Tyson's Red Meat Stepchild, Demand vs. Consumption, and Spiteful Activists
Feb 22, 2013
Tyson’s red meat step child
We’ve got some thinking to do about this well-crafted story about Tyson’s earnings report. I’m glad the guys are making money despite their cattle supply problems, but it is scary it is to me that beef marketing has fallen into the hands of such, such, chicken people.
Let us reflect, again, on the fact that these companies buy their beef and grow their own bland meat. So, if they were a grocery store, chicken parts would be their house brand—the stuff the employees get bonuses for pushing—and beef would be the high-cost brand name stuff they have to offer to build traffic. But they’d rather sell the house brand.
Not that I blame the beef side of a Tyson. Not the people. But if I’m Donnie Smith allocating resources, I’d rather sell chicken. More BIMP (old economic term: Bucks in My Pocket).
On the one hand, the Tyson-types do think about what consumers want. They put their name on their product and they want consumers to be happy with what they buy. That’s the main reason poultry mongers have taken such a huge share of beef’s market. Historically, stand alone packers never cared about consumers—IBP least of all. They just wanted to pump through tonnage. More output equals more profit. Let the retailers deal with tough meat.
That has changed. And that is good for cattle producers. It is what little salvation we’ve had in these 30 years of market-share decline.
But to some extent, comes at the cost of having beef being a step child to the more profitable poultry business. If you’re in the manufacturing business--and you are--you want your distributors to make more money selling your product than they make selling the competition.
So, when Tyson buys Taco Bell’s tortilla supplier, how long before Taco Bell is featuring poultry tacos?
Second point brought forward. Note this paragraph:
"Smith said the company would not over produce chicken at sky-rocket grain costs and would err on the side of caution, buying commodity chicken parts and then further processing them for its customers"
If I were one with the anti-packer crowd, that would gall me. Think a few years ahead in a deal where these giant companies let us grow their meat in the bad cycles and then step in to oversupply the market during the good cycles?
I had my doubts when the beef packers were absorbed by the chickenistas. I just had this image of a retailer buying his neighbor just to shut it down and increase market share. I’m not sure yet I was completely wrong.
But more about that some other time.
Demand vs. Consumption. Again
Having become an older gentleman who has labored in this business for many years, this interview with Polly Ruhland reminds me of the many, many times I’ve had to write about and explain the difference in production, consumption and demand.
I daresay it will be more fun for you to listen to Polly than to read my explanation.
Why I hate nosy, spiteful activists. Part deux.
So here’s how this works. First, the activists get your business declared to be everybody’s business. Then they demand that your private information be regarded as in the public domain.
These are not the same jerks who post online everybody’s government payments so that nosy people like me can search around and see how much the neighbors make? That would be the Environmental Working Group.
But jerks is jerks is jerks and in both cases, the idea is to raise money for their excellent salaries while making producers (of just about everything, not just beef) miserable.
Oh, the misery in wine country
I am not one to find fault with any writer named Rachel Dovey, and, in fact, this article is well-done so far as it goes.
But she (and I may assume too much, genderwise, from that first name, if I know Sonoma) fails to dig into why nobody slays livestock in the vicinity.
And the answer is the same reason there are so few small abattoirs everywhere else. Government regulation and labor costs. And both are quite popular causes among the locavore types.