Source: MEATINGPLACE, 5/7/18

Meat and poultry processors received a Christmas gift last year that will keep on giving — the new federal tax law which cut the top corporate tax rate to 21 percent from 35 percent. Publicly traded processors’ quarterly results released in February showed a collective savings of roughly half a billion dollars in federal tax payments this year by the companies reporting.

The biggest winners: “The firms that get the largest share of their sales from the U.S.,” says Zain Akbari, an analyst who follows the food industry for Chicago-based Morningstar Research Services LLC. Sanderson Farms Inc. gets about 85 percent to 95 percent of its sales from domestic customers, Tyson Foods Inc.’s domestic sales have been in the high-80-percent range recently and Hormel Foods Corp. has been in the mid-90s, he estimates.

Expect companies to use their tax windfalls to increase plant efficiencies, expand production capacity, raise some wages to attract workers in a tight labor market, increase marketing for lagging brands — and to shop for acquisitions that bring higher-margin products into their portfolios, industry analysts predict.

All of that should be happening against a backdrop of rising consumer demand for proteins brought on by the tax savings some consumers will realize.

For more stories, go to www.meatingplace.com.