Tyson Foods chicken operations in China have taken a hard hit as fears of the new H7N9 bird flu have driven Chinese consumers away from poultry, but the company is continuing to set itself up to produce a biosecure supply of chicken products once flu illnesses abate and consumers return to eating poultry.
On a conference call following Tyson’s quarterly earnings report, company officials acknowledged demand for their products around their Shanghai plant has dropped substantially. They noted, however, that the outbreak has affirmed their model of extreme biosecurity and food safety and predicted that over time, it will validate their model.
Chinese consumers have shifted back to a vegetable-based diet in the wake of the flu outbreak that has sickened over 120 and killed 23 people, the executives said.
Tyson’s strategy is to move as quickly as possible to fully vertically integrated operations and slaughter company-owned birds at its two existing plants. Tyson President and CEO Donnie Smith told analysts one bottleneck the company is facing in its quest to raise more of its own birds in China is obtaining land use rights.
The chicken farms in China that Tyson currently owns implements the same stringent biosecurity measures as the company employs in the United States, including advanced ventilation and temperature control in live bird houses and strict shower in/shower out procedures on and off the farm.
At the same time, Tyson has chosen not to invest in upgrading one of its older chicken complexes in China. Smith said the capital it would take to get that complex to perform successfully would be better spent in other ways. He said the company had not yet decided whether or not to close the facility permanently.
