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Wednesday, August 11, 2021

As chicken prices rise, and more increases are forecast, Cargill and Continental Grain are buying Sanderson Farms

“With the price of chicken soaring, the third-largest poultry producer in the U.S. is being bought for $4.53 billion,” report Dee-Ann Durbin and Michelle Chapman of The Associated Press. “Cargill and Continental Grain have formed a joint venture to acquire Sanderson Farms, paying $203 per share in cash for a company that last year processed more than 4.8 billion pounds of meat.”

The merger will have to pass anti-trust muster with the Department of Justice. Republican Sen. Chuck Grassley of  Iowa said on Twitter that he has expressed concerns to Justice about the deal, and "We've been too soft in allowing past mergers." He said he has heard complaints about lack of competition in the meat industry at his county meetings, and the poultry industry "has recently been investigated for price fixing, so we need thorough review."

“The deal comes as chicken prices are surging,” AP reports. “Wholesale chicken breast prices have been at or above $1.80 per pound since mid-April, a seven-year high, according to the Livestock Marketing Information Center. Last year at this time, they were $1.13 per pound.” The increases have been driven by demand from restaurants; several major chains have introduced new chicken sandwiches.

Tyson Foods, the biggest meatpacker, is projecting even higher meat costs ahead, as it "seeks to pass along elevated prices for animal feed, increased wages and ongoing pandemic expenses to restaurants and supermarkets," Jacob Bunge reports for The Wall Street Journal.

“Rising labor costs along with elevated prices for packaging, transport and grain—typically the biggest expense in raising livestock and poultry—are pushing Tyson to raise prices the company charges supermarkets and restaurants, executives said” in a conference call with reporters.

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