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Tyson in contact with Chinese pork buyers in wake of swine fever, CEO says


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Tyson in contact with Chinese pork buyers in wake of swine fever, CEO says

Chinese pork buyers have reached out to Tyson Foods Inc. in recent months in attempts to fill protein demand in that country in the wake of African swine fever, or ASF, Tyson's top executive said Aug. 5.

"We know the market, and we have had discussions, particularly over the course of the last three or four months," President and CEO Noel White said during a call with analysts to discuss the company's fiscal third-quarter results. He declined to name specific parties with which Tyson had discussions or which types of protein the conversations focused on.

The comment marks the latest evidence that ASF is likely to shape global markets for protein. While exact figures have been difficult to come by, companies including Tyson and Hormel Foods Corp. have said that the disease and efforts to eradicate it in China are likely to increase prices for pork around the world and force China, which is both the largest producer and consumer of pork, to look abroad to satisfy domestic demand.

Tyson's fiscal third-quarter adjusted EPS was in-line with analysts' expectations, while its as-reported net income was above the consensus estimate. The results did not include a benefit from ASF, though Tyson still expects to global shipments of protein to China to pick up by the end of the 2019 calendar year, White said.

The company first said in May that it expected ASF to boost demand for multiple types of protein as Chinese buyers looked for other types of protein to replace hogs that had been slaughtered in efforts to control the disease. Such a sourcing shift could benefit Tyson even without the company shipping meat directly to China, its executives have said, including through sales to countries that will need to meet domestic demand after shipping their own meat supplies to China.

When Chinese buyers do start sourcing abroad, the effect is unlikely to be a rapid shift, White told analysts. Instead, he said, it is more likely that shipments to China will grow gradually over time.

The Springdale, Ark.-based company also ramped up its shipments of products including plant-based protein during the quarter. In July, Tyson started shipping nuggets that include plant protein under its Raised & Rooted brand, White said, adding that the product will be available in about 4,000 retail locations as well as to its food service offerings.

In a separate filing, the company also confirmed that it received a subpoena related to a U.S. Department of Justice investigation into whether Tyson colluded with other meat processors to fix chicken prices. The investigation became known after the DOJ asked the U.S. District Court in Chicago to halt discovery proceedings in a food service company's lawsuit, which took aim at Tyson, Pilgrim's Pride Corp. and Sanderson Farms Inc.

Under the subpoena, Tyson must provide "additional documents and information related to the chicken industry," the company said in the filing. Tyson did not immediately respond to a request for additional details, though the company said in the filing that it is "fully cooperating" with the subpoena.

Shares of Tyson increased 5.1% to $83.91 in afternoon trading on Aug. 5.