Archive for the ‘pork’ Category

Pork Will Have to Repair Its Brand After H1N1

May 5, 2009

The H1N1 virus is really causing an issue with the global pork consumers with the weekends announcement that a hog farm in Alberta has been quarantined. Many are asking why a person just returning from Mexico was ever let in the facility in the first place but the biggest concern is restoring consumer faith in safety of Canadian pork. Alberta is the worlds third largest producer of pork.

In the beginning everyone was referring to it as the swine flu which has created mega issues for the perception of pork. Organic producers are cheering the fact they believe this demonstrates the negative impact of factory farming while realists are angry that this was ever referred to as Swine Flu. The sad part here is that it takes years to build a brand and a single moment to destroy one and this is the challenge the global pork industry now faces.

Harry Siemens on the radio talking about the safety of pork

I know that I will still be eating pork which is very similar to the fact I ate beef after BSE. As Canadian consumers we must do two things.

  1. Always refer to the flu strain as H1N1 (even though at this point the pork brand has been decimated)
  2. Continue to eat pork and show the world that our product is safe.

With countries like China banning the importation of Alberta pork, there is some major work to be done by the industry as BSE proved it can be a very long process to get the borders re-opened and in the meantime the producer is set up for financial ruin.

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The Grain Markets Provide Reflection

January 8, 2009

It is sad but so true.  The graph to the left not only describes what has happened to the grain markets but also mysteriously looks like a Christmas tree.  I found this picture at the blog Eds World: Grain Marketing.  As Ed describes in the blog, he is not sure if he should laugh or cry.  

As Ed states you should choose to laugh because if you think back on the last 24 months it really is an unbelievable story.  In one breath ethanol is being blamed for high food prices and shortages of grain and then prices have bombed lower with higher supplies and a growing global recession.  
We need grain prices to get to a level where both the farmer and the livestock industry can be sustainable in the long run.  A major part of this is stability in the price and not the massive price swings as we have experienced in the past.  When the price moves that quickly no one can capitalize on opportunities.  The major question now for grain prices is what happens next? 

Dick Bond is Leaving Tyson Foods

January 5, 2009
According to a press release from Tyson Foods this morning, President and CEO Dick Bond is leaving the company effective immediately. According to Reuters, Leland Tollett who was the chairman and CEO from 1995 to 1998, will resume the post until a replacement is found. By revenue Tyson is the largest processor of protein in the world.

It would seem that there is more to the story than Bond just trying to pursue other interests. Planned corporate transitions do not usually include resignations deemed to be “effective immediately.” The stock has not been very a real favorite of analysts through the commodity surge last spring but as of late had been working its way back to the twelve month highs. On the news of the resignation this morning the stock is down almost 6%. In a Wall Street Journal story posted this morning Tyson restructured its lending agreements a month ago by providing all its assets to gain further flexibility and a one billion dollar revolving loan.  There has been speculation this morning by several news providers that Bond was forced out by lender pressure as a result of the restructuring a month ago.  Of course this is being denied by Tyson at this time.  

It is obvious that the ride in coarse grain prices negatively affected Tyson’s earnings which resulted in Bond and the company attacking the merits of the ethanol industry in the US. There has been a lot of conversation on Wall Street as to what Tyson’s strategy would be going forward in order to solidify earnings in this very volatile environment.  Some speculation has circled that Tyson will sell off its red meat division to focus more on pork and chicken.  This seemingly came closer to reality after the proposed sale of Lakeside Packers in Brooks to Nillson Bros became public.  Several industry insiders are also saying that the sale of the red meat division would create working capital and allow Tyson to show institutional investors a restructuring plan is being implemented.  Although it is easy to suggest a sale of the red meat division, the reality is that finding a buyer of such a large holding can be very tricky and may require a multi-package approach based on the limited amount of buyers and lack of profitability in the industry.

When the new CEO is chosen it will come with a new direction and change for the company. I think that it will be interesting as to whether the choice will be internal or external.  Hiring an external CEO would showcase the thrust for change at Tyson while an internal choice could mean more of the same in the short term.

There is no doubt that these are very interesting times at Tyson Foods and will continue you to be in 2009.

Mexico Cuts Off Beef Trade

December 30, 2008
Last week, Mexico cut off the imports of US pork and beef from 30 US plants owned by Tyson, Smithfield Foods, JBS and Cargill. This is in addition to Mexico joining Canada on December 19th to file a complaint with the WTO regarding COOL. Reportedly, the ban had to do with technical and sanitary issues at the US plants.  As of today Mexico has resumed imports from 21 of the 30 plants and reports indicate that the other nine plants will be back onstream shortly.

According to a Reuters report, Mexico denied that the import ban had anything to do with COOL or its filing with the WTO. It does seem that the timing is more than just a coincidence. The ban was completely unexpected, it was during the week of Christmas and Mexico is the largest importer of US beef, second in pork and third in chicken.  I find it hard to believe that this was not a shot across the bow to try and show the US that Mexico is willing to play the US game of hardball to get what it wants.  Canada’s next move could be interesting as Canada tends to play safer and follow more diplomatic tactics.  If you didn’t think that 2009 would be interesting, I think you may have to reconsider.