China is rebuilding its herds, CEO Dean Banks says, but ASF situation in Vietnam, Germany and other countries is also a factor
While China is rebuilding its swine herds after the African swine fever (ASF) virus decimated the pig population in the country, it is difficult to discern when global pork prices will normalize, Tyson Foods CEO Dean Banks said.
Tyson Foods, a diversified producer of pork and other proteins, reported its financial results for the first quarter of fiscal year 2021 on February 12. The company’s pork segment saw a year-over-year decline in its operating income for the quarter, sliding from US$191 million to US$116 million. It attributed those declines largely to a temporary idling of one of its pork plants due to a mechanical malfunction and production inefficiencies and direct incremental expenses related to the COVID-19 pandemic.
However, the average sales price for the pork segment increased due to a strong demand.
In Tyson Foods’ quarterly earnings call, held the day the earnings were released, Banks was asked by Bernstein analyst Alexia Howard about the higher pork prices and the high demand for U.S. pork exports, and how much longer they were expected to endure. Using a baseball analogy, she asked what inning the pork industry was in in the game of ASF pushing up global pork prices.
“It’s hard to project, to be honest. We still hear reports of ASF in China. We also do know that they’re making aggressive measures to build a commercial herd there and making some progress towards that,” Banks replied. “We’ve seen global redistribution of protein related to ASF cases in Germany and Vietnam and others. That continues to play itself out generally positively. We see very strong demand for pork, which is helping offset some of the increase in hog prices. And so far, the business is performing well. Projecting ASF is very difficult. We’ve seen, historically, it to take a decade plus to recover from ASF in certain markets. And so, we hesitate to call whether or not we’re halfway through that.”
View our continuing coverage of the African swine fever outbreak.