by Lance Turner
Posted 12/10/2013 10:43 am
Updated 12 months ago
The Wall Street Journal this week goes inside Tyson Foods Inc.'s expanding operation in China, and finds the meat processor overhauling its business model to ensure more growth and better food safety.
So what's the Springdale company up to? After years of buying chickens from independent farmers, Tyson is building its own chicken farms in China. Executives have been particularly focused on the build-out this year. In May, CEO Donnie Smith noted that, "We're building chicken houses as fast as we can. That, frankly, is our bottle neck. Our profitability will improve dramatically when we’re running plants with company-owned birds."
Smith was talking specifically about China, where growth had been stalled by customer fears of a bird flu outbreak. Through company-owned farms, Tyson will be able to better control bio-security, Smith said.
The model is different from how Tyson operates in the United States, where it contracts with independent farmers for chickens. But in the U.S., the farms are larger and easier to monitor for safety than in China.
According to the Journal:
Tyson aims by 2015 to run 90 such farms in China and supply its processing plants here almost exclusively with company-raised broilers, as chickens raised for meat are called. Today the Springdale, Ark., company has 20 farms in China. Three years ago, none. The goal is to double production in China to three million birds a week for supermarkets and restaurants to help offset sluggish growth in the U.S.
While Tyson doesn't disclose revenue by country, analysts estimate the company is raking in about $715 million in revenue in its most recent fiscal year and is on track to reach $1 billion by 2015.
You can read more about Tyson and plans for China, and see a video that goes inside one of the company's chicken farms there, right here.