XL FourStar is a family operated facility, with an additional location in Nampa, Idaho. Once volume dictates, Niman Ranch will also utilize the Nampa location to process its Idaho raised beef, further decreasing the transportation time for all the cattle within the Niman Ranch network. This will allow Niman Ranch to provide regional/local beef for all its West Coast customers.
Jeff Tripician, chief marketing officer of Niman Ranch, said, “At Niman Ranch it’s important for us to reinforce our core values by continually setting the standards higher. We’re always looking for ways in which we can take further action to allow us to drive these values to the next level; this move allows us to do just that. Processing cattle at XL FourStar makes us a more environmentally sustainable company with even stricter animal handling protocols.”
Source: Niman Ranch
Smithfield outlook raisedFitch Ratings has affirmed the credit ratings of Smithfield Foods Inc. The Rating Outlook has been revised to Positive from Stable. At Aug. 1, 2010, Smithfield had approximately $3 billion of total debt.
Smithfield's ratings reflect its high financial leverage, low relative margins, volatile cash flow generation, and lack of diversity across proteins. Moreover, periodic instability in export markets and ambiguity surrounding internal hedging policies remain a concern. These negatives are partially offset by Smithfield's leading position in the pork industry, good liquidity, and the fact that near-term maturities are manageable. Furthermore, the company is currently generating positive free cash flow (FCF; defined as cash flow from operations less capital expenditures and dividends).
The positive outlook is due to the fact that operating fundamentals and credit metrics have improved considerably over the past three quarters. Furthermore, in fiscal 2011, Fitch expects additional improvement in year-over-year earnings growth and meaningful debt reduction. Despite recent increases in grain costs, favorable protein supply/demand dynamics should support live hog and processed pork prices along with earnings in the near term. Debt repayment will be facilitated by significant cash on hand. Smithfield had $542 million of cash at Aug. 1, 2010 and will receive approximately $175 million of net proceeds from the divestiture of its 49% interest in Butterball, LLC. The sale is expected to close by Dec. 31, 2010.
Since the end of the fiscal year ended May 2, 2010, Smithfield repurchased $69 million of its 7% senior unsecured notes due Aug. 1, 2011, leaving an estimated $533 million outstanding. Fitch believes additional repurchases of the 2011 notes are likely because terms of the company's $1 billion asset-based loan (ABL) revolving facility stipulate that if more than $60 million of the company's 2011 notes remain outstanding at May 3, 2011, the facility becomes due at that time versus the stated maturity date of July 2, 2012. Given good access to capital for speculative rated entities, Smithfield could elect to refinance this maturity and/or its ABL but the company remains focused on deleveraging its balance sheet. Smithfield's goal is to reduce debt by $1 billion by fiscal 2013. Fitch views the timeline as aggressive but believes significant debt reduction is necessary to withstand the inherent volatility of the industry.
Smithfield's cumulative operating income has strengthened over the past three quarters as losses in Hog Production decelerated and turned positive during the first fiscal quarter ended Aug. 1, 2010. Fitch believes the hog production cycle has turned and expects Smithfield's business to continue to generate profits in the near term. Absent unexpected shocks to global pork demand and an outsized run up in corn costs, which are not anticipated, the segment should also generate profits in fiscal 2012. Smithfield announced a new long term Hog Production Cost Savings Initiative during the fourth quarter of fiscal 2010 which aims to improve the company's operating efficiencies and its overall competitive position. The plan, which includes farm reconfigurations and the termination of certain high cost third party breeding stock contracts, is expected to reduce the company's base hog raising costs by about $2/hundredweight (cwt) by fiscal 2014. Smithfield's raising costs were $53.52/cwt during the quarter ended Aug. 1, 2010. Smithfield estimates that a total of approximately $40 million of expenses and charges will be incurred over a 2-3 year period for these efforts.
Although Smithfield's Pork Processing Segment is experiencing higher raw material costs, pricing for the company's higher margin packaged meat business remains strong. During the first quarter ended Aug. 1, 2010, packaged meat sales increased 5% as a 12% average price increase offset a 6% decline in volume. Pricing increased 2% in fiscal 2010 and was flat in fiscal 2009. Fitch believes that pricing will remain firm due to tight supply and good overall demand. Furthermore, Smithfield achieved its targeted $55 million of fiscal 2010 cost savings from its Pork Restructuring Program completed at the end of fiscal 2010 and expects to realize $125 million of annualized savings beginning fiscal 2011.
