USA – Hormel Foods Corporation, an American food processing company focused on the packaging and marketing of beef, poultry and pork products, has revealed that its turkey volumes decreased by 80% year-on-year on account of HPAI.
HPAI, highly pathogenic Avian Influenza, outbreak in the US has had an ongoing impact on the company, which owns popular household brands like Jenni-O, reducing the capacity of its turkey production facilities.
In a statement, Jim Snee, the company’s CEO, revealed that the virus had led to a lower amount birds produced by the company, that were commercially viable.This resulted in Hormel’s net sales for the first quarter declining by 2.8% to US$3 billion, compared to last year.
The company’s CFO, Jacinth Smiley, also attributed this decline to meat volatility but she expressed that the company expects a change soon.
“We expect to improve meat availability in the back half of the year to drive higher sales volumes for our turkey business, offsetting the impact of market declines and higher feed costs,” Smiley said on the earnings call.
The CEO disclosed that due to cases of the flu, the company was restricted from exporting turkey in the past year and had to divert its raw turkey material domestically to help meet U.S. demand.
Snee explained that despite supply issues, the national demand for turkey remains high, specifically for their value-added products. The avian flu has therefore impacted many local consumers as well.
In the last Thanksgiving holiday, the price of turkey had increased by 23% compared to 2021, according to a report from Wells Fargo.
Between January 2022 and January 2023, grocery prices for “other uncooked poultry,” which includes turkey, also increased by 14.2%, according to the Bureau of Labor Statistics’ latest Consumer Price Index.
Smiley said Jennie-O’s turkey supply had not been hit since December 2022, but that HPAI still remains a significant risk for the company.
The CFO also highlighted other factors that may have led to dwindling sales of their turkey.
“Turkey markets have become less favourable as breast meat prices have steadily declined over the last month. Additionally, historically high feed costs remain a headwind for our business,” she said.
The CEO also acknowledged that in as much as the turkey breast market is not as strong as it used to be, the company’s turkey business division is “still in a very favourable position”.
During the earnings call, the CFO also talked about the recent modification made to a plant in the turkey division in Minnesota.
She communicated that the project is now completed and is representative of a trend to add automation to Hormel Foods facilities.
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