Poultry Problems

By the numbers, Tyson Foods (TSN) dominates chicken. It produces around 20% of the nation’s supply, and ranks as the largest chicken operation. The issues plaguing its poultry division is diminished production and the inability to match market demand.

The Arkansas-based company says this stems from difficulty hatching enough chicks as well as being short-staffed on processing lines. What’s more, Tyson’s beef division is expected to decline in 2022 following record levels of production, further pressuring its bottom line.

What They’re Trying

One of Tyson’s main steps was to phase out a less productive breed of chicken in favor of older varieties that had success. The company announced a $1.3 billion investment into automations at processing plants this past December. A new worker benefit program has also reportedly boosted staffing.

The change in breeding practices is expected to improve Tyson’s “hatch rate,” as too many eggs weren’t turning into chickens. Other moves are even more practical such as a machine that helps capture and reuse extra cooking oil, as well as better placement of refuse bins to boost plant efficiency.

Hot Chicken Market

There are a number of factors pushing up demand for chicken in the US. Fast-food chains are locked in high profile competitions to sell the most crispy chicken sandwiches. Supermarkets are also demanding more products. In the meantime, prices have surged upward. Since the start of 2021, boneless skinless chicken breast prices have tripled. Year-to-date, they’re up 41% per the Agricultural Department.

Tyson hopes to be part of the solution when it comes to boosting the nation’s supply. CEO Donnie King says while the company has the capacity to produce 47 million chickens per week, its average is closer to 37 million. Closing that gap could boost supply, and help lower prices.

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