Source: Fitch Ratings
Federal, state representatives promote U.S. beef in RussiaRepresentatives of agriculture departments for Colorado, Kansas and Montana are in Russia to try to promote U.S. beef, reports the Associated Press.
The Colorado Department of Agriculture says the group began its trip Saturday and is scheduled to be there through Oct. 12. They planned to visit Moscow, tour farms and ranches and to attend the Golden Autumn Livestock Exposition.
Andy Maupin with Spruce Mountain Cattle Ranch in Larkspur, Colo., is among cattlemen on the trip. He says he hopes to share how U.S. genetics could help Russia produce more high-quality beef. Colorado has been trying to build relationships with Russia's beef industry. It hosted two delegations of Russian cattlemen in July.
Source: Associated Press
Government to help Louisiana chicken farmersLouisiana's agricutlure commissioner says chicken farmers who lost contracts and money after Pilgrim's Pride Corp. went bankrupt in 2008 can apply for help from the federal government. Commissioner Mike Strain said Friday that the U.S. Department of Agriculture has set aside up to $60 million in grants for Louisiana chicken farmers who lost contracts and money after Pilgrim's Pride went bankrupt.
According to AP reports, chicken farmers who lost contracts between May 1, 2008, and July 1, 2010, are eligible.
After Pilgrim's Pride went bankrupt, California-based Foster Farms bought the former Pilgrim's Pride plant in Farmerville and many farmers got new contracts with Foster Farms. But Strain said the USDA grant was "designed to help all the growers who lost their contracts."
Source: Associated Press
CKE Restaurants reaches $1 million mark for breast cancer programsCKE Restaurants Inc. announced it has once again reached its goal of raising $1 million for breast cancer programs and awareness through its Pink Star fundraising campaign. During the three-week, in-store fundraiser, which ran April 28 through May 18, guests of Carl’s Jr. and Hardee’s restaurants across the United States donated to the campaign in support of the National Breast Cancer Foundation (NBCF).
For each $1 donation, restaurant guests received a commemorative pink Happy Star to personalize and place on display in the restaurant lobby. This leave-behind piece combined the icon for both the Carl’s Jr. and Hardee’s chains with the color pink to represent hope and awareness in the fight against breast cancer. Guests also received coupons to use toward future visits. SynqSolutions Inc. of Atlanta donated the cost of all printed materials related to the Pink Star program.
The $1,010,000 total bests last year’s $1 million milestone, which represented the single largest one-time gift given to the NBCF. The donation is slated to fund the NBCF’s ongoing National Mammography Program, which provides free mammograms to underserved women through participating medical facilities in 47 states across the country.
“The loyal customers of Carl’s Jr. and Hardee’s have stepped up once again and given generously in support of breast cancer awareness and the National Breast Cancer Foundation,” said Andrew F. Puzder, CEO of CKE Restaurants. “We could not be more proud of our guests, as well as our dedicated franchisees and staff, whose enthusiasm and generosity over the past six years has made this program a great success.”
The funds raised through the Pink Star program go directly toward public education regarding early detection in the battle against breast cancer.
Source: CKE Restaurants Inc.
FAO: Beef may become caviar of the futureFood and Agriculture Organization officials attending a meat congress in Buenos Aires warned the world faced a developing crisis in beef production as global human population would soon outstrip the numbers that current or future supplies from livestock farming could feed, reports UPI.
Henning Steinfeld, coordinator of livestock, environment and development initiative at the FAO, warned delegates beef could become so scarce as to be equated with caviar, in the same way as salmon was a luxury food item half a century ago.
Steinfeld's comments appeared to echo statements by World Wildlife Fund's livestock expert Bryan Weech, who said farmers already faced costs that made beef production uneconomical.
Sustainable resources for livestock production were among challenges the world community would face as human population reached new highs, delegates said.
Steinfeld said beef will become an extreme luxury food item worldwide by 2050 because of soaring production costs.
"The necessary resources for the production of beef will be three, four, five times higher than those of chicken and pork," said Steinfeld. Citing projections for the coming decades he said beef could cease to be a "mass product" since beef production couldn't sustain the growth of world population.