Tyson May Buy Chinese Poultry Producer on Higher Meat Prices

US - Tyson Foods Inc. said it may buy a Chinese poultry company, part of a plan by the world's largest meat processor to meet rising consumer demand for good-quality food and capitalize on higher meat prices in the Asian nation.
calendar icon 1 August 2007
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Tyson aims to start producing and selling poultry in China in the next year, adding to shipments from the U.S., said James Rice, Greater China country manager of the Springdale, Arkansas- based company.

"We're either going to partner with a leading poultry company so we already have a head start, or we'll look for a green-field operation where we can start with world-class best practices," Rice said in a July 27 interview in Shanghai. "Chinese consumers want trustworthy brands and they want safe food. That's exactly what we do."

China, the sixth-largest buyer of U.S. pork and the world's biggest consumer of the meat, is importing more food from producers including Tyson, after an outbreak of hog flu reduced supplies. Rising incomes are spurring meat consumption, while increasing awareness of food safety pushes consumers to buy from retailers that enforce their own safety standards.

China's growing middle class will increase food expenditures to $650 million from the current $150 million in the next decade, an annual growth rate of about 17 percent, consulting firm A.T. Kearney estimates. Rice estimates China's per capita annual protein consumption at 10 kilograms (22 pounds), compared with 38 kilograms in Hong Kong and 53 kilograms in the U.S.

Chicken Production

China will produce about 10.5 million metric tons of chicken in 2007 and will import 430,000 metric tons, according to estimates by the U.S. Department of Agriculture. Tyson supplies 18 percent of China's chicken imports, including selling chicken feet which U.S. consumers don't eat, Rice said.

Source: Bloomberg

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