The controversy over lean finely textured beef, dubbed “pink slime” by its critics, is affecting the entire beef industry, as ground beef sales declined 11 percent in March. A total of 37.7 million pounds of ground beef was sold in March, which is the smallest amount sold in March in 10 years, reports Bloomberg. For packers, the price for wholesale beef dropped 7.8 percent in the month, the most since October 2008.
At the height of the “pink slime” controversy, many retailers vowed to stop selling beef with LFTB. The results have affected the industry far beyond Beef Products Inc., the maker of LFTB. It has temporarily shut down three of its four production facilities, and it remains to be seen when or if they will reopen. AFA Foods, another ground beef processor, declared bankruptcy and cited the consumers' reduced interest in ground beef as a contributing factor.
Cargill has scaled back its output of lean meat at four plants. Tyson Foods stated that the beef supply will decline. They and other processors may start labeling ground beef that uses LFTB to try and gain sales heading into the summer grilling season.
“If demand remains lackluster, it will impact beef processors’ profitability,” Farha Aslam, an analyst at Stephens Inc. in New York who has a hold rating on Tyson shares, said in an interview on April 10.
Source: Bloomberg, USA Today