Some chicken thinking is about to hit the beef industry.
And that means innovation, not fear of change.
North America’s largest poultry producer, Tyson Foods Inc., is in a deal to buy the continent’s largest beef producer and a major player in pork, IBP Inc.
The acquisition has to pass muster with American anti-trust regulators, but if it does, it will shake up the beef industry, which only recently has woken up to changing consumer demands.
Tyson controls 25 to 30 percent of the poultry market, while IBP has a similar share in beef and about 18 percent of the pork market.
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IBP is a major player in Canada through its ownership of Lakeside Packers in Brooks, Alta.
A story in this week’s Agrifinance section sets out some of the concerns of American farmers about the merger.
One aspect that beef producers might welcome is Tyson’s experience in creating convenient, branded products for grocery shelves.
Tyson was a leader in cutting chicken into parts, producing snacks and quick-to-prepare meal items.
Busy consumers took to these products and the trend was partly responsible for the growth in demand for poultry.
In the past 25 years, chicken consumption has increased more than 98 percent, while beef consumption has dropped 26 percent.
The trend is also popular with a fast growing segment of the American grocery business: Wal-Mart and Kroger. These big, low-margin retailers don’t want to have the costs of in-house butcher departments. They want meat packaged in ready-to-sell boxes direct from the packer.
Beef companies have recently started down this road and the amazing renaissance of beef demand the last two years is in part due to these new, consumer-friendly products.
Tyson’s entry to the beef market is sure to speed the change and give the meat a better competitive footing.
On the other hand, Tyson has a deep belief in the benefits of product uniformity and vertical integration.
It owns breeding stock, production barns, feed mills and processing plants. What it doesn’t produce, it acquires through contracts with growers.
But cattle are not chicken. While chickens are produced almost like widgets in large, intensive operations, cattle are still produced largely by smaller, family operations employing a host of breeds.
Trying to force the cattle industry to mirror poultry will surely make the feathers fly.
