CARTHAGE — Choctaw Maid Farms Inc., which has climbed the ranks through the years to become one of the top 10 largest private companies in Mississippi, will be private no more. It is being purchased by publicly-traded food giant Tyson Foods Inc. — the second largest food processing company in the U.S.
Choctaw Maid Farms Inc., based in Carthage, employs 3,400 people with an annual payroll of about $80 million and annual sales in the range of $250 million. Company officers said that the purchase is not expected to create significant changes for personnel, grower relationships or processing output.
The purchase price was not disclosed.
The announcement didn’t come as a great surprise. Tyson was the only customer of Choctaw Maid Farms, and reportedly had been interested in acquiring the company for many years.
“Tyson Foods has been the sole acquirer of all of the production from all of those facilities for quite some time,” said Tyson corporate public relations manager Ed Nicholson. “We were taking all of their production.”
Nicholson said one motive for the acquisition is to gain economies of scale in a very competitive industry.
“We have seen some consolidation on the part of our customers,” Nicholson said. “If you look at the supermarket chains, we have seen a considerable amount of consolidation there attempting to capture economies of scale. And in order to effectively supply those customers, we have to be mindful of the scale in which we are operating.”
The acquisition is expected to be complete by Sept. 28, and includes Choctaw Maid facilities in five locations including two processing plants, two hatcheries and a feedmill. About 185 poultry growers in the state supply to Choctaw Maid Farms.
The acquisition will more than double Tyson’s work force in Mississippi. Currently Tyson Foods owns processing plants in Jackson and Ceres (near Vicksburg), a grow-out facility based in McGee and a processing plant and grow out operations in Forest in addition to chicken grow-out operations there. Tyson currently employs 2,824 people in Mississippi.
Bill Lovette, group vice president of the Tyson Foods Food Service Group, said the purchase makes strategic sense for Tyson Foods.
“For some time, these operations have been very efficiently producing quality products for our company, with their entire output dedicated to our needs,” Lovette said.
Tyson Foods had approached Choctaw Maid several times in the past about a sale. Waid Prather with The Carthaginian reported that the difference this time was that the time seemed right to Tam Ethridge, chairman of the board at Choctaw Maid and sole stockholder in the firm.
“Tam eventually, reluctantly put things into motion where they could buy it,” Choctaw Maid president Duffy McKenzie was quoted as saying in The Carthaginian. “They’ve been talking with us about buying us for at least 10 of (the past) 12 years. This is not new. This just turned out to be the right time. This will be best for the Choctaw employees and the community and the growers, the whole thing.”
McKenzie said the Carthage plant was running at two-thirds of its capacity, with nearly 2,300 employees on the job, and the Forest processing plant, with 950 employees, was operating at only half capacity.
“I think you’ll see positive things happen with Choctaw Maid,” McKenzie said. “There’s no reason for anyone, our employees, our growers or anyone to be concerned. We’re working really hard to make a seamless change to Tyson.”
The big change will be the immediacy of the community’s dealings with officials at the chicken processor.
Decisions within the community will have to go up to the corporate level, McKenzie said. “That will be better in some ways and in some ways not,” he said.
The name Choctaw Maid brand will be dropped.
“It’s going to be tough to change over and be Tyson,” McKenzie said. “Choctaw Maid is getting ready to go away. It’s not going to be the same as Choctaw Maid. It’s just going to be different.”
Tyson’s 2002 stockholders reports showed total sales, chicken, beef and pork, of nearly $23.4 billion. Tyson controls about 40% of the U.S. meat market. Choctaw Maid Farms had been recognized as an industry leader in modern processing techniques.
In the late 1990s after Choctaw Maid Farms processing plant underwent a $55-million expansion, the attractive building confused motorists showing up at the front gate, some of whom mistook it for a casino. Broiler Industry magazine wrote that the company had created the largest broiler processing plant in the world.
“Choctaw Maid’s Carthage plant hums night and day and achieves a Frank Lloyd Wright-like quality in its integration of form, function and site,” Broiler Industry said.
Mike McAlpin, president of the Mississippi Poultry Association, said the purchase following the consolidation trend being seen in many industries.
“I think consolidation is just a way of life in all industry,” McAlphin said. “It is no different for us than anyone else. If you look across the board at industry in the U.S., the way people are keeping their businesses alive these days is consolidation. In the poultry industry we don’t gauge profits on pennies per pound. We gauge our profits on fractions of cents per pound. It is that competitive. When you are looking at profit being a fraction on penny pound sold, you are talking about thin margins and a lot of competition out there.”
McAlpin said since Tyson moved to Mississippi, they have been an excellent corporate citizens. The chairman of Mississippi Poultry Association board this year is the manager of the Jackson Tyson complex, Richard Evans.
“We have found that when Tyson came into the state they became very involved in industry matters,” McAlpin said. “They serve on all of our committees. We are delighted to have Tyson in the state of Mississippi.”
Tyson Foods, the nation’s largest chicken production company, was named by Fortune magazine in March as America’s Most Admired Company in the food production industry. The company has approximately 110,000 employees team at 300 facilities and offices in 27 states and 22 countries.
Contact MBJ contributing writer Becky Gillette at firstname.lastname@example.org.