Beef Bits

Cattle Market & Farm Reports, Editorials
Feb 7, 2005
by WLJ

McDonald's triples Q4 profits
Strong U.S. sales helped McDonald's Corp. more than triple its fourth-quarter profits to $398 million, capping the fast-food chain's best single-year sales improvement under the Golden Arches in 17 years. Intent on keeping the momentum going, the company raised the possibility Jan. 28 that it might spin off its Chipotle Mexican Grill business. The company extended its nearly two-year hot streak with higher-priced menu additions, later operating hours and the introduction of cashless pay options sent comparable sales up 9.6 percent last year in the United States and contributed to a 6.9 percent improvement worldwide.

Tyson buys Oscar Mayer plant
Tyson Foods will spend $100 million to renovate a former Oscar Mayer plant in Sherman, TX, and turn it into its largest case-ready operation. According to Tyson, the plant will employ 1,600. The 537,000-square-foot plant opened in 1974 and closed in 1998. It was sold to IBP Inc. in 2000, which Tyson purchased in 2001. Renovations will start immediately, including an upgrade of the refrigeration system and installation of all-new processing and packaging equipment. Tyson hopes to have one production shift operating by early 2006 and a second shift by early 2007. The plant will have a capacity of 6 million pounds of pork and beef cuts per week.

ConAgra Foods pays $14M settlement
CorxAgra Foods has agreed to settle a class action lawsuit, according to a news release from the Omaha-based company. The suit was brought in 2001 by shareholder plaintiffs, principally related to accounting matters at a former ConAgra Foods subsidiary, United Agri Products Inc. following the company’s June 2001 restatement of earnings in connection with UAP for fiscal years 1997-2001. ConAgra Foods sold UAP in November of 2003. The $14 million settlement, which is largely covered by insurance, is without any admission of liability or wrongdoing. The settlement has been preliminarily approved by the court.

Beef hormone battle continues
The United States and European Union have asked the World Trade Organization (WTO) for the creation of a panel to resolve their disagreement regarding beef treated with hormones. The resolution panel may be set up in the near future, but any final resolution will probably take years. The EU was ordered to end its ban on hormone-treated beef from the United States and Canada because the decision is without scientific grounding. The EU contends that it has since developed the scientific evidence and has instituted a new rule, which bans permanently one hormone, oestradiol 17b, and provisionally bans five others.

Tyson earnings hurt by BSE
Tyson Foods Inc., hurt by costs associated with bovine spongiform encephalopathy (BSE), reported lower profits for its first quarter. Tyson earned $48 million, or 14 cents per share, for the three months ending Jan. 1. Compared to the period a year ago when the worlds largest meat company earned $57 million, or 16 cents per share. No case of BSE has been attributed to Tyson, but the company has seen its beef business affected all the same. Tyson said it took charges of $61 million related to the disease, plus charges of $25 million for poultry plant closings and costs related to prepared foods. Low pork prices also pressured earnings, but Tyson said it had a good quarter in its poultry division.

Taiwan to reopen to U.S. beef soon
An Agriculture Department official said that Taiwanese agricultural officials have finished a review of the American beef industry, which included a fact-finding mission to the U.S., and will announce reopening of the border to American beef within a month. The border was closed in Dec. 2003 after the United States’ first case of BSE was found in a Canadian-born animal. That year the U.S. exported $325 million worth of beef to Taiwan.

BSE scare in British clinics
Some cosmetic surgery clinics in Great Britain are allegedly operating without licenses and using collagen from cattle on their patients without certifying that the product is BSE-free. Great Britain authorities are looking into these claims and are reporting that as many as one of six cosmetic surgery clinics operate without licenses. The country's chief medical officer, Sir Liam Donaldson, said that fillers like collagen are used to puff up lips and smooth out wrinkles. Although there has been no outbreak to date, the fillers used often come from cattle. With the high incidence of BSE that was present in that country, officials are leary of an outbreak. Donaldson said they have to look into the use of these aesthetic fillers to establish if there is any risk of variant CJD, the human form of BSE.