Ordinarily, reports of strong sales, or even record high sales, would be a cause for celebration. But in the meat and poultry industry, exuberance has been tempered.
Indeed, many processors on this year’s Top 100 Report had excellent years. However, there is an undercurrent of concern as to just how those strong sales were achieved.
Tight raw-material supplies forced many companies to raise their prices in the last year. While the increase in sales managed to outweigh the decline in volume that may have occurred as a result this year, it’s impossible to say if that trend can continue. Through the first five months of 2014, one of the main talking points in mainstream media regarding the meat industry had revolved around the record prices for beef. Will there come a tipping point where the price of meat simply becomes more than the average family can afford to pay?
As is typically the case, the largest areas of concerns among meat processors are the things that are completely out of their hands: commodity costs and government regulations. The drought that is affecting critical areas of the country in California and Texas, has led to a historically low cattle herd, and companies across all protein segments are concerned about the prices of meat, as well as corn and soybean meal. Those companies that produce prepared foods also have to contend with the rising costs of spices, vegetables and wheat flour, making it even more difficult to produce items that meet a specific price point.
As far as concerns of government overreach, there was not a specific issue that united the companies in the Top 100. Nevertheless, additional regulation, in general, has taken up space on processors’ radar screens.
“An aggressive federal bureaucracy attacking business and inhibiting growth,” one company listed as its chief concern. “Federal regulatory policies further restraining the processes of daily operations,” wrote another. This is a change from the last couple years, during which the effects of the Affordable Care Act (“Obamacare”) were a common concern virtually throughout the industry.
Meat and poultry processors are preparing for the future by growing their business. Many companies have built or are in the process of building new facilities or warehouses, while others are developing new products or exploring new markets. Many companies are also analyzing internal operations, systems and strategies, improving their processes while finding ways to eliminate waste. Only one processor listed “acquisition of other company(ies)” as a growth area, demonstrating that acquisition/consolidation may not be as strong a factor in business this year as it was in the past.
For information about participating in next year’s Top 100 Report, please contact Sam Gazdziak at email@example.com.