CHICAGO – Tyson Foods is laying off a certain type of rooster from its US chicken business after a surprising discovery that eggs fertilized by the male bird hatch less often, resulting in fewer chickens.
The world’s largest meat producer by sales will install a replacement in its breeding program by the fall to boost production, Donnie King, president of Tyson’s poultry business, said on Monday.
The United States craves more chicken and supplies are tight as fast food companies compete to sell chicken sandwiches and wings.
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“We are changing a man we frankly made the wrong decision on,” King told analysts on a quarterly earnings call.
A spokesperson for the company did not immediately respond to a request for details on the variety and origins of the type of rooster that gets the startup.
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Breeding companies supply hens and roosters to chicken farmers, who then raise the birds and hatch their eggs to produce meat. Tyson owns one of the country’s leading breeding companies, Cobb-Vantress.
The unexpected drop in outbreaks hit Tyson in January, after introducing the type of rooster that is currently being fired, King said. The problem is half the reason the company’s chicken supplies are tight, he said.
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“It’s about 50/50 between the trap door problem for us and the high demand,” King told reporters after the call for results. “We will sort out our supply. “
Reduced outbreaks, along with production disruptions related to severe winter weather and the COVID-19 pandemic, caused Tyson’s chicken sales to drop 3.2% by volume in the quarter ended April 3 , according to the company. Prices soared 7.8%, pushing sales by value 4.6% to $ 3.6 billion.
To meet customer needs, Tyson purchased more chicken from outside companies during the quarter than usual, mostly breasts.
One customer, KFC, has a new chicken sandwich that sells for twice as much as a previous version, according to KFC owner Yum Brands.
“Our main challenge has been to meet this demand,” Yum CEO David Gibbs said on an April 28 call.
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Nationwide, 842 million chicks were hatched in March that were raised for meat, down 2% from the previous year, according to the US Department of Agriculture. As of April 1, there were 717 million eggs in incubators, up 4% from last year.
Once Tyson’s new type of rooster is in place, it will be a year before the company sees the full benefits of an improved hatch, King said.
“It will help us with the supply,” he said, “the supply that we frankly need today.”