Tyson Foods, Inc. (TSN) Developing Integrated Production in China to Overcome Food Safety Concerns

April 30, 2014

Analyst Bryan Agbabian of Allianz Global Investors says Tyson Foods, Inc. (TSN) is a solid play on the increase in chicken demand in the U.S. and internationally, particularly in areas like China, where they are battling food safety issues.

Tyson is developing an in-country, in-China integrated production of chicken so that Tyson can then sell to not only the local market there, but also to the U.S.-based restaurants that are doing business there such as Kentucky Fried Chicken (YUM) and McDonalds (MCD) — two companies that are doing business in China and are having a problem with sourcing safe food,” Agbabian said.


Agbabian says that chicken companies in general have done better over the last few quarters, due to an increase in corn acres and the resulting lower feed costs.

“Last year [farmers] increased to around 95 million acres of corn planted, and they actually had a good harvest; corn prices had declined. The increase in production has helped replenish some of the low inventories, and that in turn has been a positive factor for chicken companies that are now benefiting from lower feed cost,” Agbabian said.