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Sanderson deboning plant will remain on hold
Story Date: 2/17/2012
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Source: Dani Friedland, MEATINGPLACE, 2/16/12
Sanderson Farms will continue to place on hold plans to build a second big bird deboning plant and hatchery operation in North Carolina until market conditions improve, Chairman and Chief Executive Officer Joe Sanderson Jr. told shareholders in a webcast from the company’s annual meeting today.
He said it is in the company’s best interest to delay construction until grain prices stabilize and while Sanderson Farms continues to reduce its debt. He also said production cuts already in place will remain so through 2012.
Sanderson said production would focus more on tray pack poultry production than big bird deboned products going forward. While 2011 production included 49 percent tray pack products and 51 percent big bird deboned products, he projected 2012 production would be 53 percent tray pack products and 47 percent deboned products.
Cost of production
The cost of production rose 27 percent in 2011, with feed grain costs accounting for 53.5 percent of costs, compared to 46.4 percent in 2010, explained Chief Financial Officer Mike Cockrell during the webcast. At the same time, the average sales price was down 4.6 percent during 2011.
Sanderson Farms paid over $1 billion in feed costs in 2011, compared to about $704 million in 2010.
Sanderson, Cockrell and President and COO Limpkin Butts each predicted no improvement in foodservice demand for poultry products until the U.S. economy and employment improve.
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