I read a piece in today’s Washington Post about how falling meat prices are hurting Tyson Foods stock price, due to recent earnings reports indicating soft demand. Apparently, Tyson is caught in a pinch where demand is going down while feed and animal costs are still high. I’m no economist, but it seems to me that this will balance out eventually as inflation is not even across all products and services. Feed prices will come down in line with the amount they are charging for their meat at some point and restore Tyson’s P/E ratio, just not in time for this quarter. Oversimplification? Absolutely. Like I said, I’m not an economist, but this is not meant to be a piece on Tyson’s stock, it’s about a different angle to their margin pinch.
Prices go up, prices go down. I know it doesn’t feel that way right now but may I remind you, that in 2020, inflation was only 1.2%. I’m not saying we’ll get back down to that level tomorrow but let’s not pretend we’re living in 1980’s Argentina. Of course, I’m not running for office, nor presenting to shareholders.
I don’t mean to sound flippant about inflation, but the truth is for years I have watched as equipment manufacturers continue to develop ever more innovative capital equipment year after year. Improved throughput, reduced waste, and increased automation, all contribute to improving the processor’s margin consistently, not on a fleeting basis such as feed prices, but for the long haul.
For the 20+ years I have been attending food industry trade shows, it never fails to amaze me the scale of solutions that OEMs bring to market. It is for this reason that processors are able to offer many more SKUs to customers than ever before and do so at a price that keeps the customer happy while also generating a profit for the manufacturer. Do we have our ups and downs? Of course we do, but this industry keeps pushing forward.
I look forward to this year’s Process Expo to see what new applications are coming to market, and look forward to the buying teams sitting down with the experts to see how they can help them strengthen their margin and continue feeding a hungry world. No matter what segment of the industry, you’ll find the latest technologies that make your production successful enough to maintain that margin. Mark it on your calendar (October 23-25 at McCormick Place) and register when you can. Your competitors sure will!