms in the northern part of the state.