Trade barriers for beef and cattle have frustrated Tyson Foods Inc in managing its beef business, the chairman said on March 16.
Tyson Foods, the largest US meat company, has been hurt by the loss of beef exports to Japan and by the lack of cattle from Canada to supply its beef plants.
Canada has been particularly troubling. The United States has banned Canadian cattle since May 2003 when Canada reported its first native-born case of mad cow disease.
"Each week you are trying make a decision into the uncertainty," Chief Executive John Tyson said on March 16 at the Reuters Food Summit. "I think 12 to 18 months you could possibly have that (uncertainty). Even if you run the court process, its 90 to 180 days."
The US Agriculture Department had planned to lift the Canadian ban on March 7, but that was thwarted when a US cattle industry group got a court injunction to keep the ban in place. Now the matter is in court.
Before the ban, Tyson plants in the northwest United States had used cattle from Canada.
"We will manage. There will be more US cattle coming in seasonally in the next four to six weeks. So we will get a little more supply," he said.
Beef plants may be realigned
If the border were to stay closed, Tyson said the company would likely try to process the same number of cattle but at different locations.
"We may do it by adding a (production) line in another location and realigning the plants where they are closer to the cattle," he said. "I don't know if we would ever cut back on our capacity."
Also difficult has been the loss of many export markets as countries banned US beef after a case of mad cow disease here in December 2003. Efforts have been underway to restart sales to Japan, which had been the top overseas market for US beef.
"You have Japanese elections coming up, I think in July. Politically there may be no interest in any of those particular individuals getting out in front of that until after the election," he said.
US Secretary of State Condoleezza Rice was expected to discuss the beef ban during a visit to Japan.
In the wide-ranging interview, Tyson also said the company might be interested in acquiring certain plants from rival Swift & Co, but downplayed the likelihood of buying the whole company.
He also said he has some interest in Oscar Mayer, which is owned by Kraft Foods Inc. and believed by some in the industry to be for sale. (Reuters)
